SMM Lead Market Morning Review (2014-6-23)

SHANGHAI, Jun. 23 (SMM) – LME lead prices started last Friday at USD 2,138.5/mt, and fluctuated at USD 2,135-2,145/mt in Asian trading hours. During European and US trading hours, LME lead prices fell slightly to close down USD 0.5/mt at USD 2,134/mt. Trading volumes gained 1,542 lots to 4,993 lots, and positions added 1,475 lots to 123,360 lots. Meanwhile, LME lead inventories held flat at 192,575 mt.

The most active SHFE 1408 lead contract hovered between RMB 14,085-14,130/mt after opening last Friday’s night session at RMB 14,100/mt, and finished up RMB 40/mt at RMB 14,110/mt. During the night session, trading volumes for the most active contract totaled 122 lots, and positions increased 10 lots to 6,316 lots.

Sources from the Iraqi army reported on June 22 that Sunni Islamic insurgents seized another three key tows after they occupied the town of al-Qaim. The escalating tensions in the country will continue to fan worries among investors. On last Friday, Ukraine's President Poroshenko unveiled details of a 14-point peace plan in a bid to end conflicts between the Kiev government army between pro-Russian insurgents. The Ukrainian government announced unilaterally to cease fire for a week. Meanwhile, the US Treasury added seven relevant persons to the sanction list, including separatist leaders in Donetsk, Slovyansk, Luhansk and the Crimean city of Sevastopol.

In China, data showed that the property trusts will have to pay a total of RMB 203.5 billion by 2015, almost doubling RMB 109 billion this year. In addition, the country’s financial regulators are stepping up their efforts to crack down upon the so-called shadow banks, which will have a negative impact on trust companies and finance management products. These, combined with earlier bond defaults, will undermine investors’ confidence in the property market. However, Chinese Premier Li Keqiang stated that the central government will ensure a GDP growth at or above 7.5% this year, helping alleviate market concerns over the fraudulent metals financing at the Port of Qingdao and the property market.

The euro eased 0.06% against the US dollar. Major stock indices across the world were mixed. LME copper, lead and zinc prices rose, but LME aluminum, tin and nickel fell slightly.

Manufacturing PMI reports for June from China and the euro zone are expected to be released on Monday. The index from China should come in positive due to a series of stimulus policies recently. In this context, LME lead prices are set to move between USD 2,120-2,150/mt, and the most active SHFE 1408 lead contract is project to hover between RMB 14,050-14,150/mt. In China’s physical lead markets, traded prices should be in the RMB 13,850-14,000/mt range on Monday.