SHANGHAI, Mar. 1 (SMM) - SMM survey of 30 Chinese lead producers reveals that 64% of them expect lead price to move in current level this week with LME lead around USD 1,700/mt and spot lead between RMB 13,700-13,900/mt in domestic market.
Poor demand for refined lead will lead to sluggish trading but spot lead will seek support from SHFE lead with high positions and limited warrants. As such, any sharp fall in spot lead prices is impossible. Meanwhile, rising strength for SHFE lead is also lacking because of negative technical indicators. Thus, give the backdrop of soft trading and strong SHFE lead, lead prices will remain in current levels this week.
See SMM Price Forecast, Please Click:LME Lead to Struggle around $ 1,700 Tonne Next Week
13% industrial insiders see LME lead to stabilize at USD 1,735/mt this week and SHFE 1604 lead will challenge RMB 13,900/mt. Markets reach consensus about global economy in the G20 meeting held in Shanghai on February 26-27 and measures should be taken to stimulate world economy recovery continuously. Expectation for more loose policies in China exists in market, which will likely support metals prices. Besides, declines on LME lead market slowed and LME lead went higher after gaining 3.17% last Friday. Additionally, many disqualified secondary lead smelters have not restarted production and secondary lead supply tightens in Jiangsu and Shandong. Scrap battery prices also remain high, boding well for secondary and primary lead prices.
The remaining 23% respondents are bearish towards lead prices this week and they believe that LME lead will fall below USD 1,690/mt and SHFE 1604 lead will drop below RMB 13,450/mt. Lead inventories pile up at some smelters due to normal production during Chinese New Year holiday, about as high as 7,000-8,000 mt at some of them. Also, lead smelters will rush to sell for cash at the end of February.
Price edge of secondary refined lead, narrowing to RMB 200-300/mt recently from RMB 400-600/mt, will shift more primary lead buyers to it. Spot lead prices increased to RMB 14,000/mt before the Chinese New Year holiday owing to short squeeze on SHFE lead market while downstream buyers refuse to accept the high price offers. Additionally, battery replacement slows in both motive and ignition battery markets, which will enter traditional off-season in March. Consequently, most battery producers keep low operating rates.