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SMM Lead Market Morning Review (2014-10-16)
Oct 16,2014 09:54CST
price review forecast
LME lead is set to fluctuate between USD 1,990-2,020/mt, and the most active SHFE 1411 lead contract is forecast to move between RMB 13,600-13,750/mt.

SHANGHAI, Oct. 16 (SMM) – LME lead started overnight at USD 2,060/mt, and managed to hover between USD 2,050-2,060/mt during Asian trading hours despite China’s soft CPI and PPI numbers. The price of the soft metal, however, dipped as low as USD 1,985.5/mt in the US trading session on the back of dispiriting economic indicators, and closed down USD 61.8/mt at USD 1,994/mt. Trading volumes gained 1,256 lots to 5,105 lots, and positions shed 2,562 lots to 118,649 lots. Meanwhile, LME lead inventories shrank 75 mt to 225,525 mt.

Lead for November delivery on the Shanghai Futures Exchange, the most active contract, opened Wednesday’s night session at RMB 13,650/mt, and then surged to RMB 13,710/mt. The price of the SHFE 1411 lead contract finished the night session down RMB 80/mt at RMB 13,655/mt. Trading volumes for all SHFE lead contracts expanded to 3,016 lots, and positions added 972 lots to 26,515 lots.

China’s consumer price index (CPI) growth fell to 1.6% YoY in September, shy of the expected 1.7% increase and its lowest since January 2010. Food and non-food prices rose 2.3% and 1.3%, respectively, while prices increased 1.4% for consumer goods and 2.3% for services. Meanwhile, China’s producer price index (PPI) dropped 1.8% YoY in September, a bigger fall than the estimated 1.6% and down for a 31st month in a row, and fell 0.4% from August. The purchasing prices for inputs decreased 1.9% YoY and 0.4% MoM.

NY Fed manufacturing index for October dipped to 6.17, a low last seen in April 2014, with the sub-index for new orders down to a refreshed low of -1.73 since April, indicating a slowdown in the manufacturing sector. US retail sales contracted 0.3% in September, well below expectations and August’s reading. The increase in employment demand failed to boost sales in a sign that consumer demand is weakening. US PPI fell 0.1% in September, down for the first time since August 2013 and missing the forecast 0.1% rise.

Germany’s CPI growth was finalized at 0.8% YoY in September, but was in line with the flash reading and estimates MoM.

The US dollar index tumbled 1.16%, but the euro spiked 1.41% against the greenback. European and US shares fell across the board. LME base metals closed sharply lower.

Base metals prices are expected to rebound slightly on Thursday, but are unlikely to recover losses with the absence of any bullish news. LME lead is set to fluctuate between USD 1,990-2,020/mt, and the most active SHFE 1411 lead contract is forecast to move between RMB 13,600-13,750/mt. On China’s physical lead markets, traded prices should range between RMB 13,650-13,750/mt on Thursday.


LME lead prices
SHFE lead prices
spot lead prices

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