SHANGHAI, May 18 (SMM) – Last Friday, SHFE 1507 lead opened at RMB 13,345/mt and closed at RMB 13,340/mt. The contract touched Monday’s high of RMB 13,460/mt as China’s April home sales of 70 big and medium sized cities rose 0.3% on the month, ending a straight 11-month drop. The metal finished the day up RMB 25/mt or 0.19%. Trading volumes dropped 1,172 to 5,910 lots while positions were up 386 to 15,244.
Deals for Tongguan, Nanfang and Hengbang brands closed at RMB 13,850-13,880/mt, with RMB 450-500/mt premiums over SHFE 1507 lead. Honglu brand remained a RMB 100/mt premium unchanged to SHFE 1506 lead. Lead smelters and traders in Shanghai held limited goods. Thus, some traders quoted high while downstream producers showed little buying interest, leaving trades quiet. Smelters and cargo holders still sold under term contract. Average price of spot goods in Henan was RMB 200/mt higher than SMM lead price, versus RMB 50-100/mt higher in Jiangxi. Quotes were RMB 13,400-13,460/mt in Guangdong. Few trades were made in North China.
SMM’s latest survey indicates that 30% of industry insiders are bearish that LME lead may fall to USD 1,950-2,000/mt and spot lead prices to RMB 13,500/mt this week for the following reasons. First, both e-bike and automobile battery sectors entered low demand season, which will dampen lead consumption. Second, production resumption of Nanfang Nonferrous and Chengyuan Nonferrous will allow lead supply in south China to increase. Meanwhile, the RMB 300/mt price gap between Guangdong and Shanghai markets will cause some goods to shift from Guangdong to Shanghai, weighing down spot premiums in the Shanghai market. Third, technical indicators began showing negative signs. Finally, weak economic data in the US, China and euro zone fueled concerns over the global slowdown, which will also pressure commodities prices.
23% of industry participants expect LME lead to move up to USD 2,030/mt and spot lead prices in China to break above RMB 14,000/mt, citing tight supply. Supply of primary lead remains limited, and secondary lead smelters are also discouraged from producing due to thinner profits.
The remaining 47% of market players see lead prices to remain stable this week, with spot lead trading at RMB 13,600-13,900/mt. These players believe that limited supply and anemic demand will leave prices in the current moving range. On the macro front, although economic signposts for the US turned out poor, the resultant decline in the US dollar index will lend some support to lead prices.