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SMM Lead Market Morning Review

Release time:2014-11-28

Nov 28, 2014 02:00 GMT   Source:SMM

 

 

SHANGHAI, Nov. 28 (SMM) – LME lead advanced to USD 2,070/mt on Thursday after starting at USD 2,060/mt, but retreated at the tail of the trading to close down USD 3/mt at USD 2,057/mt. Trading volumes for three-month lead on the London Metal Exchange shed 715 lots to 1,750 lots, while positions decreased 1,778 lots to 110,493 lots. LME lead inventories fell 25 mt to 217,900 mt.

Lead for January delivery on the Shanghai Futures Exchange, the most active contract, opened at RMB 13,610/mt in Thursday’s night session and then hovered at RMB 13,600-13,630/mt. Trading volumes for the SHFE 1501 lead contract were merely 430 lots, and positions were off 60 lots to 13,130 lots.

The euro zone’s October money supply growth and November economic confidence, published Thursday, both improved. Germany’s preliminary CPI growth for November, however, slowed to 0.6% YoY, suggesting that the single currency area still confronts deflationary risks. Markets expect the euro zone’s inflation due for release late on Friday to slide to 0.3%, the lowest since 2009. These downbeat economic numbers are likely to boost market expectations for the European Central Bank (ECB) to unveil a new round of stimulus measures in December.

China’s National Bureau of Statistics (NBS) announced Thursday  that aggregate profits at China’s large industrials shrank 2.1% YoY in October, recording the worse performance since August 2012 and indicating a further slowdown in the world’s second largest economy. The decline in industrial profits was attributed to rising costs and falling product prices amid sluggish demand.

The People’s Bank of China (PBOC) suspended selling repurchase agreements on Thursday following a surprise interest rate cut last week. The PBOC conducted only RMB 5 billion of 14-day repurchase agreement sales on Tuesday, when the interest rate it pays on the contracts was cut by 20 basis points to 3.20%. Overall, the central bank will injected a net RMB 35 billion to the open markets this week. Market insiders project that it will pump more liquidity to China’s financial markets via reverse repurchase agreements from December to boost the economy.

The US dollar index ended up 0.35% on Thursday after slipping for three straight trading days. Asian and European stocks were mixed, while the US stock market suspended trading for Thanksgiving Day. LME base metals finished lower across the board.

No major news is expected on Friday and trading sentiment is low for the Thanksgiving Day holiday. However, cold winter weather in the US should help underpin lead prices. LME lead is set to fluctuate at USD 2,050-2,070/mt, and the most active SHFE 1501 lead contract is expected to move at RMB 13,550-13,650/mt. Traded prices on China’s spot lead markets should range between RMB 13,450-13,600/mt on Friday.