[market voice] how to study and judge the lead price after the traditional off-season VS due to the time difference of resuming work and rigid demand

SMM1, March 23: into 2019, the central bank continues to release liquidity, Sino-US trade negotiations once again sent an optimistic signal, the market risk aversion sentiment cooled significantly, commodity asset prices have been boosted. With the gradual recovery of the macro environment, from January 11, Shanghai lead main 1902 contract all the way singing, recorded six Lianyang, lead began to rebound from the low, but the overall range is only about 3%. Compared with other non-ferrous metal varieties, the weak pattern of lead fundamentals has not changed significantly.

SMM believes that from a macro point of view, the shutdown of the US government has not yet been resolved, Brexit is a twists and turns, at the same time, there is no progress in Sino-US trade negotiations, and Sino-US economic data continue to refresh historical lows. Under such a macro background, It is harder for basic metals to get out of the downturn.

Judging from the fundamentals of lead, after the Spring Festival, according to the traditional practice, there will be rigid demand for replenishment of lead ingots downstream according to the traditional practice. At the same time, because of the meagre profits of the recycled lead refineries before the festival, the recycled lead refineries (especially small refineries) will resume work after the festival or later than the storage enterprises. There is a time difference between supply and demand. If the downstream replenishment demand appears as scheduled after the festival, or boost the lead price to rise to above 10, 000 (only for the post-holiday replenishment period). In addition, March-April is the traditional off-season of lead battery market, and the support for lead consumption is limited.

SMM interviewed a number of organizations about the price of lead before and after the Spring Festival, as follows:

Guangzhou Futures / Li Jun: near the Spring Festival, the inventory has rebounded, the operating rate of lead-acid battery enterprises continues to decline, and the performance of the demand side tends to be flat. On the supply side, the reduction in the price of waste batteries will weaken the cost support for recycled lead, and the increase in the opening rate of primary lead smelters indicates an increase in the supply of primary lead in the short term. After the market sentiment gradually returns to calm, the lead period may be under pressure under the influence of empty fundamentals.

After the Spring Festival, it is still a off-season for consumption, and it is expected that the demand side will not improve, but the supply of lead is gradually increasing, and the cost of battery prices has not stopped falling, which will lead to a downward shift in the production cost of recycled lead, and the support for lead prices will also gradually weaken. Taken together, the lead market is in a situation of increased supply and weak demand, and lead futures are unlikely to rise.

Yangtze River Futures / Zeng Junhui: macro Sino-US negotiations are still complicated and confusing, the increasing downward pressure on China's economy has led to obvious pessimism about future demand, and it is difficult for relevant policies to provide a significant boost to the economy in a short period of time. The macro face of lead price is still mainly suppression. In the short term, the supply is still in excess of demand, but in January, the output of the refinery may be slightly reduced after the end of the year, and the narrowing of the price difference between the recycled lead and the primary lead indicates that the cost support below is stronger, and the probability of stabilizing the lead price is higher. However, the downstream off-season market superimposed electric bicycles under the new national standard is about to be implemented, weak demand will obviously drag down lead prices. In the aspect of operation strategy, it is suggested that we should short every high in the vicinity of 18000 yuan / ton, grasp the opportunity of stage short order, give priority to medium-and long-term operation, and pay attention to the support level of 17200 yuan / ton.

The risk points that need to be paid attention to are as follows: 1. The outcome of Sino-US trade negotiations and the future trend of Sino-US relations;

2. Policy environmental protection to limit production.

Futures Daily: from a fundamental point of view, near the Spring Festival, downstream enterprises have a holiday one after another, demand performance tends to be flat, it is difficult to boost lead prices. On the supply side, although the current inventory of lead market is still at a relatively low level, and the price difference between primary lead and recycled refined lead is relatively small, the price of waste battery, the raw material of recycled lead, continues to decline, resulting in a continuous decline in the production cost of recycled lead. Support for lead prices has also gradually weakened. After the market sentiment returns to calm, the lead price will return to the fundamentals, showing an oscillatory weak trend.

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