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SMM Lead Market Morning Review (2014-10-15)
Oct 15,2014 10:25CST
price review forecast
LME lead prices opened at USD 2,065/mt overnight.

SHANGHAI, Oct. 15 (SMM) – LME lead prices opened at USD 2,065/mt overnight. Germany lowered its growth forecast this year to 1.2%, and ZEW's economic indicators for the euro zone and Germany weakened further. Germany's government bond yields hit a record low, causing market pessimism to grow. LME lead prices were dragged down and closed at USD 2,055.8/mt, down USD 14/mt. Trading volumes increased 846 to 3,849 lots, and total positions decreased by 3,776 to 121,211 lots. LME lead inventories fell 50 to 225,600 mt.

SHFE 1411 lead contract prices opened at RMB 13,800/mt, and dropped to RMB 13,755/mt with LME lead prices, but rallied to close at RMB 13,790/mt, down RMB 5/mt. Trading volumes were 328 lots, and total positions decreased 38 to 13,722 lots.

The PBOC executed USD 20 billion in 14-day repurchasing yesterday at a rate of 3.4%, 10 basis points lower than the last time and hitting a record low in 3.5 years. The PBOC had lowered interest rate for 14-day repurchasing 20 basis points to 3.5% September 18. The bank resumed 14-day repurchasing July 31 at a rate 10 basis lower than previously, and announced target interest rate cut August 27. That means the bank acted to reduce financing costs, which will help inspire the market.

UK's September CPI slowed to 1.2%, its lowest growth since September 2009, compared to the 1.4% expected and August's 1.5%. Lower-than-expected inflation rate caused market anticipation that Bank of England may slow interest rate hike, pushing down the GBP. ZEW's October economic climate index for Germany fell to -3.6, much lower than market expectations and September's. Moreover, Germany's investor confidence index also dropped to a two-year low. Euro zone industrial output in August slid 1.8%, compared to a 1.6% drop expected and a 1.6% growth in July.

The US dollar index rose 0.75%, with the EUR: USD down 0.71%. US stocks rebounded, and European stocks were mixed. LME base metals prices followed their own track. LME copper, zinc and aluminum prices closed with gains, but LME lead, tin and nickel prices finished the day with declines, with LME tin prices falling as much as 2.49%.

China's September CPI to be released today is expected to be around 1.7%, while PPI will slide further. LME lead prices are expected to hover between USD 2,050-2,070/mt today, and SHFE 1411 lead contract prices should fluctuate between RMB 13,750-13,850/mt. Spot lead prices in Shanghai will be RMB 13,700-13,850/mt.

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