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SMM Lead Market Morning Review (2014-6-17)
Jun 17,2014 09:59CST
price review forecast
LME lead prices are set to move between USD 2,090-2,115/mt on Tuesday, and the most active SHFE 1408 lead contract is forecast to hover between RMB 13,960-14,050/mt.

SHANGHAI, Jun. 17 (SMM) – LME lead prices overnight rose as high as USD 2,107/mt, boosted by positive US economic data and China’s pro-growth policy, and ended up USD 12.25/mt, or 0.59%, at USD 2,102.25/mt. Traded volumes lost by 1,463 lots to 2,696 lots, and positions added by 391 lots to 128,666 lots. Meanwhile, the latest LME lead inventories decreased by 150 mt to 191,100 mt.

The SHFE 1407 lead contract finished down RMB 5/mt at RMB 13,915/mt during Monday’s night session, with 6 lots traded, but no transactions were reported for other contracts.

The People’s Bank of China (PBOC) announced Monday that it has expanded the scope of the reduction in the reserve requirement ratio (RRR) to the Industrial Bank, China Minsheng Bank, China Merchants Bank, and Bank of Ningbo. The PBOC added that the RRR cut also can apply to big state-owned banks that fulfill the stipulated criteria. Banks with substantial lending to small firms and the farming sector will be eligible for the rate cut. These banks include big state-owned banks, joint-stock banks, city commercial banks and rural commercial banks. Meanwhile, The People’s Bank of China (PBOC) revealed funds outstanding for foreign exchange increased RMB 38.665 billion in May, setting a 9-month low. The Chinese Premier Li Keqiang also stated the central government is prepared for policy adjustment in a bid to achieve the GDP growth target of 7.5% this year.

The NY Empire State Index for June was reported Monday at a 4-year high of 19.28, beating the estimated 15, and US industrial output rose 0.6% MoM in May, well above April’s 0.6% fall. The country’s NAHB housing market index, also hit a high of 49 in June, last seen in January 14. The euro zone’s May inflation, however, rose only by 0.5% YoY and fell 0.1% MoM, far short of the European Central Bank’s 2% target.

The escalating violence in Iraq and natural gas row between Russia and Ukraine prompted investors to buy precious metals and crude oil to avoid risks. Sunni Muslim militants strengthened control over the north Iraq over the past week, and attempted to overthrow the Iraqi government. Meanwhile, Russia cut natural gas supply to Ukraine on Monday since Ukraine failed to pay its debt on time, which could disrupt supply to other regions in Europe.

US stock indices rose across the board, but European stock indices fell. LME base metals registered gains, except for tin.

US housing data and inflation reports from the UK and US due for release Tuesday are expected to be positive, helping boost base metals markets. Investors, however, should pay close attention to the US Federal Reserve’s latest interest rate meeting to be held on Thursday.

LME lead prices are set to move between USD 2,090-2,115/mt on Tuesday, and the most active SHFE 1408 lead contract is forecast to hover between RMB 13,960-14,050/mt. In China’s physical lead markets, traded prices should be mostly in the RMB 13,850-13,950/mt range on Tuesday.

LME lead prices
SHFE lead prices
physical lead prices

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