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SMM Lead Market Morning Review (2014-10-23)
Oct 23,2014 09:50CST
price review forecast
LME lead is set to move between USD 2,010-2,035/mt, and the most active SHFE 1412 lead contract is projected to swing between RMB 13,580-13,680/mt on Thursday.

SHANGHAI, Oct. 23 (SMM) – LME lead started overnight at USD 2,032.5/mt, and then hovered at USD 2,020-2,030/m in the Asian trading session. During European and US trading hours, the price of the soft metal surged as high as USD 2,058/mt, but fell subsequently to close down USD 9.3/mt at USD 2,026/mt. Trading volumes for three-month lead on the London Metal Exchange gained 220 lots to 2,790 lots, but positions shrank 2,118 lots to 118,221 lots. At the same time, LME lead inventories shed 25 mt to 224,675 mt.

Lead for December delivery on the Shanghai Futures Exchange, the most active contract, fluctuated between RMB 13,615-13,675/mt during Wednesday’s night session after opening at RMB 13,670/mt, and ended flat at RMB 13,635/mt. During the night session, trading volumes for the SHFE 1412 lead contract totaled 412 lots, and positions lost 16 lots to 9,866 lots.

The US Labor Department announced late on Wednesday that its Consumer Price Index (CPI) edged up 0.1% in September even as energy prices fell 0.7%, down for a third straight month. Market participants are inclined to interpret the persistently weak inflation as signs of the sluggish US economy, stoking concerns in base metals markets. In response, the US dollar index rose 0.41% to 85.72, while major US stocks fell.

Chinese Finance Minister Lou Jiwei stated at the Asia-Pacific Economic Cooperation (APEC) forum that China will be focused on infrastructure development to realize growth potential and meet development goals. Meanwhile, the National Development & Reform Commission approved 8 major infrastructure projects on Wednesday with investment totaling RMB 150 billion, indicating that the Chinese government is determined to boost growth. On the other hand, Zhou Xiaochuan, Governor of the People’s Bank of China (PBOC), projected that China’s GDP growth will be about 7.5% this year. He added that the Chinese government will continue its prudent monetary policy and is unlikely to launch a broad reserve requirement ratio (RRR) cut for the near future.

Minutes of the Bank of England’s recent policy meeting revealed that most policymakers believe an interest rate hike will leave the UK economy more exposed to potential shocks. European Central Bank officials indicated Wednesday that the ECB will unveil more stimulus measures including corporate bond purchases.

Crude oil tumbled 2.4%, and gold was down 0.5%. European stocks rose 0.7%. LME aluminum, zinc and tin closed higher, but copper, lead, and nickel dropped.

Base metals markets are expected to take heart from China’s refreshed pro-growth measures on Thursday. Nevertheless, HSBC’s China manufacturing PMI is forecast to hold flat, representing source of uncertainties.

LME lead is set to move between USD 2,010-2,035/mt, and the most active SHFE 1412 lead contract is projected to swing between RMB 13,580-13,680/mt on Thursday. Traded prices on China’s physical lead markets should range between RMB 13,600-13,750/mt.

LME lead prices
SHFE lead prices
spot lead prices

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