SMM Lead Weekly Price Review and Forecast (Jun. 9-13, 2014)

SHANGHAI, Jun. 10 (SMM) – Lead for August delivery became the most active contract on the Shanghai Futures Exchange last week, with trading activity slower than that for the SHFE 1406 lead contract. Traded volumes and positions for the SHFE 1406 lead contract were both down sharply due to shorts establishing positions and longs liquidating positions. The most active SHFE 1408 lead contract moved mostly between RMB 14,000-14,100/mt last week, but will likely fall to a RMB 13,900-14,000/mt range this week, with prices weighed down by lower LME lead prices.

In China’s physical lead markets last week, traded prices were largely in the RMB 13,850-13,950/mt range, with supply exceeding demand. A variety of lead brands were available in the Shanghai market, and prices fell sharply in the region since Yunnan Chihong Zinc & Germanium, Nandan Nanfang Nonferrous Metals Smelting, Guangxi Chengyuan Mining & Smelting, and Anhui Tongguan Nonferrous Metals (Chizhou) were all moving goods. In the Guangdong market, prices for Gejiu brand were around RMB 13,800/mt, and warehouse receipts for goods in the market traded at a discount of around RMB 20/mt over the SHFE 1406 lead contract. Although lead supply increased slightly in Henan, Hunan, and Jiangxi provinces, downstream producers expressed little buying interest due to soft orders, growing inventories, as well as tight liquidity. Lead-acid battery producers will confront not only growing finished goods inventories and soft demand in June, but also tight liquidity at the mid-year point. Physical lead is expected to trade this week largely between RMB 13,800-13,900/mt given current oversupply.