SHANGHAI, May 25 (SMM) - SHFE 1507 lead opened at RMB 13,270/mt last Friday evening and touched a low of RMB 13,180/mt, to end down RMB 135/mt at RMB 13,220/mt. LME market was suspended Monday and thus SHFE lead lost guide. SHFE 1507 lead rose slightly on Monday as shorts closed positions, to finish at RMB 13,275/mt, down RMB 80/mt or 0.6%. Trading volumes dropped 542 to 6,012 lots and positions fell 810 to 13,632.
Trades were quiet today. Quotes were RMB 13,850/mt for Shuangyan (packed in plastic) brand and RMB 13,600-13,630/mt for the same brand (packed in iron), a RMB 500/mt premium to SHFE 1507 lead. Old goods of Honglu brand traded at RMB 13,420/mt, RMB 150/mt higher than SHFE 1506 lead.
SMM’s survey of 30 industry insiders shows 33% of them are bearish about lead prices this week, expecting LME lead to fall to USD 1,900/mt and SHFE lead to test RMB 13,000/mt. On the macro front, Fed Chair Janet Yellen last week stated that the US economy will rebound and it will be appropriate to hike the interest sometime this year rate should economic indicators match projections. The hawkish remark, combined with growing concern over the Greek debt crisis, may send the US dollar index up.
In China, lead consumption remains unimproved with both automobile and e-bike sectors entering slow demand season, leaving little support to lead prices. Moreover, Guangdong’s stocks are shifting towards Shanghai amid the RMB 300-400/mt spread between the two markets, pressuring Shanghai lead prices. Secondary lead output will also increase after some unlicensed smelters resumed operations. With the price gap between secondary refined lead and #1 lead widening to RMB 400-500/mt, some downstream buyers favored secondary refined lead, hurting demand of #1 lead. Thus, these players believe spot lead prices will move lower to RMB 13,300/mt this week.
17% of market players are bullish that LME lead will rise above USD 2,030/mt and SHFE lead will break through RMB 13,900/mt. These players based their opinion on tight supply, particularly in Shanghai. Although Yuguang Gold & Lead, Jinli Gold & Lead, and Nanfang Nonferrous Metals restarted production, output has yet to increase significantly.
The remaining 50% see LME lead to stay in the USD 1,900-2,040/mt and spot lead prices to remain at RMB 13,600-13,900/mt this week. Although supply tightened, anemic demand downstream will deprive lead prices of any impetus to rise further. Meanwhile, Technical indicators showed both resistance and support for lead prices. These factors will leave lead prices in the current range.