SMM Lead Market Morning Review (2014-6-30)

SHANGHAI, Jun. 30 (SMM) – LME lead prices traded largely in ranges after starting last Friday at USD 2,170.5/mt, with mixed European and US economic reports. During US trading hours, the metal drifted lower to end down USD 17.75/mt, or 0.82%, at USD 2,159.25/mt. Trading volumes shed 418 lots to 3,010 lots, and positions gained 1,188 lots to 130,212 lots. The latest LME lead stocks spiked 1,500 mt to 193,400 mt.

Prices for the most active SHFE 1408 lead contract opened last Friday’s night session at a high of RMB 14,180/mt, but later tracked LME lead prices down to the RMB 14,080-14,105/mt range. SHFE lead prices ended down RMB 20/mt at RMB 14,105/mt, with trading volumes totaling 562 lots and positions down 16 lots to 7,152 lots.

In the US, the University of Michigan’s consumer sentiment index was finalized at 82.5 in June, above the expected 82, boosted by the increase in the sub-index of current conditions. The gauge of expectations, however, hit a refreshed 3-month low. Meanwhile, the German flash CPI for June rose by 1% YoY, in line with expectations and grew by 0.3% MoM, beating expectations for a rise of 0.2% and a fall of 0.1% in May. UK final Q1 GDP rose by 0.8% MoM, matching forecasts. Euro zone final consumer confidence index was reported at -7.5, below the estimated -7.4, while France’s Q1 GDP increased by 0.7% YoY, short of the reading in the final quarter of 2013 and the expected 0.8%.

Meanwhile, Ukraine signed a free-trade and political cooperation agreement with the European Union, suggesting that Ukraine restarted the process of joining the EU. In response, Russian Deputy Foreign Minister Grigory Karasin stated that there will undoubtedly be serious consequences for the signing of the agreement. The EU also warned that more sanctions could be imposed on Russia for its involvement in the Ukraine crisis.

In China, Hohhot, the capital of the Inner Mongolian Autonomous Region, became the first city to lift restrictions on house purchases on June 26. In addition, the People’s Bank of China (PBOC) inked a Memorandum of Understanding (MoUs) on RMB business with the central banks of Luxembourg and France. Previously, RMB clearing banks were established in London and Frankfurt.

US stocks rose across the board, but most European stocks fell. LME base metals prices closed lower, except for LME nickel prices.

LME lead prices are expected to hover between USD 2,145-2,170/mt, and prices for the most active SHFE 1408 lead contract are set to move between RMB 14,070-14,170/mt. In China’s physical lead markets, traded prices should be in the RMB 13,850-14,000/mt range on Monday.