Last week saw range-bound movement of LME lead and bullish SHFE lead, and widening spread between spot and futures prices made buyers prudent

SHANGHAI, Jul 24 (SMM) – LME lead prices hiked after a drop last week. LME lead opened at $2,124.5/mt, and dipped to $2,078.5/mt in the first half of last week. In the second half of last week, rising US unemployment figures raised the possibility of the Fed’s interest rate hike. However, former Federal Reserve Chairman Bernanke said that the Fed is expected to raise interest rates in July, which may be the last round of hike. LME lead trended higher to $2,143/mt last Friday, but closed at around $2,121/mt, an increase of about 1.23% as of 18:30 on last Friday.

Last week, SHFE 2308 lead contract opened at 15,790 yuan/mt, with a low of 15,655 yuan/mt at the beginning of the session, but trended higher to 15,930 yuan/mt as China's second-quarter GDP growth of 6.3% year-on-year and June's social consumer goods retail sales growth of 3.1% lifted market confidence in consumption recovery, and finally closed up 2.07% at 15,925 yuan/mt on last Friday.

In spot lead market, SMM1# lead prices rested at 15,475-15,625 yuan/mt last week. In Henan, sustained supply tightness allowed some smelters to offer at premiums of 0-50 yuan/mt over SMM1# lead. In Hunan, offers from large lead smelters were at premiums of 0-50 yuan/mt over SMM1# lead, versus those from individual small ones at discounts of 25-0 yuan/mt. Tight inventory drove some smelters to start preselling refined lead to be produced in 3-5 days in the middle of last week. Offers from Yunnan-based smelters were assessed at discounts of 200 yuan/mt against SMM1# lead. In terms of trade market, last week, offers in Jiangsu, Zhejiang and Hunan were from discounts of 30 yuan/mt to premiums of 20 yuan/mt over SHFE 2308 lead contract. SHFE lead market swung in firmness. Smelters were active in shipments. Downstream buyers purchased on a hand-to-mouth basis, and took a wait-and-see approach towards the weekend. Market sentiment improved. 

Offers for secondary refined lead vary greatly, seeing high-bismuth lead at 250-100 yuan/mt discounts against SMM1# (ex-factory, tax-included), and low-bismuth lead with less supply at a discount of 50 yuan/mt against SMM1#, or premiums of 50-75 yuan/mt. There was secondary refined lead-primary lead price inversion reported in some areas, and most downstream buyers turned to primary lead smelters.