SHANGHAI, Jul. 19 (SMM) – SMM survey of 30 Chinese lead smelters reveals that 50% of them are optimistic over lead prices this week and they see LME lead to challenge USD 1,900/mt and SHFE 1609 lead to grow above RMB 13,500/mt.
Market expectation for global monetary easing and depreciation of Chinese yuan grows, which will support base metal prices. Moreover, concentrate supply continues tightening and smelters will hold back sales with falling stocks, resulted by output cut and goods delivery to SHFE warehouses. Additionally, battery makers slightly increase operating rates with coming traditional high-demand season and leading battery makers already hiked battery prices in some regions. This reflects slight recovery in consumption.
43% market players reckon that LME lead will slip to USD 1,600/mt this week and SHFE 1609 lead will drop below RMB 13,000/mt. The deliverable goods will flow into market this week, growing supply. Base metals rose across the board last week and LME lead once broke through USD 1,900/mt, a new high for this year. But later LME lead fell back due to sell-offs by longs. Trading fails to pick up notably in China’s spot market and spot prices may fall further in the near future.
The remaining 7% investors expect lead prices to remain at current levels this week with LME lead between USD 1,850-1,875/mt, SHFE 1609 lead at RMB 13,100-13,300/mt and spot lead at RMB 12,900-13,100/mt. Markets expect demand to improve with coming peak-demand season and technical side is positive for LME lead. But battery makers have not increased purchase for lead yet and mainly take a wait-and-see stance. As such, lead price should fluctuate at current levels amid mixed news.