SMM Lead Market Morning Review (2015-5-5)

SHANGHAI, May 5 (SMM) – The most active SHFE 1506 lead moved higher at RMB 14,025/mt and lower at RMB 13,510/mt Monday night. Eyes will be on European March PPI and US April non-manufacturing PMI due out Tuesday night. US dollar index increased on upbeat US data. Therefore, lead prices are expected to meet resistance. Few trades were made in spot market as traders quoted high. High lead prices stimulated former goods to enter the market and lead smelters are expected to increase operating rate. Downstream producers just waited for a price fall. Trades are expected to mute today.

Data from China were poor Monday. HSBC’s China manufacturing PMI for April was 49.2, the lowest since April 2014, with March PMI and expected number 49.6. Output index dropped from March’s 51.3 to 50, the lowest since December 2014 and new order index hit a new low since April 2014. Also, input prices index and output prices index both fell faster, a sign that deflationary pressure worsened.

In euro zone, April manufacturing PMI was 52, a little higher than expectation but lower than March PMI. Germany’s April manufacturing PMI was 52.1 and France’s 48, lower than expectation and March PMI. Germany’s pace of new hiring in April hit a 4-month high. France’s April manufacturing output and new orders dropped and decline in purchase hit a new high since December 2013. Backlogs of work also fell noticeably.

US March factory order climbed 2.1% on the month, biggest rise in eight months and 2% higher than expectation, supporting US dollar index.

US dollar index rose 0.19% while euro dropped 0.42%. Both US and European stocks increased. London Metal Exchange was closed on banks’ holiday

LME lead is expected to move between USD 2,090-2,120/mt. The most active SHFE 1506 is expected move at RMB 13,780-13,880/mt and spot lead RMB 13,800-13,900/mt.