SMM Lead Market Morning Review (2015-3-9)

SHANGHAI, Mar. 9 (SMM) – LME lead fell to as low as USD 1,785/mt and finished up USD 9/mt at USD 1,811/mt last Friday. Trading volumes for three-month lead on the London Metal Exchange shed 788 lots to 5,143 lots, while positions gained 684 to 129,574. LME lead inventories increased 75 mt to 213,950 mt.

Lead for May delivery on the Shanghai Futures Exchange, the most active contract hovered narrowly between RMB 12,235-12,265/mt and closed up RMB 10/mt at RMB 12,255/mt. Trading volumes and positions for the most active contract did not change significantly.

US nonfarm payrolls surged by 295,000 in February, with the growth above 200,000 for a twelfth straight month, while its unemployment rate fell unexpectedly to 5.5%, a low last seen in May 2008. The recovering labor market boosted market expectations that the US Federal Reserve will raise interest rates in the middle of this year. In response, the US dollar index rose 1.31%, the biggest rise in over three years, to end at 97.64, exerting considerable downward pressure on base metals prices.

The euro zone’s retail sales grew 1.1% in January, the sharpest rise since May 2013 largely due to a series of stimulus measures by the European Central Bank (ECB). The single currency area’s finance ministers will discuss Greece’s new reform list. Greek Finance Minister Yanis Varoufakis raised the prospect of Greece holding new elections or even a referendum on any debt deal should euro zone ministers fail to accept seven major reforms Greece has put forward.

China’s imports and exports totaled RMB 3.79 trillion in the first two months, down 2%. Exports grew 15.3%, but imports declined 19.9%, causing trade surplus to expand 11.6-fold. Imports are not expected to improve for the near future due to anemic domestic demand. A string of Chinese economic indicators are due for release this week, including inflation, output, investment, consumption and credit data. The annual sessions of the National People’s Congress (CPC) and Chinese People’s Political Consultative Conference (CPPCC) will continue this week.

Last Friday, European stocks rose, while US stocks fell, with the Dow down 1.54%. Crude oil decreased 2.27% to end at USD 49.61/bbl. LME lead and nickel closed higher, but other base metals dropped, with copper down 1.47%.

LME lead is expected to hover between USD 1,790-1,820/mt, while the most active SHFE 1505 lead contract is set to hover between RMB 12,200-12,300/mt on Monday. Spot lead in China should trade at RMB 12,250-12,400/mt.