SHANGHAI, Jul. 15 (SMM) – The most active SHFE 1408 lead contract last week tracked LME lead prices down after rallying to a high, hovering between several major moving averages, with trading volumes and positions both down. Despite positive technical indicators, the most active SHFE 1408 lead contract is likely to fall back for the near term and is set to fluctuate largely between RMB 14,000-14,200/mt this week.
In China’s physical lead markets, traded prices last week were largely in the RMB 13,800-13,950/mt range, with trading activity better than the previous week. Physical lead prices in Shanghai and Guangdong were high due to tight supply. Lead smelters in the two regions were little interested in selling. The unfavorable spread between futures and physical prices also meant that little material flowed into either market under arbitrage. Supply in lead ingot production bases, Henan, Hunan, and Jiangxi, however, were ample last week. Trading activity in China’s physical lead markets should continue to pick up this week, with traded prices mostly at RMB 13,850-14,000/mt. Lead smelters will move goods at firm prices on bullish sentiment, helping support prices. Downstream producers began showing buying interest last week since they considered downside room in prices limited. However, only those large companies will build raw material stocks due to the severe cash squeeze, and this condition should continue through this week.