SHANGHAI, Jul. 22 (SMM) – LME lead prices overnight advanced to USD 2,193.5/mt after starting at USD 2,188.3/mt, but later fell to a trough of USD 2,178/mt in Asian trading hours. During the European and US trading session, the metal followed gold and oil up to as high as USD 2,218/mt, and closed up USD 19/mt at USD 2,211.5/mt. Trading volumes decreased 626 lots to 3,424 lots, and positions gained 52 lots to 133,176 lots. Meanwhile, LME lead inventories held flat at 213,725 mt.
The most active SHFE 1408 lead contract opened sharply higher at RMB 14,115/mt during Monday’s night session, and ended up RMB 55/mt at RMB 14,110/mt, with only 8 lots traded. During the night session, total trading volumes were 506 lots, with transactions done mostly for the SHFE 1409 lead contract.
The US indicated that there is growing evidence that the Malaysian Airlines passenger jet was shot down by pro-Russian separatists with the help of Russia. Thus, the US and European countries threatened more sanctions on Russia. Meanwhile, the death toll resulting from Israel’s offensive in the Middle East was also rising. As a result, the VIX, a popular measure of the implied volatility of S&P 500 index options, climbed by 6.22%. Crude oil prices surged, but major world share stock indices fell. Intensifying geopolitical strains look set to weigh down base metals prices.
The International Monetary Fund (IMF) raised its GDP forecasts for Germany from 1.7% to 1.9% this year and from 1.6% to 1.7% in 2015.
Chicago Fed’s National Activity Index for June dropped to 0.12, shy of expectations but still above 0, a sign that the US economic growth still exceeded the average rate.
The US dollar index nudged up 0.02%, while the euro eased 0.01% against the greenback. LME gold and silver rose 0.18% and 0.27%, respectively. LME base metals closed higher across the board, with aluminum and zinc prices leading gains, up nearly 2%.
Base metals will embrace relatively bullish sentiment on Tuesday due to falling aluminum and zinc inventories as well as copper prices arresting declines. In this context, LME lead prices are expected to hover between USD 2,200-2,230/mt, and the most active SHFE 1408 lead contract is set to move between RMB 14,070-14,170/mt. In China’s physical lead markets, traded prices should be in the RMB 13,900-14,050/mt range on Tuesday.