SMM Lead Market Morning Review (2015-5-6）

SHANGHAI, May 6 (SMM) – LME lead started at USD 2,116.5/mt Tuesday evening and rose fast during European and US trading hours due to expectation for China’s stimulus measures and slight drop in US dollar index. LME lead lurched up to a high of USD 2,162.5/mt before ending at USD 2,157/mt, up USD 38/mt. Trading volumes climbed 42 to 4,149 lots and positions grew 2,315 to 151,840. LME lead inventories decreased 1,325 to 170,250 mt.

SHFE 1507 lead, the most active contract, closed Tuesday evening at RMB 13,940/mt, up RMB 135/mt with SMM/LME lead price ratio falling.

US April ISM non-manufacturing index was 57.8, better than expectation and March’s index. US March trade deficit was USD 51.4 billion, the highest since October 2008. Decline in US dollar index was bigger on poor trade data, further supporting base metals.

In euro zone, March annualized PPI fell 2.3%, lower than February’s decline, and monthly PPI rose 0.2%, the second rise in two months, indicating that it will not take much time before prices recover rising. European Union adjusted GDP growth expectation for the 19–nation euro zone from 1.3% to 1.5% yesterday and expectation for it in 2016 remained unchanged. European Commission believed that ECB’s QE program helped economy and financial system a lot. Falling euro and oil prices and stable global economy are also helpful.

Crude oil prices dropped much as Saudis planed to suspend air strikes on Yemen on Monday. But oil prices remained rising yesterday on an easing of oversupply. US oil prices rose above USD 60/bbl.

US dollar index fell 0.31% while euro climbed 0.32%. Both US and European stocks dropped. And Shanghai composite index fell 4%. LME base metals all increased with nickel up 3.6% and aluminum and zinc over 2%.

LME lead is expected to move higher at USD 2,140-2,180/mt. The most active SHFE 1507 lead is expected hover between RMB 13,900-14,050/mt and spot lead RMB 13,900-14,050/mt.