Rising Momentum Wanes for LME Lead (2016-3-8)

The power rationing in Yunnan, Henan, and Hunan since July-August and the power rationing in Jiangxi and Guangxi in September are undoubtedly the current hot spots. According to a recent SMM survey, the power rationing in Jiangsu, Guangdong and other regions in China has continued. Since late September, the social inventory of lead ingots has declined due to the combined effects of losses, power rationing and environmental protection.

LME lead will fluctuate at highs between USD 2,460-2,490/mt today.

Motive battery supply is tight in China's market and will ease in mid and late June.

Average operating rate at surveyed 51 Chinese lead-acid battery producers was 62.12% in March, up 3.35 percentage points MoM but down 4.41 percentage points YoY.

SHFE 1702 lead started at RMB 18,800/mt and finally ended at RMB 18,780/mt, up RMB 315/mt or 1.71%.

SMM survey of 30 Chinese lead producers finds that 97% of them see LME lead to fall below USD 1,700/mt this week and SHFE 1607 lead to test support at RMB 12,700/mt.

Operating rates at lead producers picked up in Yunnan’s Gejiu who halted operation previously because of profitable lead prices and TCs.

LME lead will trade higher at USD 1,690-1,725/mt during Asian trading hours Tuesday owing to position opening by longs.

LME lead will range between USD 1,625-1,655/mt during Asian trading hours Friday.

SHFE 1601 lead faces strong resistance at the 20-day moving average and will range between RMB 12,400-12,600/mt.