SHANGHAI, May 24 (SMM) – SMM survey of 30 Chinese lead producers finds that 30% of them are bearish towards lead prices this week and they see LME lead to test support at USD 1,620/mt and SHFE 1607 lead to fall to RMB 12,500/mt.
See SMM Price Forecast, Please Click:LME Lead to See No Rising Strength Next Week, SMM says
Downstream demand will remain weak. Motive battery oversupply continues and inventories pile up in market. Leading battery makers start sales promotion activities and less-known battery prices also fall back. Most battery makers choose to buy lead only under term contracts. Besides, bets for rate hike in June grow in market. US Q1 GDP should be revised up to 0.9% and flash Markit manufacturing PMI for May and US April home sales are expected to be upbeat. US dollar will strengthen further. Also, technical indicators are negative.
67% market players expect lead prices to remain at current levels this week with LME lead around USD 1,650/mt and spot lead between RMB 12,650-12,850/mt. Downstream weak demand and poor technical indicators will weigh on lead prices but fundamentals may give support to lead prices. Parts of smelters will turn more willing to cut operation with tight supply of concentrate, hurt by falling imported concentrate and domestic high operating rates. Smelters are not willing to sell at large discounts, especially in Henan. Yuguang Gold & Lead is reported to release no goods into market and Jiyuan Wanyang Smelting Group controls its shipments to market. Anyang Yubei Gold & Lead Group also starts holding back sales.
The rest 3% predicts that LME lead will return to USD 1,700/mt this week and SHFE 1607 lead will challenge RMB 13,000/mt. An increasing number of secondary lead producers cut operation due to environmental protection crackdowns and thinner profits, reducing supply. Scrap battery supply also tightens and this forces secondary lead smelters to purchase at highs. Additionally, some investors expect lead prices to gain after falling back all the way.