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SMM Lead Market Morning Review

Release time:2014-11-18

Nov 18, 2014 01:59 GMT   Source:SMM

 

SHANGHAI, Nov. 18 (SMM) – LME lead held steadily at USD 2,030-2,045/mt on Monday, and finished down USD 0.75/mt, or 0.04%, at USD 2,039.25/mt. Trading volumes for three month lead on the London Metal Exchange shrank 519 lots to 2,148 lots, and positions shed 1,321 lots to 119,089 lots. At the same time, LME lead inventories decreased 25 mt to 216,725 mt.

Japan’s GDP fell at a real rate of 1.6% YoY in Q3 after contracting 7.3% in Q2. Many economists point out that two consecutive months of contraction suggest recession in the economy. Amid the disappointing economic figures, markets expect the Japanese government to delay a new round of consumption tax hike which was raised from 5% to 8% on April 1. The yen slipped versus the US dollar on Monday.

US industrial production edged down 0.1% MoM in October again after picking up in September. Manufacturing production, however, rose 0.2% MoM for the same month even as the mining, public service and automobile manufacturing sectors encountered declines.

European Central Bank (ECB) President Mario Draghi reiterated that the ECB should adopt other unconventional stimulus measures including government bond purchases should the euro zone economic outlook deteriorate. He added that member states in the single currency area should agree on specific short-term structural reforms as soon as possible. Meanwhile, falling oil prices left the ECB more concerned over deflationary risks in the euro zone. The weakening euro and yen helped push the US dollar up.

The Shanghai Composite Index started up more than 1% on Monday when the Shanghai-Hong Kong Stock Connect debuted, and then rose above the 2,500 mark before leveling off. Global investors rushed to trade Shanghai shares, using up more than 80% of quotas by the end of the morning trading session, compared to only 17% in Hong Kong shares.

European and US equities were mixed. Gold and crude oil closed slightly lower. LME base metals except aluminum and nickel fell on Monday.

The rising US dollar index is expected to continue weighing down lead prices. Investors should eye European and US inflation data on Tuesday which are projected to come in downbeat. LME lead is set to hover at USD 2,025-2,050/mt, and the most active SHFE 1501 lead contract is forecast to fluctuate at RMB 13,450-13,520/mt. Traded prices on China’s physical lead markets should range at RMB 13,450-13,600/mt on Tuesday.