SMM Lead Weekly Price Review and Forecast (Jul. 28-Aug. 1, 2014)

SHANGHAI, Jul. 29 (SMM) – Total trading volumes and positions both increased nearly 2% last week on the Shanghai Futures Exchange, with lead for October delivery, the most active contract, up by RMB 500/mt. The SHFE 1410 lead contract looks set to maintain a rising momentum this week and trade in a wide range, reaching as high as RMB 15,200 /mt.

In China’s physical lead markets, traded prices rose last week above the RMB 14,000/mt mark. Downstream producers were willing to buy early last week, but later moved out of the market as prices continued to rise, with trading activity slowing down. Meanwhile, lead smelters held back goods from sale, resulting in tight supply in the market. Physical lead prices will range between RMB 14,200-14,500/mt this week. Lead smelters will express higher selling interest at the end of July, while downstream producers will be disinclined to buy due to tight liquidity and after building some raw material previously. Traders are set to buy actively at a discount above RMB 300/mt, helping support prices.