SHANGHAI, Jul. 26 (SMM) – SMM survey of 30 Chinese lead smelters shows that 57% of them see LME lead to grow above USD 1,900/mt this week and SHFE 1609 lead will challenge RMB 13,800/mt.
Some smelters suspend operation due to shortage of concentrate and TCs for domestic concentrate drop further to RMB 1,800/mt. Growing environmental pressure forces many domestic small secondary lead smelters to halt operation, indirectly growing demand for refined lead. This will boost lead prices. Most smelters are optimistic over lead prices and hence still hold back sales. On the demand side, leading battery makers will lift operating rates for coming peak season, increasing demand for lead.
16% investors expect LME lead to fall to USD 1,800/mt this week and SHFE 1609 lead will drop below RMB 13,200/mt. A series of US economic figures released recently reflect recovery in US economy in the short run and US dollar posts gains, which may raise bets for a rate hike in 2016. This will weigh on lead prices. SHFE lead surged in a short period and hit a new high since April this year but meanwhile faces great sell-off pressure. In China’s domestic spot market, traders reduce price offers and battery makers mainly purchase on rigid demand under term contracts. This will leave trading muted in market.
The rest 27% market players predict that lead prices will remain at current levels this week with LME lead around USD 1,860/mt, SHFE 1609 lead at RMB 13,500-13,650/mt and spot lead at RMB 13,100-13,300/mt. In spite of modest improvement in fundamentals, rapid rises in SHFE lead make battery makers unwilling to buy at highs. Spot trading will remain dull.