33% Market Players Negative Toward Lead Prices This Week, SMM Surveys

SHANGHAI, Aug. 30 (SMM) – SMM survey of 30 Chinese lead smelters reveals that 33% of them see LME lead to drop below USD 1,843/mt this week and SHFE 1610 lead to fall below RMB 13,500/mt and test the 60-day moving average.

Products have flown into market successively following operation restart at some lead smelters in Yunnan. Moreover, nationwide lead smelters resume operations in a large scale with end of environmental protection inspections, which also can be seen from rising scrap battery prices recently. Thus, lead ingot supply is predicted to increase. Downstream battery producers’ purchase declines because of cash strain at the end of month and disrupted transport in Jiangsu and Zhejiang due to the upcoming G20 Summit in Hangzhou. US Federal Reserve Chairwoman Janet Louis Yellen delivered a speech last Friday, which boosts expectation of interest rate hike in the year. Consequently, US dollar will move higher and this will weigh on lead prices.    

Approximately 20% market players in the survey predict that LME lead will rebound above USD 1,900/mt this week and SHFE 1610 lead will rise above RMB 14,000/mt and hit a year-high. Lead concentrate supply stays tight. Some smelters should stay offline due to falling TCs. Thus, falling supply will allow lead to hover at highs. Smelters hold back sales for higher prices because of tight lead supply, especially new product supply. Spot premiums in China’s domestic market will also support SHFE lead.

The rest 47% market players surveyed expect LME lead to stabilize at around USD 1,870/mt this week and SHFE 1610 lead to range between RMB 13,800-14,000/mt. SHFE lead should stay hovering at highs for the short term with mixed factors. Trading will be limited in domestic spot market and upstream and downstream producers both take a wait-and-see stance. As such, lead prices should remain at current levels.