SHANGHAI, Aug. 25 (SMM) – SHFE lead dived to RMB 13,035/mt after starting at RMB 13,100/mt for day trading Monday. Then, the contract rallied slightly to RMB 13,150-13,180/mt and closed the day at RMB 13,050/mt, down RMB 320/mt. Trading volumes totaled 6,948 lots and positions increased 178 to 17,742.
In Shanghai market, Nanfang brand quoted RMB 160/mt higher than SHFE 1510 lead at RMB 13,260-13,270/mt, versus RMB 13,250-13,260/mt for Humon brand and RMB 13,200/mt for Shuangyan brand (packed in iron).
Hechi Nanfang Nonferrous Metals Group and Shandong Humon Smelting moved goods out. Trades were willing to sell as spot premiums widened. However, the drop in commodity prices and global stock prices triggered bearishness in downstream market. Thus, market saw light trades Aug. 24.
SMM survey of 30 market players shows that 53% of them see LME lead to slip to USD 1,500/mt and China spot lead to test RMB 13,000/mt this week. On the macro side, global commodities prices, excluding precious metals, crude oil prices and stocks dropped across the board last Friday. China’s A-shares opened lower Aug. 24 and stock index futures fell to daily limit. Global stocks extend losses, triggering panic in market. Hence, lead prices will post a drop.
Caixin’s manufacturing PMI for China in August turns out to be downbeat, mirroring a slowdown in China’s manufacturing. Bearish sentiment looms market, boding ill for lead prices. Technically, LME lead meets strong resistance at the 5-day moving average and KDJ point downside. Lead-acid battery makers cut or halt production due to Beijing’s parade, hurting demand for lead.
44% industrial insiders expect LME lead prices flat at USD 1,660-1,720/mt and spot lead at RMB 13,150-13,350/mt this week. Decline in spot supply will lend support to lead prices. Henan Wanyang Group and Henan Jinli Gold and Lead mainly provide goods to term buyers, narrowing spot discounts to RMB 50/mt from RMB 80/mt in Henan. Spot discounts also narrowed at Guiyang Yinxing Nonferrous Metals and Guiyang Yinxing Nonferrous Metals. Wait-and-see sentiment looms market. As such, lead prices should hover in current range this week.
The rest 3% note that LME lead will break above USD 1,720/mt and spot lead will trade at RMB 13,400/mt this week. Shortage in secondary lead in Hebei, Jiangxi and Guangdong will shift buyers to primary lead. This will help to support lead prices. Meanwhile, investors expect a turnaround of demand in September and October, which also favors lead prices.
