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SMM Lead Market Morning Review (2014-12-3)

Release time:2014-12-03

Dec 03, 2014 01:41 GMT   Source:SMM

 

 

SHANGHAI, Dec. 3 (SMM) – The US dollar index rose sharply on Tuesday, boosted by a fall in energy prices and weakening non-US currencies. In response, LME lead overnight hovered largely below USD 2,052.75/mt in the Asian trading session and ended down USD 17.5/mt at USD 2,034.5/mt. Trading volumes for three-month lead on the London Metal Exchange added 815 lots to 4,344 lots, but positions shrank 686 lots to 112,000 lots. LME lead inventories ballooned 11,275 mt to 228,825 mt, which will put a dent in lead prices. 

A series of US economic indicators, published Tuesday, came in positive. US construction spending rose 1.1% MoM in October, beating the expected 0.6% increase. The ISM New York Fed business conditions climbed to 62.4 in November, topping estimates and October’s reading. In addition, In addition, Federal Reserve Bank of Dallas President Richard Fisher stated that we might well move to raise rates sooner than thus far assumed. He added that this neutered the adjective “considerable” in stating the time frame under which we might act. Meanwhile, the euro zone’s PPI fell 0.4% MoM in October, short of expectations and September’s reading. As a result, the US dollar strengthened.

Base metals prices also took a hit from a sharp fall in crude oil. The Iraqi government agreed Tuesday to a long-term deal with the autonomous Kurdish region to share the country’s oil wealth. This has fueled expectation for an increase in oil supply, resulting in a slump in oil prices. Brent crude oil fell 2.8% to close at USD 70.54 a barrel, while WTI for January delivery decreased 3.1% to USD 66.88 a barrel on the New York Mercantile Exchange.

US stocks rose across the board on Tuesday, while European stocks were mixed. Base metals excepttin closed lower.

The euro zone’s retail sales for October, US November ADP jobs report and non-manufacturing PMI all will be released on Wednesday. US economic numbers are expected to come in dispiriting due to impact from snowstorms. This, combined with a stronger dollar, should weigh on LME lead.

LME lead is set to hover between USD 2,015-2,045/mt, and the most active SHFE 1501 lead contract is expected to move at RMB 13,400-13,480/mt. Traded prices on China’s spot lead markets should range between RMB 13,400-13,550/mt on Wednesday.