SMM Lead Market Morning Review (2014-12-29)

SHANGHAI, Dec. 29 (SMM) – Lead for February delivery on the Shanghai Futures Exchange, the most active contract, dipped to as low as RMB 12,115/mt in last Friday’s night session and ended down RMB 85/mt at RMB 12,190/mt. During the night session, total trading volumes gained 114 lots to 11,614 lots, while total positions added 4,400 to 50,056.

China’s industrial profits totaled RMB 676.12 billion in November, down 4.2% YoY, with the fall increasing 2.1 percentage points from October. The sliding profits, insufficient orders, as well as low capacity utilization rates all point to deflationary risks in the world’s second largest economy. Meanwhile, China’s goods imports and exports are expected to rise only about 3.5% in 2014, well below 7.5% targeted.

The Japanese government approved USD 29.17 billion of stimulus December 27 in an attempt to kick-start growth in an economy which has contracted for two consecutive quarters. The stimulus is expected to help push Japan’s GDP growth up 0.7 percentage point.

Greece’s prime minister called for wavering members of Parliament to support candidate for president in his own party in Monday’s final round of voting, warning that the country confront “turbulence for no reason” if a snap general election is held.

US equities rose across the board last Friday, while trading was suspended on European stock markets. The US dollar index surged above 90. The London Metal Exchange (LME) closed for the Christmas Day holiday. COMEX copper slid as much as 1.38% to a refreshed 4.5-year low.

LME lead is set to hover at USD 1,840-1,865/mt on Monday, while the most active SHFE 1502 lead contract is expected to fluctuate at RMB 12,110-12,200/mt. Spot lead prices in China should edge down RMB 50/mt to RMB 12,450-12,600/mt.