SMM Lead Market Morning Review (2015-5-4）

SHANGHAI, May 4 (SMM) – LME lead hit a high of USD 2,153/mt last Friday, the highest since middle September 2014. LME lead ended at USD 2,119/mt, up USD 4.5/mt, gaining 0.21%. Trading volumes dropped 1,853 to 4,107 lots, but positions grew 1,525 to 150,000. LME lead inventories decreased 4,325 to 174,775 mt.

Shanghai Futures Exchange was closed last Thursday evening and Friday. Eyes will be on Asian countries’ PMI. China’s upbeat official April manufacturing PMI released Friday supported optimistic expectation for HSBC’s China manufacturing PMI for April due out Monday morning. US March monthly factory orders will be the focus.

London Metal Exchange is closed today on bank holiday. SHFE lead is expected to rise, following LME lead’s growth during China’s May Day holiday, but the rise will be limited. Spot lead is expected to follow SHFE lead to grow. Many lead smelters resumed operation recently and high lead prices stimulated former goods to enter the market. Meanwhile, secondary-lead smelters increased production. Hence, goods growth may weigh down lead prices in long term. Downstream producers should purchase on production need.

China’s April manufacturing PMI released Friday was 50.1, the same with March PMI, both higher than 50, thanks to high operating rate in manufacturing with production index rose 0.5 on the month. As a whole, market expects more stimulus measures. China’s non-manufacturing PMI was 53.4, dropping 0.3 but 3.4 higher than 50, indicating that China’s non-manufacturing industry kept expanding, albeit at slower pace.

China’s 100 cities’ average house price was RMB 10,522/m2 in April, down 0.01% on the month, down for the third month this year. But house prices in big cities including Beijing and Shanghai turned to grow.

US ISM April manufacturing PMI was 51.5, the lowest since May 2013 after 30-month growth. But Markit’s April manufacturing PMI from US was as high as 54.1. The University of Michigan CCI in April turned to increase after 2-month drop, the second high since 2007, indicating US consumers’ growing confidence.

UK April manufacturing PMI was only 51.9, a 7-month low, and much lower than expectation. March PMI dropped 0.4 to 54.0. UK April manufacturing PMI output price index dropped from March’s 49.1 to 47.9, the lowest since September 2009.

Greece is highly expected to reach agreement with its creditors in May.

US dollar index rose 0.47% while euro dropped 0.23%. Asian and European stock markets were suspended. US stocks grow more than 1%. Expect aluminum and nickel, LME base metals climbed.

The most active SHFE 1506 lead is expected to move at RMB 13,790-13,890/mt and spot lead RMB 13,800-13,950/mt.