SHANGHAI, Aug. 19 (SMM) – Lead for October delivery, the most active contract on the Shanghai Futures Exchange, underperformed LME lead, down RMB 300/mt, or 1.8%, with positions down from the previous week. The most active SHFE 1410 lead contract remains on a downward trajectory and looks set to hover between RMB 14,300-14,500/mt this week.
Traded prices in China’s physical lead markets slid RMB 350/mt last week. Supply from lead smelters did not rise markedly. While some smelters were more willing to sell out of concern that prices may fall further, others were reluctant to sell at the prevailing low prices. Spot lead prices were depressed by a broad sell-off by traders who considered the price gap between SHFE and spot lead appropriate for arbitrage. Lead-acid battery producers were generally bearish and disinclined to buy, though some did go bargain hunting after prices dipped to around RMB 14,300/mt.
Spot lead prices should trade between RMB 14,200-14,400/mt this week. Lead ingot supply should be sufficient as smelters and traders are more willing to sell. Meanwhile, some downstream producers have resumed lead purchases, suggesting that raw material inventories are low and that they see little room for lead prices to decline further for the foreseeable future. Downstream producers are expected to evince greater interest in buying as lead prices level out this week.