SHANGHAI, Jun. 21 (SMM) – SMM survey of 30 Chinese lead smelters reveals that 43% of them reckon that LME lead will slip below USD 1,620/mt this week and SHFE 1608 lead will drop to RMB 12,500/mt.

LME Lead to Struggle around $ 1,710 per tonne Next Week

Stocks at battery makers remain large and sales promotion does not work effectively. Average operating rate at the battery makers fell from 62.52% in April to 58.03% in June. Besides, inventories at lead smelters also pile up and spot discounts in Henan expand from RMB 50-100/mt to RMB 150/mt owing to weak demand. Also, market supply is still in surplus and trading is subdued. As such, downward momentum should be ahead for lead prices this week. 

The remaining 57% industrial insiders expect lead prices to remain at current levels this week with LME lead between USD 1,680-1,720/mt, SHFE 1608 lead around RMB 12,750-12,900/mt and spot prices in China at RMB 12,650-12,800/mt. US Fed’s attitudes turn from hawkish to dovish, weakening possibility for rate hike in July. US dollar will thus be weak. This will boost crude oil and commodity prices. Economic figures from China are negative for May and the Brexit fear factor fuels risk aversion sentiment in market. This may lead to sell-offs in base metal market. A growing number of smelters perform maintenance due to tight supply of raw materials and downstream demand is soft. The technical side is mixed on both LME and SHFE lead markets.