Metals News
SMM Lead Market Morning Review (2014-8-7)
price review forecast
Aug 7,2014

SHANGHAI, Aug. 7 (SMM) – LME lead prices overnight hovered steadily above USD 2,230/mt after starting at USD 2,235.5/mt in Asian trading hours. During the European trading session, the price of the soft metal sank to a low of USD 2,202/mt, dampened by negative economic data from Germany and Italy, but rebounded subsequently to end flat at USD 2,238/mt. Trading volumes gained 134 lots to 4,611 lots, and positions added 119 lots to 139,290 lots. LME lead inventories held unchanged at 215,650 mt.

Lead for October delivery, the most active contract, rose to as high as RMB 14,780/mt on the Shanghai Futures Exchange after opening Wednesday’s night session at RMB 14,620/mt. SHFE lead prices later fell slightly, pressured by the 5-day moving average, and finished up RMB 30/mt at RMB 14,765/mt. During the night session, trading volumes for the SHFE 1410 lead contract were 40,412 lots, and positions expanded 326 lots to 39,416 lots. Total trading volumes reached 41,214 lots, and positions increased 182 lots to 56,156 lots.

The North Atlantic Treaty Organization (NATO) reported that Russia massed more than 20,000 soldiers near Ukraine’s border, further aggravating the geopolitical strains. The NATO was concerned that Russia is likely to send troops to eastern Ukraine cities in the name of humanitarian aid and peacekeeping. Russia annexed Crimea several months ago and provided support to pro-Russia separatists, which drew several rounds of sanctions by western nations. Meanwhile, Russia has banned the import of agricultural goods from the US and European countries that have imposed severest sanctions on it in July.

German June manufacturing orders dwindled 3.2% from May, recording the biggest monthly fall in nearly three years, with export orders down 4.1%, amid the ongoing Ukraine crisis. Italy’s preliminary Q2 GDP decreased 0.2% from the first quarter of this year, missing expectations and down for a second quarter in a row. Data from Halifax showed that UK house prices rose at a seasonally adjusted rate of 1.4%, higher than the expected 0.4% increase and June’s 0.6% fall. Disappointing economic reports from the euro zone and continuing Ukraine tensions combined to weigh down European stocks.

The US dollar index fell 0.11%, while the euro rose 0.05% against the greenback. Major global shares closed down, while US stocks rose fractionally. LME base metals prices were mixed.

Investors should pay close attention to the Bank of England and European Central Bank’s respective interest rate decisions late on Thursday. LME lead prices are expected to hover between USD 2,220-2,250/mt, and the most active SHFE 1410 lead contract is set to hover between RMB 14,700-14,800/mt. In China’s physical lead markets, traded prices should be in the RMB 14,600-14,700/mt range on Thursday.



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