SMM Lead Market Daily Review (2015-8-27)

SHANGHAI, Aug. 28 (SMM) –SHFE 1510 lead gapped lower at RMB 13,145/mt for night trading Wednesday and then ranged between RMB 13,115-13,275/mt, to close at RMB 13,190/mt, losing RMB 110/mt. Trading volumes declined 4,416 to 2,810 lots and positions also dropped 84 to 17,234.

The most actively trade contract broke out above RMB 13,300/mt during Thursday trading session as iron ore, rebar and rubber futures prices grew quickly after the open. Then the contract ranged between RMB 13,260-13,300/mt and increased near session’s end responding to a rise in Chinese stock market, to close at RMB 13,355/mt, up RMB 55/mt. Trading volumes were about 6,356 lots while positions decreased 634 to 16,684 with shorts exiting market.

SMM/LME lead price ratio already stands above 8, but expectation for more depreciation in yuan exists and less lead imports flow into China. SHFE 1510 lead does not suffer sell-offs. As such, SHFE 1510 lead should test resistance at RMB 13,350/mt in short term.

On Thursday, mainstream traded prices were RMB 13,350/mt for Chengyuan brand in Shanghai, RMB 50/mt higher than SHFE 1510 lead, versus RMB 13,340/mt for Hanjiang and Humon brands.

Less shipment arrived and thus lead smelters moved few goods. Only West Mining shipped goods out. Spot premiums narrowed. Trades were active in buying as hedged goods were hard to flow into market. Supply shortage put a brake on trades. Downstream consumption remained slack late this month. Trades were thus left light.