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

Release time:2014-12-12

Dec 12, 2014 01:48 GMT   Source:SMM

 

 

SHANGHAI, Dec. 12 (SMM) – LME lead started Thursday at USD 2,016/mt in the Asian trading session and then sank to USD 1,980.3/mt before ending down USD 29/mt at USD 1,983/mt. Trading volumes for three-month lead on the London Metal Exchange gained 3,437 lots to 5,566 lots, while positions shed 114 lots to 117,902 lots. LME lead inventories decreased 150 mt to 220,200 lots.

Lead for February delivery on the Shanghai Futures Exchange, the most active contract, hit a record low of RMB 13,315/mt in Thursday’s night session and finished down RMB 60/mt at RMB 13,320/mt. Trading volumes for the SHFE 1502 lead contract amounted to 360 lots, and positions added 204 lots to 9,866 lots.

China’s Central Work Economic Conference set five major tasks for 2015 on Thursday, putting it as a priority to maintain stable economic growth. The Chinese government pledged to focus on the balance of economic restructuring and growth to avoid sharp fluctuations in the economy. The Conference also emphasized the effectiveness in fiscal policy and flexibility in monetary policy, implying that the deficit rate may exceed 2.5% in 2015. Markets expect the government to unleash more accommodative monetary policy next year.

US initial jobless claims for the week ending December 5 came in at 294,000, fewer than expectations, boosting expectation for an earlier-than-anticipated rate hike by the Federal Reserve. The US Commerce Department reported that retail sales grew 0.7% MoM in November, the highest monthly increase in 8 months and well above expectations. A higher growth in wages and a tumble in oil prices combined to stimulate consumption in the US. Helped by these encouraging economic indicators, US stocks rose sharply and projections for its Q4 GDP growth were raised by several investment banks.

Germany’s CPI remained low in November, up 0.6% YoY. In the European Central Bank (ECB)’s targeted longer-term refinancing operation (TLTRO), only 129.84 billion euros were taken up by banks, way below forecasts. The euro zone’s inflation thus is likely to remain low, and markets expect the ECB to accelerate the launch of quantitative easing (QE). 

The US dollar index rose 0.45%, while the euro was down 0.45% versus the greenback. US stocks closed with gains, and European stocks were mixed. LME base metals diverged.

Market participants should focus their attention on China’s Central Economic Work Conference, fixed asset investment and new RMB lending due for release early on Friday. LME lead is expected to hover at USD 1,970-2,000/mt, while the most active SHFE 1502 lead contract is set to fluctuate at RMB 13,270-13,370/mt. Traded prices on China’s spot lead markets should be in a RMB 13,250-13,400/mt band on Friday.