SMM Lead Market Morning Review (2014-6-11)

SHANGHAI, Jun. 11 (SMM) – LME lead prices overnight hovered mostly between USD 2,133-2,143/mt after starting at USD 2,136/mt in Asian trading hours. During European and US trading hours, the metal swung in a wider range, dipping to around USD 2,120/mt, and ended down USD 0.3/mt at USD 2,142/mt. Traded volumes lost 310 lots to 4,962 lots, and positions shed another 990 lots to 127,637 lots. Meanwhile, LME lead inventories held flat at 170,775 mt.

The most active SHFE 1408 lead contract fluctuated at RMB 14,100/mt after opening at RMB 14,045/mt, and finished up RMB 25/mt at RMB 14,090/mt. Traded volumes for the most active contract were 322 lots, and positions were off 34 lots to 5,250 lots.

China’s producer price index (PPI) fell 1.4% year on year in May, while its consumer price index (CPI) edged up to a four-month high of 2.5%. These two indices both outperformed expectations and April’s figures, in a sign that China’s economy is stabilizing, stimulated by a raft of pro-growth measures. Meanwhile, market concerns over the country’s weakening demand for base metals also decreased, giving a boost to copper prices. Nonetheless, the World Bank cut its outlook for China’s 2014 economic growth to 7.6% from 7.7%, and downgraded its forecast for economic growth in developing countries to 4.8% from 5.3%. It also expects the GDP in developed countries to grow 1.9%, compared to January’s 2.2% forecast, and global economic growth to fall to 2.8% from 3.2%.

In Europe, UK industrial production increased 3.0% YoY in April, its strongest annual gain since January 2011, and the production in the three months ending in April also grew 1.1%, the biggest rise since June 2010. The country’s manufacturing production rose 4.4% YoY during the same month.

Major three US stock indices crept up 0.22%, and shares across the world were mixed. The euro eased 0.35% against the US dollar. LME base metals fell, except for copper closing slightly higher.

Base metals markets have digested the probe into metals financing irregularities at the China’s Port of Qingdao. On Wednesday, LME lead prices are expected to move between USD 2,130-2,150/mt, and the most active SHFE 1408 lead contract is set to hover between RMB 14,050-14,120/mt. In China’s physical lead markets, traded prices should be in the RMB 13,850-14,000/mt range.