SHANGHAI, Jun. 16 (SMM) – Prices for the most active SHFE 1408 lead contract advanced last week to a high of RMB 14,480/mt, hovering mostly between RMB 14,000-14,100/mt, but later dropped to RMB 13,950/mt, weighed down by falling LME lead prices. The most active SHFE 1408 lead contract followed LME lead prices down last week to RMB 13,900-13,950/mt, and will fluctuate this week largely between RMB 13,850-14,000/mt.

In China’s physical lead markets, traded prices tracked SHFE lead prices down by RMB 100/mt. Downstream producers increased purchases later last week after lead prices retreated, a sign that they regarded lead prices as too high and held extremely low raw material inventories. Lead smelters were relatively reluctant to trade as cash flows improved, but traders were actively moving goods after physical discounts narrowed to RMB 60/mt from RMB 160/mt. Physical lead prices should trade this week mostly between RMB 13,800-13,900/mt. Outflows of goods from traders and increasing deliveries by lead smelters will combine to inflate lead supply in the market as a whole. Downstream producers are largely depleting finished goods inventories and are expressing little interest in building raw material inventories, which will put downward pressure on lead prices.