Most China Lead Smelters Optimistic over Lead Prices This Week, SMM Survey

SHANGHAI, Aug. 9 (SMM) – SMM survey of 30 Chinese lead producers finds that 47% of them are bullish towards lead prices this week. They see LME lead to challenge USD 1,850/mt and SHFE 1609 lead to hit a high of RMB 14,275/mt for the year.

SHFE Lead to Continue Outperforming LME Lead Next Week, SMM Expects

Average operating rate at Chinese refined lead smelters fell 7 percentage points MoM to 57% in July, hurt by environmental protection inspections. And the rate should stay low in August. Disqualified secondary lead smelters, who shut down previously, give no clear clues about when to restart operation. Scrap battery supply and prices both remain steady. Supply tightness will make lead holders to hold back sales, which will boost lead prices. On the demand side, battery sectors remain in peak season and recovery in downstream demand will also give rising momentum to lead prices. 

13% respondents are bearish towards lead prices this week and they expect LME lead to drop to USD 1,750/mt and SHFE 1609 lead to slide to RMB 13,500/mt. US nonfarm payrolls released last Friday far topped forecast, boosting expectation for a rate hike in September. US dollar index will thus stay firm in the short term and this will weigh on base metals. SHFE 1609 lead extend gains and grows to a new high for the year, at which point longs may choose to exit market.

The remaining 40% industrial insiders believe that lead prices will remain in current levels this week with LME lead around USD 1,800/mt, SHFE 1609 lead at RMB 13,800-14,000/mt, and spot lead at RMB 13,900/mt. Moving averages all draw near to USD 1,800/mt for LME lead while technical side shows mixed trend for SHFE lead.