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SMM Lead Market Morning Review (2014-10-29)
Oct 29,2014 09:58CST
price review forecast
LME lead is set to swing between USD 2,020-2,050/mt, and the most active SHFE 1412 lead contract is forecast to hover between RMB 13,650-13,750/mt.

SHANGHAI, Oct. 29 (SMM) – LME lead overnight advanced as high as RMB 2,048/mt after starting at RMB 2,019/mt on a series of positive macroeconomic news, and ended at USD 2,033.3/mt. Trading volumes for three-month lead on the London Metal Exchange gained 433 lots to 2,872 lots, and positions added 112 lots to 117,942 lots. At the same time, LME lead inventories expanded 150 mt to 224,550 mt.

Lead for December delivery on the Shanghai Futures Exchange, the most active contract, opened Tuesday’s night session at RMB 13,645/mt, and then climbed to RMB 13,710/mt before closing up RMB 50/mt at RMB 13,695/mt.

Profits at China’s large industrial companies grew 0.4% to RMB 563.39 billion in September, reversing a fall in August, which soothed market concerns over a slowdown in the world’s second largest economy.

The People’s Bank of China pumped additional liquidity to the market on Tuesday even as the central bank conducted RMB 20 billion of 14-day repurchase agreements. This, combined with a fall in interest rates on repurchase agreements, led market participants to anticipate targeted interest rate cuts.

Richmond Fed manufacturing index and the Conference Board’s consumer confidence index for October both beat expectations and September’s readings. US durable goods orders, however, surprised the market with a 1.3% monthly fall in September, far below estimates. Orders excluding transportation fell short of expectations, down 0.2%. These disappointing economic indicators reinforced investor expectation that the US Federal Reserve will remain dovish on its monetary policy.

Meanwhile, workers at Freeport-McMoRan Inc’s giant Indonesian copper mine plan to go on strike for a month from next week, while workers at Peru’s biggest copper mine, Antamina, will go on an indefinite strike from November 10. Output from Indonesia’s Grasberg copper mine, one of the world’s biggest, fell in October since miners were absent from work. The strike is likely to partly offset greater surpluses in 2015 expected by industry insiders.

The US dollar index closed down 0.19%. Major world stocks rose across the board. LME zinc ended flat, while other base metals drifted higher, with nickel up 6.19%.

Base metals markets should be dominated by optimism on Wednesday amid upbeat macroeconomic news and positive technical indicators. LME lead is set to swing between USD 2,020-2,050/mt, and the most active SHFE 1412 lead contract is forecast to hover between RMB 13,650-13,750/mt. Traded prices on China’s physical lead markets are expected to fluctuate between RMB 13,650-13,750/mt on Wednesday.

LME lead prices
SHFE lead prices
spot lead prices

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