SHANGHAI, Jan. 18 (SMM) – SHFE lead prices dropped on January 17 after one-week fluctuation. On January 17, SHFE 1703 lead dropped RMB 735/mt or 3.88% as of 14:32.
“Lead prices in China’s domestic market will lack the rising strength in the short term, and may drop further,” SMM lead analyst expects
Technical indicators on the SHFE lead market are negative. SHFE 1703 lead advanced to above many moving averages last Tuesday thanks to longs strengthening, but failed to break through the 40-day moving average for several times and then dropped. Meanwhile, market players have begun leaving the market to reduce risks with nearing of 2017 Chinese New Year holiday, reducing trading volumes.
“Overall supply is expected to fall, and downstream demand is also estimated to wane for the upcoming holiday,” SMM says, providing no price support.
SMM survey finds that large primary lead smelters with annual capacity above 100,000/mt post stable operation, but many some SMEs smelters in Gejiu have suspended production for shortages of raw materials. This, together with insufficient supply of secondary lead, will reduce overall lead supply in the market.
Despite falling supply, downstream demand is estimated to fall with the nearing of 2017 Chinese New Year holiday, and goods transportations are also expected to be suspended from this weekend for the holiday factor. Hence, trading in China’s domestic spot market is expected to wane gradually.
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