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SMM Lead Market Morning Review (2014-6-25)
Jun 25,2014 09:46CST
price review forecast
LME lead prices are expected to move between USD 2,170-2,190/mt, and prices for the most active SHFE 1408 lead contract are set to hover between RMB 14,100-14,200/mt.

SHANGHAI, Jun. 25 (SMM) – LME lead prices overnight started at USD 2,173/mt, and then trended lower to USD 2,165/mt. During European and US trading hours, the metal bottomed out to hit a 4-month high of USD 2,192/mt, but fell subsequently to close up USD 5.8/mt at USD 2,181.8/mt. Trading volumes contracted 1,166 lots to 6,116 lots, and positions gained 2,941 lots to 125,740 lots. Meanwhile, LME lead stocks shed 50 mt to 192,525 mt.

Prices for the most active SHFE 1408 lead contract sank to RMB 14,120/mt after opening Tuesday’s night session at RMB 14,165/mt, but later rebounded slightly to end down RMB 25/mt at RMB 14,145/mt. During the night session, trading volumes for the most active contract fell sharply to 118 lots, and positions expanded 14 lots to 7,184 lots. SHFE lead prices are expected to hover above the RMB 14,100/mt mark for the near term.

A string of US economic reports released overnight were mixed. The country’s S&P/CS 20-City Home Price Index for April grew at the slowest pace in a year. The Richmond Fed Manufacturing Index fell to 3 in June, below a reading of 7 in May, although the manufacturing sector in the region was still growing during the month. Meanwhile, US new home sales hit a refreshed high of 504,000 units in May last seen in May 2008 on an annually adjusted basis. The home sales spiked by 18.6% from a month ago, with the growth rate setting a 22-year high, indicating the US property market is recovering steadily. In addition, the country’s Conference Board’s consumer confidence index rose to 85.2 in June, far exceeding the estimated 83.5 and touching a new high since January 2008. The rise in consumer confidence was largely attributable to higher optimism towards the labor market.

The German Ifo Business Climate Index made public on Tuesday dropped to 109.7 in June, short of the level in May and expectations. Although the German economy took a hit from the turmoil in Ukraine and Iraq, the country’s manufacturers remained optimistic towards export conditions and its domestic consumption was still stable.

The president of Iraq’s autonomous Kurdish region voiced strong support for Kurdish self-determination by stating in an interview that it is the time for the Kurdistan people to determine their future. This, combined with ongoing crisis in Ukraine, will put a damper in investors’ risk appetite, weighing down base metals prices.

The euro nudged up 0.03% against the US dollar. The US dollar index rose by 0.07%. US stocks closed lower, while European stocks were mixed. LME base metals prices ended up fractionally, except for a fall in zinc and nickel prices.

Intensifying geopolitical crisis in Ukraine and Iraq will add caution to base metals markets on Wednesday. LME lead prices are expected to move between USD 2,170-2,190/mt, and prices for the most active SHFE 1408 lead contract are set to hover between RMB 14,100-14,200/mt. In China’s physical lead markets, traded prices are projected to hover in the RMB 13,900-14,000/mt range on Wednesday.

LME lead prices
SHFE lead prices
physical lead prices

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