SHANGHAI, Mar. 29 (SMM) – SMM survey of 30 market players finds that 30% of them are bearish towards lead prices this week and expect LME lead to test support from USD 1,740/mt and spot lead in China to fall to RMB 13,400/mt.
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Continuous rally in US dollar will weigh on lead prices. Many US Fed officials agreed to quicken its rate hike pace should economic figures turn out to be positive. US March non-farm payrolls due for release this week will likely exceed 200,000 people, though below 242,000 in February. And markets expect March manufacturing data and PMIs to be upbeat, supporting US dollar.
Lead supply is expected to grow. Lead smelters maintain high operating rates as TCs in 2016 are still higher than in 2015 despite TCs falling for 2 straight months this year. Average TC was RMB 1,900/mt (Pb content) last year while was RMB 2,600/mt (Pb content) in the same period this year. Some Henan-based smelters are reported to cut production slightly but smelters in other regions are not reported to execute maintenance for low prices. Besides, ignition and motive batteries enter slack season and therefore, poor orders at those producers will dampen demand for lead. Also, parts of downstream buyers increase purchase for secondary refined lead, also curbing demand for refined lead.
The rest 70% industrial insiders see lead prices to move in current ranges this week with LME lead moving around USD 1,780/mt and SHFE 1605 lead struggling around RMB 13,600/mt. Industrial sources believe that weak fundamentals will likely drive down lead prices but SHFE lead registers stability. Additionally, secondary refined lead prices (including tax) are on par with refined lead prices. This curbs large drops in refined lead prices.