SHANGHAI Jan. 19 (SMM) – SMM survey of 30 industrial insiders indicates that 70% of them expect lead prices to move at current level this week with LME lead testing USD 1,600/mt and spot lead trading at RMB 13,000-13,200/mt.
See SMM Price Forecast, Please Click:Weakness Ahead for LME Lead Next Week
Spot supply tightness remains in Shanghai, Guangdong, Henan, Yunnan and Jiangxi. Spot goods from Shandong Humon Smelting should flow into Shanghai next week. Thus, overall tightness in supply will not ease this week. And downstream buyers will hoard stocks this week before upcoming 2016 Chinese New Year holiday, slightly support lead prices.
Technically, LME lead struggles around the 5-day moving average and SHFE lead hovered between moving averages, which gives no downside pressure to lead prices. But strong rising strength is also lacked. As such, lead prices will move at current level.
30% respondents are bearish toward lead prices this week and they see LME lead to fall below USD 1,580/mt and SHFE 1603 lead to drop below RMB 12,500/mt due to three reasons.
First, crude oil production is forecast to hit 50 bbl per day after US and European nations lifted oil and financial sanctions on Iran on January 16. This will worsen global oil oversupply. Both US crude oil and Brent oil recorded a 12-year low, which will drag down lead prices. Second, depreciation in Chinese yuan has been effectively controlled by the PBOC and SHFE lead will perhaps slip at a fast pace with waning expectation for depreciation in yuan. Third, a growing number of medium and small battery makers start vacation for the 2016 Chinese New Year, hurting demand for lead.