SHANGHAI, Oct. 21 (SMM) – Against a raft of negative macroeconomic news, LME lead overnight dipped as low as USD 2,009/mt after starting at USD 2,043/mt in the Asian trading session. The price of the soft metal finished down USD 22.5/mt at USD 2,010/mt, falling below the 5-day moving average again. Trading volumes contracted 1,800 lots to 2,188 lots, and positions shed 1,169 lots to 121,282 lots. At the same time, LME lead inventories decreased 350 mt to 224,700 mt.
Lead for December delivery on the Shanghai Futures Exchange, the most active contract, opened Monday’s night session at RMB 13,670/mt, and then followed LME lead down to end at RMB 13,590/mt, RMB 60/mt off.
Having digested stimulus measures by the People’s Bank of China (PBOC), base metals markets should be focused on a string of key Chinese economic indicators due for release on Tuesday. Most economists project that China’s GDP growth will slow to 7.2% in Q3, down from 7.5% in Q2, raising concerns over fixed asset investment and manufacturing PMI.
On Monday, French Finance Minister Michel Sapin called on Germany to raise investment by 50 billion euros, equivalent to the amount Paris is seeking to save from public spending, to prop up the European economy. The German government revealed that it was inclined to increase some 5 billion euros of investment in infrastructures.
In the US, a number of companies released their earnings reports on Monday, with IBM’s operating revenues down 4% YoY, but other companies faring well. Meanwhile, investors were worried that sluggish euro zone economy will have a contagion effect on the US economy, helping push up US government bonds prices. The Ebola outbreak and ongoing conflicts in the Middle East caused safe-haven demand to grow.
Crude oil fell 0.1% to end at USD 82.71 a barrel, and gold rose 0.5% to USD 1,244.70/mt. European stocks dropped 0.5%, but US stocks stretched gains, with the Nasdaq up 1.35%. LME aluminum and tin closed higher, but other base metals fell, with nickel down 2.68%.
China’s Q3 GDP, industrial output, and retail sales should have limited impact on base metals even though these economic indicators are expected to come in downbeat on Tuesday. LME lead is set to hover between USD 2,000-2,030/mt, and the most active SHFE 1412 lead contract is forecast to move between RMB 13,550-13,650/mt. Traded prices on China’s physical lead markets should range between RMB 13,600-13,700/mt on Tuesday.