SMM Lead Weekly Price Review and Forecast (Jun. 30-Jul. 4, 2014)

SHANGHAI, Jun. 30 (SMM) – Prices for the most active SHFE 1408 lead contract tracked LME lead prices to a high of RMB 14,275/mt early last week, but later fell back to RMB 14,050-14,150/mt due to sluggish lead market fundamentals in China. SHFE lead prices will also fall along with declining LME lead prices this week, but will find solid support at RMB 14,050/mt.

In China’s physical lead markets, traded prices were down last week as a result of increasing deliveries at the end of June. In the Shanghai market, Chihong Zn & Ge, Nanfang, Chengyuan, and Tongguan all moved goods, with traded prices falling below RMB 13,900/mt last Thursday due to sufficient supply. Lead smelters in Henan province’s Jiyuan, Anyang, and Lingbao regions were all trading more actively at prices largely between RMB 13,800-13,880/mt, but goods from Wanyang and Yuguang were barely sold at SMM’s average lead prices.

Trading activity is expected to improve slightly this week, with prices hovering mostly between RMB 13,800-13,950/mt. Downstream producers are likely to increase purchases since their cash flows will improve with a new round of bank loans, helping support physical lead prices. However, lead smelters should be unwilling to move goods as liquidity improves and due to a brief rebound in prices. As a result, the market will be dominated by supply from traders.