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SMM Lead Market Morning Review (2014-12-11)

Release time:2014-12-12

Dec 11, 2014 01:49 GMT   Source:SMM

 

 

SHANGHAI, Dec. 11 (SMM) – LME lead started Wednesday at USD 2,025/mt in the Asian trading session and closed down USD 10.3/mt at USD 2,012/mt amid a rash of dispiriting macroeconomic news. Trading volumes for three-month lead on the London Metal Exchange shed 1,699 lots to 2,129 lots, while positions decreased 544 lots to 118,016 lots. LME lead inventories shrank 1,925 mt to 220,350 mt.

Lead for January delivery on the Shanghai Futures Exchange, the most active contract, sank to RMB 13,135/mt in Wednesday’s night session after opening at RMB 13,330/mt and ended down RMB 50/mt at RMB 13,290/mt. Trading volumes for the SHFE 1501 lead contract totaled 202 lots, while positions added 68 lots to 9,986 lots.

On Wednesday, the Organization of Petroleum Exporting Countries (OPEC) cut global demand for its crude oil by 300,000 barrels per day to 28.9 million barrels per day, the lowest since 2003 and below its daily output for November. Meanwhile, US crude oil inventories were reported to be higher than expectations, while Saudi Arabia’s oil minister indicated the nation is not planning to reduce production. In response, Brent crude oil for January delivery finished down 3.89% at USD 64.24 a barrel, and Nymex crude oil for January delivery ended down 4.51% at USD 60.94 a barrel. The tumble in oil prices put a dent in market sentiment, sending US stocks and base metals prices down.

China’s CPI, published on Wednesday, grew only 1.4% YoY in November, the lowest since November 2009, due to weak demand and the slump in oil prices. PPI fell 2.7% YoY for the same month, down for a 33rd straight month, against declining investment in the property market. The soft economic numbers have fueled worry over deflation and boosted market expectation for the Chinese government to loosen monetary policy further.

France’s nonfarm payrolls decreased 0.3% QoQ in Q3, missing expectations and the reading in Q2. High unemployment rate and lackluster economic growth in France, the second largest economy in the euro zone, will depress the overall economy in the single currency area.

The US dollar index slipped 0.55% on Wednesday, while the euro advanced 0.59% against the greenback. US stocks fell over 1.5%, and European stocks were mixed. LME base metals closed lower across the board.

Market sentiment will remain cautious on Thursday in the wake of discouraging Chinese economic data and a tumble in oil prices. LME and SHFE lead both are on a downward trajectory on the technical front.

LME lead is expected to hover at USD 2,000-2,030/mt, and the most active SHFE 1501 lead contract is set to move at RMB 13,250-13,350/mt. Traded prices on China’s spot lead markets should range between RMB 13,300-13,450/mt on Thursday.