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SMM Lead Market Morning Review (2014-6-18)
Jun 18,2014 10:07CST
price review forecast
Source:SMM
LME lead prices are set to move between USD 2,105-2,130/mt, and the most active SHFE 1408 lead contract is forecast to hover between RMB 14,000-14,080/mt on Wednesday.

SHANGHAI, Jun. 18 (SMM) – LME lead prices overnight drifted up to a high of USD 2123.75/mt after starting at USD 2,109/mt, and closed up USD 18.75/mt, or 0.89%, at USD 2,121/mt. Trading volumes gained 891 lots to 3,587 lots, and positions shed 1,030 lots to 127,636 lots. Meanwhile, the latest LME lead inventories added 1,775 mt to 192,875 mt.

The most active SHFE 1408 lead contract tracked LME lead prices up to RMB 14,090/mt after opening Tuesday’s night session at a low of RMB 13,990/mt, and ended up RMB 75/mt, or 0.54%m at RMB 14,040 lots. A total of 636 lots were traded during the night session, the highest volume since May 9.

Chinese Premier Li Keqiang stated that the central government will maintain a 7.5% GDP growth this year, while the reserve requirement ratio (RRR) cut applied to a wider range of banks, both helping lift market sentiment.

In the US, home starts and building permits declined in May by 6.5% and 6.4%, respectively, from a month ago, both missing expectations. The country’s May CPI, however, rose by 2.1% YoY and 0.4% MoM, setting the highest growth rates in 20 and 16 months, respectively. Despite this, the US Federal Reserve is likely to decide on an earlier time frame for an interest rate hike at its latest policy meeting now that the CPI has already exceeded its 2% target.

Meanwhile, the euro zone’s economic climate index released by the Center for European Economic Research, or ZEW institute, was reported at 58.4 in June, up from May’s 55.2, but the index from Germany stood at 29.8, below the expected 35 and May’s 33.1. President of the ZEW institute went on record as saying that the economic recovery in Germany confronts more difficulties.

On the geopolitical front, Iraqi officials indicated that crude oil exports in the Persian Gulf were growing even as the Sunni Muslim rebels were staging attacks to the country’s north. This statement soothed angst among investors to some extent. In addition, the relation between Ukraine and Russia showed signs of intensifying with the natural gas transmission pipeline allegedly exploded. Meanwhile, Ukraine’s President Petro Poroshenko put forward a peace plan to solve tensions in the country’s eastern regions, which was backed by German Chancellor Angela Merkel.

European and US stock indices rose across the board. LME copper, lead, zinc and nickel all closed higher.

The US Fed is highly likely to continue its bond purchase pace at the interest rate meeting held late on Wednesday. Investors could seek cues of the timing for an interest rate hike from the press conference presided by Fed Chairwomen Janet Yellen. Caution should dominate base metals markets before the interest rate meeting, and a stronger US dollar could limit gains in lead prices.

LME lead prices are set to move between USD 2,105-2,130/mt, and the most active SHFE 1408 lead contract is forecast to hover between RMB 14,000-14,080/mt on Wednesday. In China’s physical lead markets, traded prices should hold steady in the RMB 13,850-13,950/mt range.

 

LME lead prices
SHFE lead prices
spot lead prices

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