SHANGHAI, Jan. 5 (SMM) – SMM survey of 30 Chinese market players shows that 60% of them note that LME lead will move between USD 1,730-1,800/mt this week and spot lead will trade at RMB 13,150-13,350/mt. 

Spot supply will not be eased this week while downstream demand should pick up slightly. But overall supply & demand will keep basically unchanged, leaving lead prices stable. On the macro side, US dollar moves at lows after Fed announced rate hike and US non-farm payrolls due this week should miss previous level. Thus, dollar should stay steady. Macroeconomic news will pose little impact on base metals prices ahead of China’s upcoming Spring Festival. Technical indicators also indicate that lead prices will move in a tight range this week.  

See SMM forecast, please click: LME Lead Expected to Trade at Highs Next Week

13% of respondents see LME lead to rise to USD 1,800/mt this week and SHFE 1602 lead will move above RMB 13,300/mt. Supply should stay insufficient in Shanghai, Guangdong, Henan and Yunnan. Many lead smelters will recover production in January, including Shandong Humon Smelting and Zhenxing Lead, but finished products will not be ready for sales until mid-January. Thus, limited goods will flow into market this week. Besides, growing disqualified secondary lead producers shut down due to environmental protection crackdowns, reducing secondary lead supply. Also, some large downstream buyers build stocks. Lots of workers start returning to their hometown for China’s upcoming Spring Festival and thus some producers keep steady operating rates to replenish stocks for early 2016. This increases demand for lead.

27% industrial insiders expect LME lead to fall below USD 1,730/mt this week and SHFE 1602 lead to test support at RMB 13,000/mt. First, base metals reported declines on the first trading day of 2016 with slump in Chinese stock market, triggering caution in market. SHFE lead will likely trace other metals and Chinese stock down. Second, some downstream buyers already built stocks for early 2016 in December and thus they will cut purchase in January and even plan to start vacation, boding ill for lead prices.