SHANGHAI, Oct. 20 (SMM) – The SHFE 1411 lead contract tracked LME lead down around 2.4% to a record low of RMB 14,340/mt last week. Lead for December delivery on the Shanghai Futures Exchange became the most active contract on last Friday. The most active SHFE 1412 lead contract is still on a downward trajectory, but will stabilize around RMB 13,500/mt this week should LME lead stop falling.
Traded prices on China’s physical lead markets ranged between RMB 13,550-13,650/mt last week. Physical lead was in short supply since smelters in Henan and Yunnan refrained from selling while smelters in Hunan and Jiangxi had little in finished goods inventories. Traders were reluctant to sell due to low inventories and difficulties in replenishing them. At the same time, lead-acid battery producers were reluctant to buy after lead prices fell sharply last week.Spot lead prices are expected to hold steady at RMB 13,600-13,700/mt this week as supply and demand is reaching equilibrium. Lead smelters will be forced to sustain sales in light volumes to ensure sufficient cash flows even though they will suffer losses at current prices. Downstream producers are likely to buy only to need given uncertain macroeconomic conditions. Traders will sell in small quantities against low stocks. Lead supply in Shanghai will remain tight this week since deliverable goods should flock mostly to the Guangdong market.