SHANGHAI, Oct. 10 (SMM) – Dampened by a stronger dollar and a steep fall in US stocks, LME lead leveled off on Thursday to close up USD 3/mt, or 0.14%, at USD 2,080/mt. Trading volumes shed 31 lots to 3,175 lots, and positions gained 288 lots to 124,766 lots. LME lead inventories decreased 25 mt to 225,200 mt.
Lead for November delivery on the Shanghai Futures Exchange, the most active contract, rose to RMB 13,980/mt during Thursday’s night session, but later fell to end down RMB 20/mt at RMB 13,890/mt.
US initial jobless claims for the week ending October 4 unexpectedly fell, with the average claims in September setting a new 8-year low, indicating sustained recovery in the US labor market. The nation’s wholesale inventories increased 0.7% MoM in August, beating the expected 0.3% rise. On the other hand, Goldman Sachs was bearish on US companies’ earnings in Q3, citing that low oil prices would eat into profits at crude oil companies and that slow recovery in Europe’s major economies would reduce profits at non-crude oil companies. In response, US stocks fell precipitously on Thursday.
Germany’s exports shrank 5.8% in August, a bigger fall than the estimated 4% contraction and the largest monthly decline since January 2009. The country’s industrial output released earlier posted the sharpest drop in five years. Trade surplus in the largest economy in the euro zone totaled EUR 14.1 billion in August, missing the forecast EUR 17.7 billion, stoking worries over its economic outlook. Meanwhile, European Central Bank President Mario Draghi pledged to unveil more stimulus measures to boost inflation if need be.
European and US stocks nursed big losses. LME base metals surged before leveling off.
The US Federal Reserve’s minutes from its September meeting is relatively dovish, while markets are expecting China to continue easing restrictions on home loans, both helping support base metals. Nevertheless, some experts estimated China’s Q3 GDP growth at 7.2-7.3%, far below the government’s annual target of 7.5%, which raised concerns over China’s economic outlook.
LME lead is expected to hover largely between USD 2,070-2,100/mt on Friday, and the most active SHFE 1411 lead contract is set to fluctuate between RMB 13,850-13,930/mt. On China’s physical lead markets, traded prices are likely to rise RMB 25/mt to RMB 13,700-13,850/mt since downstream producers begin replenishing raw material stocks.