SHANGHAI, May 4 (SMM) – About 30% of 30 Chinese lead producers surveyed by SMM see LME lead to slide below USD 1,740/mt this week and SHFE 1606 lead to test support at RMB 13,000/mt.
Though lead concentrate TCs drop to RMB 2,400-2,600/mt (Pb content) in May, still RMB 600/mt (Pb content) above the same period last year. Higher TCs will still lead to modest production at smelters. The majority of smelters in Henan keep normal operation with local inventories as high as 50,000 mt. This will pile pressure on lead prices. And smelters may choose to delivery lead to SHFE warehouses, posing pressure on SHFE lead.
On the demand side, more lead-acid battery makers will cut production due to weak orders in low-demand season for batteries. Some battery makers announced to stop purchase spot lead with difficulties in digesting long-term goods. Parts of battery makers cut purchase in a large amount due to order, fund and equipment factors. Some battery producers start sales promotion activities.
7% market players expect LME lead to stabilize at USD 1,800/mt this week and SHFE 1606 lead to return above RMB 13,380/mt. US April manufacturing figures are downbeat, a reflection of slowdown in US manufacturing expansion in April. The appreciation of Japanese yen also helps drive down US dollar to a 8-month low. Markets expect US non-farm employment due for release this week to be blow March, also weighing on US dollar. Also, scrap battery prices remain firm despite SMM #1 lead prices falling RMB 130/mt last week. This may support secondary and even primary lead prices.
The rest 63% investors believe that lead prices will fluctuate at current levels this week with LME lead around USD 1,750/mt and spot lead around RMB 13,050-13,250/mt. Economic figures from China turn mixed. SHFE 1606 lead currently both meets resistance above and find support below. As such, lead prices should stabilize this week.