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SMM Lead Market Morning Review (2014-12-8)

Release time:2014-12-08

Dec 08, 2014 02:16 GMT   Source:SMM

 

 

SHANGHAI, Dec. 8 (SMM) – The US dollar index surged last Friday, boosted by a sharp rise in US nonfarm payroll numbers, weighing on lead prices. LME lead initially rose, but later leveled off to end down USD 8/mt at USD 2,030/mt. Trading volumes shed 171 lots to 3,064 lots, but positions gained 3,666 lots to 119,185 lots. LME lead inventories shrank 2,300 mt last Friday.

The US Labor Department reported last Friday that nonfarm payroll numbers added 321,000 in November, well above 230,000 expected and recording the biggest monthly increase since January 2012. Increases in the nonfarm payroll numbers for October were revised up from 214,000 to 243,000 and from 256,000 to 271,000 in September. US unemployment rate was unchanged at 5.8% in November, remaining the lowest since mid-2008. These encouraging jobs figures boosted market expectations for the Federal Reserve to tighten its monetary policy. In response, the US dollar index soared again to a new 4.5-year high, driving base metals prices to close lower last Friday.

US trade deficit was reported at USD 43.4 billion in October, above USD 41.4 billion estimated. The higher-than-expected deficit was due to the fact that lower crude oil prices failed to offset a jump in imports. October factory orders dwindled 0.7% MoM in October, level with expectations. Adjusted factory orders for September fell 0.5%, down from the initial 0.6% contraction.

The euro zone’s final Q3 GDP grew 0.2% QoQ and 0.8% YoY, in line with initial readings. German Bundesbank cut its forecasts for inflation and GDP growth for 2015 and 2016, a sign that the single currency area’s consumer prices are struggling. The central bank lowered German inflation for 2014 from 1.1% made in June to 0.9% and real GDP growth from 1.9% to 1.4%. 

The US dollar index rose 0.81%. Major world shares advanced. LME zinc closed slightly higher, but other base metals fell.

Base metals markets are expected to continue digest US nonfarm payrolls on Monday. Investors should eye China’s trade data for November, the euro zone’s December investor sentiment index, as well as US labor market conditions index (LMCI).

LME lead is set to hover at USD 2,020-2,045/mt on Monday, while the most active SHFE 1501 lead contract is expected to move at RMB 13,300-13,380/mt. Traded prices on China’s spot lead markets should fall to RMB 13,350-13,450/mt.