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SMM Lead Market Morning Review (2014-7-16)
Jul 16,2014 10:07CST
price review forecast
LME lead prices started at USD 2,212.8/mt Tuesday and soon fell below USD 2,200/mt, but gained support at the 5 and 10-day moving averages.

SHANGHAI, Jul. 16 (SMM) – LME lead prices started at USD 2,212.8/mt Tuesday and soon fell below USD 2,200/mt, but gained support at the 5 and 10-day moving averages. Later, as the ZEW economic indicator for the euro zone and Germany disappointed in July, LME lead dipped as low as USD 2,192/mt. However, the prices regained some earlier losses after Fed Chairwoman Janet Yellen said any near-term interest rate hike is not expected as the jobless rate remained high. LME lead finished at USD 2,208/mt, down USD 2/mt. Traded volumes increased 102 lots to 3,487 lots, while positions shrank by 225 lots to 132,187 lots. LME lead stocks held steady at 213,375 mt.

SHFE 1408 lead contract prices opened at RMB 14,015/mt during Tuesday’s night session, and hit a high of RMB 14,035/mt before ending down RMB 45/mt at RMB 14,000/mt. Only 26 lots were traded during the night session, and positions increased 2 lots to 6,148 lots.

Janet Yellen said the US job market remained weak during the testimony to Senate Banking Committee and expressed her concerns over a slow recovery in housing market. As a result, she considered accommodative policies still needed. But Yellen also stated if the economy proves to be stronger than anticipated by the Committee, then increases in the federal funds rate target are likely to occur sooner and to be more rapid than currently envisaged. The US dollar index rallied after the testimony, weighing on base metals.

The US retail sales were reported up 0.2% in June, the worst data since January this year and falling short of forecast. The NY Fed manufacturing index for July, however, exceeded expectations to hit 25.60, its highest since April 2010.

In China, the PBOC announced the new RMB lending in June hit RMB 1.08 trillion, up RMB 216.5 billion from a year ago and staging a spike from May’s RMB 870.8 trillion, and surpassing the RMB 955.0 billion expected. The M2 stood at RMB 120.96 trillion by the end of June, posting a 14.7% YoY growth. China’s new RMB loans through the first half of the year amounted to RMB 5.74 trillion, up RMB 659.0 trillion. Total financing during the first six months also increased RMB 414.6 billion YoY to hit a record high of RMB 1.057 trillion. These data were a clear indication that financial markets were offering more support to the physical economy.

The National Energy Administration reported Tuesday China’s electricity consumption increased 5.9% YoY in June to 463.9 billion kwh, higher than May’s 5.3% growth.

Standard Chartered has begun legal proceedings in Hong Kong against the head of a commodities-trading firm Decheng mining which is at the centre of suspected loans fraud in the port of Qingdao. Reports are that many Hong Kong banks have launched inspections to lending to mainland enterprises and have become extremely cautious towards new loans.

In Europe, the ZEW indicator of economic sentiment for Germany fell for a seventh month straight in June. The UK CPI rose 1.9% YoY in June, posting the biggest rise since January and higher than the 1.6% expected.

The US dollar index increased 0.26%, while the euro weakened 0.36% against the dollar. Most indexes on European and US stock markets declined, but Asian stocks posted a slight rise. Base metal prices on the London Metal Exchange were mixed.

Markets are optimistic towards China’s GDP growth due for release today. SHFE 1408 lead contract prices are expected to move at RMB 13,950-14,050/mt, and spot lead prices will be RMB 13,800-13,950/mt.


LME lead prices
SHFE lead prices

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