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SMM Lead Market Morning Review (2014-12-5)

Release time:2014-12-05

Dec 05, 2014 01:29 GMT   Source:SMM

 

 

SHANGHAI, Dec. 5 (SMM) – Aided by a pullback in the US dollar index, LME lead closed up USD 11.75/mt at USD 2,038/mt. Trading volumes for three-month lead on the London Metal Exchange gained 482 lots to 3,235 lots, while positions added 1,701 lots to 115,519 lots. LME lead inventories were unchanged at 229,075 mt.

China’s stock markets have posted sharp gains in recent trading days, while US nonfarm payroll numbers are expected to come in positive late on Friday, both helping lift market sentiment. Yin Zhongli, Deputy Director of the Financial Market Research Office of the Chinese Academy of Social Sciences, projected that the Shanghai Composite Index may rise to 4,000-5,000 in 2015. Mr. Yin explained that the Chinese government has to rely on capital markets to tackle tight credit and will adopt various measures to kick-start its economic growth next year. As such, base metals and iron oreclosed higher on Thursday even though Saudi Arabia’s move to increase discounts on crude oil exported to the US and Asia depressed oil prices.

US initial jobless claims for the week ending November 29 were reported at a seasonally adjusted 297,000, falling below the 300,000 mark again, which boosted market sentiment.

Meanwhile, the European Central Bank (ECB) left its interest rates unchanged on Thursday. ECB chief Mario Draghi stated that the bank is set to reassess its current stimulus in Q1 2015, but that no new measures are likely to be unveiled in January. In response, the euro rebounded sharply above 1.24 against the US dollar. 

The US dollar index slipped 0.38% to 88.6. European and US equities fell across the board. LME base metals ended with gains.

US nonfarm payrolls due for release on Friday should be encouraging, but uncertainties remain in the US labor market in light of a series of recent economic indicators. However, sentiment in base metals markets is expected to recover on Friday, helped by a rally in nickel prices.

LME lead is forecast to move at USD 2,025-2,050/mt on Friday, and the most active SHFE 1501 lead contract is expected to hover at RMB 13,380-13,460/mt. Traded prices on China’s spot lead markets should range between RMB 13,400-13,550/mt.