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SMM Lead Market Morning Review (2014-7-21)
Jul 21,2014 10:10CST
price review forecast
Source:SMM
LME lead prices are expected to hover between USD 2,170-2,200/mt on Monday, with solid support from technical indicators.

SHANGHAI, Jul. 21 (SMM) – LME lead prices rose last Friday to USD 2,200/mt after starting at USD 2,192.3/mt, but then fell back to the USD 2,185-2,195/mt range in Asian trading hours. During the European and US trading session, the metal dipped to a trough of USD 2,165/mt on disappointing economic reports, but recouped some losses at the tail of the trading to end down USD 6/mt at 2,192.5/mt. Trading volumes gained 1,159 lots to 4,050 lots, and positions added 1,187 lots to 133,124 lots. Meanwhile, LME lead inventories increased 175 mt to 213,725 mt.

Lead for August delivery, the most active contract, started last Friday’s night session lower at RMB 14,020/mt on the Shanghai Futures Exchange, and closed down RMB 65/mt at RMB 13,990/mt. During the night session, trading volumes for the SHFE 1408 lead contract were only 10 lots.

The crash of a Malaysian Airlines plan in eastern Ukraine remained under the limelight over the weekend. Russian President Vladimir Putin and his US counterpart Barack Obama reportedly discussed the accident immediately, but the geopolitical crisis failed to ease significantly. Meanwhile, pro-Russian rebels refused to cooperate with international investigators on the plan crash, which stoked the US and European countries’ severe criticism towards Russia. As financial markets were gradually digesting tensions in Ukraine, the VIX, a popular measure of market panic, tumbled 15%. US shares rose across the board, while precious metals fell. Investors should heed uncertainties surrounding Ukraine and the Middle this week.

The National Bureau of Statistics announced in a report on changes in home prices among 70 middle and large cities that home prices rose at the slowest pace in 15 months from a year ago. Property prices in these major cities fell by a wider margin in June from a month earlier, down for a second straight month. 55 cities faced lower prices for new residential houses, and 52 saw declining prices for second-hand houses from a month ago. Oversupply was believed to be the reason behind the sharp fall in home prices, which will dramatically undermine economic growth. However, the disappointing performance in China’s property market also reinforced market expectations for another round of stimulus measures by the central government. It was rumored in several regions recently that restrictions over house purchasing will be loosened.

Following a corporate bond default by Shanghai Chaori Solar Energy Science & Technology, Huatong Road & Bridge Group would be the first to fail to pay both interest and principal, and would also be the first default in the interbank note market. Huatong Road and Bridge Group stated on Wednesday that it was uncertain whether it would be able to pay interest or principal on a one-year bond worth RMB 400 million, or about USD 64 million. It blamed a continuing official investigation into its chief executive for the payment problem. The company’s chief executive, Wang Guorui, was publicly dismissed from the Chinese People’s Political Consultative Conference of Shanxi Province, a political advisory body, on July 10 on suspicion that he had broken the law, according to a statement on the provincial government’s website.

The University of Michigan’s flash consumer sentiment index for July came in at 81.3, well below the expected 83 and setting a refreshed 4-month low. The Conference Board’s leading indicators rose 0.3% MoM in June, shy of the estimated 0.5% increase.

The US dollar index edged up 0.03%, while the euro eased 0.01% against the greenback. Major world shares rose. LME base metals prices dropped across the board, with nickel prices down sharply 3.26%.

Bearish sentiment has dominated the market due to disappointing European and US economic releases, declining home prices in China, as well as geopolitical crisis in the wake of a Malaysian Airlines plane crash. LME lead prices are expected to hover between USD 2,170-2,200/mt on Monday, with solid support from technical indicators. The most active SHFE 1408 lead contract is set to move between RMB 13,950-14,050/mt, and physical lead prices should be RMB 13,850-13,950/mt.
 

LME lead prices
SHFE lead prices
physical lead prices

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