SMM Lead Market Morning Review (2014-10-28)

SHANGHAI, Oct. 28 (SMM) – LME lead started overnight at USD 1,991/mt, and then hovered mostly at USD 1,990-1,997/mt in the Asian trading session. The price of the soft metal advanced as high as USD 2,021/mt subsequently, and closed up USD 22/mt at USD 2,014/mt. Trading volumes added 141 lots to 2,439 lots, and positions gained 537 lots to 117,380 lots. At the same time, LME lead inventories shed 275 mt to 224,400 mt.

Lead for December delivery on the Shanghai Futures Exchange, the most active contract, swung between RMB 13,650-13,690/mt after opening Monday’s night session at RMB 13,655/mt, and finished up RMB 60/mt at RMB 13,670/mt.

Market participants this week will be focused on the US Federal Reserve’s interest rate meeting which is due to conclude early on Thursday. Whether the Fed will end its bond buying program at this meeting and raise interest rates remains an open question.

US Markit flash service PMI fell from 58.9 to 57.3 in October, short of expectations, while the composite PMI slid from 59 to 57.4. Pending home sales for September grew 1%, a smaller-than-expected rise. In addition, the Dallas Fed manufacturing index dropped from 10.8 to 10.5 in October, shy of the expected 11. These downbeat economic indicators dented US stocks, but pushed up US Treasuries, with yields closing lower at 2.257%.

Italy’s stock market saw a plunge on Monday following reports that its banking system suffered the biggest capital hole in the European Central Bank’s stress test which failed 25 banks. Meanwhile, Brazil’s financial markets slumped on doubts that Dilma Rousseff can restore confidence in the economy after winning the presidential re-election. German business confidence fell to a 2-year low in October, down for six straight months in a row.

LME base metals, except tin, closed higher on Monday. The US dollar index weakened.

Profits at large Chinese industrials are expected to come in positive on Tuesday, and market risk appetite has improved. LME lead is set to fluctuate at USD 2,000-2,030/mt, and the most active SHFE 1412 lead contract is forecast to move between RMB 13,630-13,730/mt. Traded prices on China’s physical lead markets should range between RMB 13,600-13,750/mt on Tuesday.