SHANGHAI, Aug. 25 (SMM) – The most active SHFE 1410 lead contract underperformed LME lead last week, up only 0.9%, and with positions down by more than 3,000 lots as a result of bulls heading for the exit. Meanwhile, LME lead will find support from the cash-to-three-month backwardation which has reached the loftiest level since the start of the year. Nevertheless, positions are dwindling in the process of price rally, indicating relatively weak buying force. As such, LME lead prices should move largely between USD 2,230-2,280/mt this week.
In China’s physical lead markets, traded prices rose last week by RMB 125/mt, with prices at 14,300-14,500/mt in Shanghai and RMB 14,100-14,250/mt in Guangdong, Tianjin, Henan, Hunan, and Jiangxi. Pressured by month-end tight liquidity and growing inventories, lead smelters rushed to move goods last week. As the price gap between SHFE and physical lead was widening, traders ramped up purchases following active selling. Meanwhile, lead-acid battery producers turned slightly more willing to buy as lead prices steadied.
The most active SHFE 1410 lead contract is expected to fluctuate between RMB 14,500-14,750/mt, weighed down by bulls liquidating positions and weak spot prices.
Spot lead prices are set to trade between RMB 14,350-14,550/mt this week. Lead smelters will become more willing to move goods against tight cash flows and towering finished goods inventories. Traders will be reluctant to buy this week after building large stocks due to the wide price gap between SHFE and physical lead last week. Meanwhile, lead-acid battery producers are expected to buy in an extremely small volume against the backdrop of tight liquidity and low operating rates.