SHANGHAI, June 14 - Futures: LME lead opened at $2,139/mt and closed at $2,089.5/mt overnight, after hitting the highest point of $2,144.5/mt and declining due to the increase of US dollar index, down 2.45%. The open interest decreased by 1436 lots to 94951 lots from the previous trading day. The most traded SHFE 2207 lead contract opened at Low 149,05 yuan/mt last night, and closed at 14,975 yuan/mt, down 0.03%, after hitting the highest point at 15,020 yuan/mt and declining due to the increase of US dollar index. The open interest decreased by 561 lots to 54903 lots from the previous trading day.
Spot fundamentals: Chihong lead in Shanghai market quoted at 14,935-14,945 yuan/mt, in discounts of 60-50 yuan/mt over over the SHFE 2207 lead contract. Henan JINLI GOLD and LEAD Group, Henan JINLI GOLD and LEAD Group, Jiangxi Copper Group and Anhui Tongguan Copper Foil Group in Zhejiang market quoted at 14,925-14,955 yuan/mt, in discounts of 70-40 yuan/mt over SHFE 2207 lead contract. Lead futures hovered at low levels and cargo holders quoted low, but some holders were reluctant to expanded the discounts amid the approaching delivery date. The battery scrap supply was still tight and profits of secondary lead smelters narrowed. The mainstream secondary refined lead quotation was in discounts of 0-100 yuan/mt over the SMM 1# lead average price.
In terms of inventory, as of June 13, the social inventory of lead ingots across Shanghai, Guangdong, Zhejiang, Jiangsu and Tianjin was 88,700 mt, up 900 mt from last Friday (June 10) and 1,200 mt from last Monday (May 6) . According the survey, the stocks were transferred to the social warehouses for the delivery of SHFE 2206, hence the inventories across regions increased. After the delivery, SMM will pay attention to the production increase amid the completion of maintenance.
Lead price forecast: The market expected that the Fed will raise interest rates significantly, hence the US dollar index soared, and non-ferrous metals were under pressure. ECB Governing Council proposed to raise interest rates by 50 basis points in September. In this case, expectations of economic tightening in the European and American markets intensified, and macro sentiment was bearish. In terms of fundamentals, although the demand was weak and the supply increased, lead prices will remain volatile amid the cost support. It is expected that the SMM 1# lead prices will be flat from yesterday.
