Lead Prices May Fall amid Eased Power Rationing, But the Downward Room is Limited

SHANGHAI, Nov 8 (SMM) - China will release the annual rates of M2 money supply, CPI, and the national electricity consumption in October this week. US will release the jobless claims in the week ended November 6 and the annual rate of October CPI without seasonal adjustment. Most of the data are expected to be positive. The market needs to focus on the Fed Chairman Powell's speech at the diversity conference jointly organised by the Fed, the European Central Bank (ECB) and the Bank of Canada, as well as the ECB President Lagarde's speech at the ECB Banking Regulation Forum. In addition, the Sixth Plenary Session of the 19th Central Committee of the Communist Party of China will be held in Beijing. The lead stocks across LME-listed warehouses fell more slowly, as the supply shortage was alleviated amid the eased power rationing in Europe. The LME lead cash to 3-month backwardation shrank to $25.5/mt, and the prices fell below $2,400/mt. LME lead is expected to trade between $2,315-2,395/mt this week should there be no other bullish factors.

The power rationing and maintenance continued to limit the domestic supply of primary lead, while the consumption recovered, which will support the lead prices at a high level in the short term. The power rationing and the environmental protection control caused the supply of secondary lead to vary by region. However, the profits of secondary lead were fair, and the smelters are expected to resume the production after the influences of external factors are lifted. Then the lead prices may pull back. The most traded SHFE lead contract is expected to stand between 15,350-15,800 yuan/mt.

The spot prices are expected to move between 15,300-15,600 yuan/mt this week. The primary lead supply is expected to stay unchanged in November as many smelters will conduct maintenance. Most deliverable primary lead brands held the prices high for small orders amid maintenance. The prices of secondary refined lead may stand at wider discounts if the market is not disrupted by external factors, as the supply currently varied by region due to the power rationing and environmental protection. The downstream consumption is recovering in the peak season, and the rising lead prices encouraged the production of lead-acid battery. The purchase of lead ingot increased steadily.