SHANGHAI, Jan. 5 (SMM) – LME lead started last Friday at USD 1,855/mt, and then fell to USD 1,835/mt in the Asian trading session, dampened by a series of downbeat macroeconomic news. The price of the soft metal rebounded afterwards to close up USD 12.75/mt at USD 1,869.5/mt. Trading volumes for three-month lead on the London Metal Exchange gained 237 lots to 2,904 lots, while positions added 763 lots to 114,210 lots. LME lead inventories held flat at 221,975 mt.
HSBC’s final China Manufacturing PMI for December was reported at 49.6, the lowest final reading since June 2014. China’s final official Manufacturing PMI fell to 50.1, a trough not seen since June 2013 and shy of its initial reading. Sluggish manufacturing boosted market expectations that the Chinese government will unveil more accommodative policy in Q1 2015.
The Chicago Manufacturing PMI for December fell short of expectations by sliding to a refreshed 5-month low. US ISM Manufacturing PMI slipped to a new 6-month low in December, well below expectations. The new orders sub-index dropped to a new 7-month low, while the sub-index tracking prices paid for all purchases also fell to a new 1.5-year low. The employment sub-index, in contrast, rose to a new 4-month high.
The euro zone’s final manufacturing PMI for December came in below expectations and November’s reading. Specifically, PMIs in Ireland, Greece and Austria rose to a new 4-month high, while the index in Germany also climbed to a new 2-month high. The manufacturing index fell to a new 2-month low in Spain and the Netherlands, a 4-month low in France and 19-month low in Italy. Mario Draghi, President of the European Central Bank (ECB), hinted last Friday that the ECB is approaching broad-based quantitative easing against growing deflationary risks in the European economy.
There are only three weeks away from Greece’s presidential election, bringing Athens back to the focal point of Europe. Controversies over whether Greece should exit the euro zone have reemerged as Syriza, a party of the radical left, aims to eliminate the bailout scheme. It was reported that both German Chancellor Angela Merkel and Finance Minister Wolfgang Schaeuble believe the euro zone has implemented enough reforms since the height of the regional crisis in 2012 to make a potential Greece exit manageable. The comments have casted a shadow down upon the prospect of the single currency area. This, combined with soft manufacturing data released earlier, sent the euro down sharply last Friday.
The US dollar index rallied to a renewed high not seen since April 2006 and closed up 0.97% at 91.15, while the euro fell 0.85% versus the greenback. Major world shares were mixed. LME base metals diverged, with tin surging 5.03%.
The high US dollar index, together with a fall in US crude oil prices, will weigh on base metals on Monday. LME lead is set to hover at USD 1,850-1,880/mt, while the most active SHFE 1503 lead contract is expected to move at RMB 12,330-12,480/mt. Spot lead prices in China should range between RMB 12,550-12,650/mt on Monday.