SMM Lead Weekly Price Review and Forecast (Mar. 9-13, 2015)

SHANGHAI, Mar. 10 (SMM) – Last week, lead for May delivery on the Shanghai Futures Exchange, the most active contract, followed LME lead up to hold flat with the week ending February 27. SHFE lead is expected to track LME lead up, but will meet strong resistance at RMB 12,200-12,350/mt this week. Rising positions for the soft metal point to the divergent market outlook towards lead prices. 

Spot lead trading remained weak last week since some downstream producers did not start to source raw materials until after the Lantern Festival on March 5. Price differentials between different brands expanded in Shanghai due to shortage of supplies from Chihong Zn & Ge, Nanfang and Chengyuan. Henan smelters sold aggressively with ex-works price at a RMB 100/mt discount to the average SMM lead price. China’s spot lead prices should range between RMB 12,250-12,450/mt with better trading this week. Primary lead smelters will sell actively against mounting finished-goods inventories. Secondary lead supply will increase as more secondary lead smelters are expected to resume production this week. Downstream producers will rush to buy raw materials, but overall lead purchases will be restrained by high finished-goods inventories at some producers.