SMM Lead Market Morning Review (2015-9-2)

SHANGHAI, Sept. 2 (SMM) – On Tuesday, LME lead moved lower to USD 1,711.5/mt as China’s official PMI for Aug. recorded a fresh low since Aug. 2012 and as growth in Caixin manufacturing PMI for Aug. slowed significantly, last seen on Feb. 2009. However, US dollar index fell and LME lead found support at the 20-day moving average. Hence, LME 3-month lead lurched up to USD 1,725-1,740/mt before closing USD 5.5/mt lower at USD 1,725.5/mt. Trading volumes declined 687 to 4,533 lots and positions decreased 482 to 126,468. LME lead inventories were down 600 mt to 186,800 mt.

SHFE 1510 lead started at RMB 13,370/mt for night trading Tuesday and then ranged between RMB 13,320-13,420/mt, to end RMB 60/mt higher at RMB 13,380/mt.

A total of 50 Chinese brokerage houses will pump RMB 100 billion (USD 15.7 billion) into the government-backed margin finance agency to stabilize China's markets. This may push China’s A-shares up, boding well for base metal prices. LME lead should stay range-bound between USD 1,710-1,740/mt on Sept. 2. SHFE 1510 lead will fluctuate between RMB 13,300-13,450/mt. In China’s spot market, cash-hunger smelters will rush to sell while downstream buyers basically finish building stocks. Trades will thus stay light. Spot lead may move between RMB 13,300-13,450/mt.