57% China Lead Smelters Optimistic over Lead Prices This Week, SMM Survey

SHANGHAI, Jul. 5 (SMM) – SMM survey of 30 Chinese lead producers indicates that 57% of them see LME lead to break through USD 1,900/mt this week and SHFE 1608 lead to challenge RMB 13,650/mt.

LME and SHFE lead to Hover at Highs Next Week, SMM Says

Influence from UK’s referendum result wanes away gradually and market expectation for global monetary loosening grows. US economic figures released last week were negative, including May personal incomes and existing home sales. US dollar will stay weak. Possibility for a rate hike in July is rather small, which will support commodity prices. Besides, concentrate supply continues falling with TCs down to RMB 2,000/mt (Pb content). This damps operating rates at smelters, cutting lead supply. Technical side for lead prices are positive.

6% industrial insiders expect LME lead to drop to USD 1,800/mt this week and SHFE 1608 lead to test support at RMB 13,000/mt. Downstream demand stays weak and battery makers work through inventories and favor term purchase. Also, spot discounts expand to above RMB 200/mt and cargo holders are eager to deliver goods to SHFE warehouses, which may depress SHFE lead prices.

The remaining 37% market players believe lead prices will remain in current levels this week with LME lead between USD 1,820-1,870/mt and SHFE 1608 lead around RMB 13,300/mt and spot lead at RMB 13,000-13,200/mt. Concentrate supply tightens and this leads to operation cut at smelters. Downstream lead holders give limited offers and watch from the sidelines. Demand remains soft. Price gap between SHFE and spot lead widens further and cargo holders may trend to sell on SHFE market.