SHANGHAI, Nov. 17 (SMM) – SHFE 1601 lead ranged between RMB 12,650-12,700/mt on Monday and once lurched down to RMB 12,470/mt before closing at RMB 12,480/mt, down by RMB 150/mt or 1.19%. Trading volumes fell 1,488 to 5,718 lots and positions were up 732 to 12,492.
SHFE 1511 lead opened Monday trading session at RMB 12,550/mt and ended at RMB 13,000/mt with the session-high at RMB 13,010/mt. Trading volumes totaled 160 lots and positions were 1,490 with settlement price at RMB 12,715/mt.
On Monday, Jinsha, Shuikoushan and Nanfang brands quoted at premiums of RMB 330/mt over SHFE 1601 lead at RMB 13,000/mt with several trades reportedly done. Mainstream prices were RMB 12,980/mt for Mengzi and Humon brands, versus RMB 12,970/mt for Hanjiang brand.
Hanjiang, Nanfang and Humon brands were moved to market, growing spot supply modestly. Traders were unwilling to moved hedged goods out. Downstream demand stayed weak and most battery makers kept low operating rate, leaving overall transactions quiet.
SMM survey of 30 market players shows the following:
20% industrial insiders are bullish towards lead prices and they see LME lead to stabilize at USD 1,630/mt this week and SHFE 1601 lead to grow to RMB 12,800/mt. First, lots of disqualified secondary lead producers halt operation due to stricter environmental protection inspection and thinner profits. Thus, falling supply will support lead prices. Second, parts of motive battery makers plan to ramp up production mid and late November to build regular inventories before the end of this year, growing demand for lead. Third, some battery distributors replenish stocks before the upcoming consumption tax starting January 1, 2016. One battery maker predicts that distributors will rush to build stocks in November and December and this will push up production at battery makers.
33% market players expect LME lead to fall to USD 1,590/mt this week and SHFE 1601 lead to drop to RMB 12,450/mt. On the macro side, US University of Michigan CCI for November beat forecast and non-farm payrolls issued last Friday were upbeat, boosting expectation for rate hike in December. Consequently, US dollar moves at highs, weighing on base metals. Downstream weak demand remains and will not change in short term, depressing lead prices. Besides, scrap battery supply stays healthy and scrap battery prices trend downward, lending no support to secondary lead prices.
The rest 47% investors point out that LME lead will move around USD 1,600/mt this week and spot lead will trade at around RMB 13,000/mt. SHFE lead enters downward track but there is possibility of technical correction. Moreover, some battery makers and distributors start to build stocks despite poor demand in market.