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SMM Lead Market Morning Review (2014-12-16)

Release time:2014-12-16

Dec 16, 2014 01:46 GMT   Source:SMM

 

 

SHANGHAI, Dec. 16 (SMM) – LME lead started Monday at USD 1,994/mt and hovered around the mark in the Asian trading session. The price of the soft metal sank as low as USD 1,963/mt during European and US trading hours due to growing risk aversion sentiment and ended down USD 29.5/mt at USD 1,967.5/mt. Trading volumes for three-month lead on the London Metal Exchange gained 836 lots to 3,255 lots, and positions added 1,134 lots to 119,740 lots. LME lead inventories shed 25 mt to 220,175 mt on Monday.

Lead for February delivery on the Shanghai Futures Exchange, the most active contract, opened at RMB 13,150/mt in Monday’s night session and dipped to RMB 13,105/mt before closing down RMB 50/mt at RMB 13,135/mt. During the night session, trading volumes for the SHFE 1502 lead contract totaled 960 lots, while positions expanded 96 lots to 11,432 lots.

Crude continued its slide on Monday, with West Texas Intermediate crude oil down 3.29% at a new 5-year low of USD 55.91/bbl. The tumble in crude buffeted emerging markets, leading to a 11% depreciation in Russia’s rubble. Russia’s central bank responded by raising benchmark interest rate from 10.5% to 17% to curb the depreciation in its currency and inflation risks. The rout in crude is also expected to weigh on the euro zone’s inflation in the coming few months, which will pose greater deflationary risks and depress commodities markets.

The US Federal Reserve reported Monday that seasonally adjusted industrial output grew 1.3% MoM in November, the biggest monthly increase since May 2010. Output in the manufacturing sector rose 1.1% YoY for the same period, while the capacity utilization rate climbed to 80.1%, above 79.4% expected. This encouraging economic numbers suggest that the US economy is strengthening.

The National Association of Home Builders/Wells Fargo builder sentiment index published Monday fell this month to 57, still close to a 9-year high. Readings above 50 indicate more builders view sales conditions as good, rather than poor. Meanwhile, the Fed was rumored to change its forward guidance to prepare for an interest rate hike next year. As a result, the US dollar index rose 0.18% to finish at 88.48, piling considerable pressure on base metals.

US stocks fell across the board on Monday. Gold slipped 1.2% to close at USD 1207.70/oz, while silver slumped 5.09% to end at USD 16.16/oz. LME base metals except tin closed lower, with copper down 1.85%.

HSBC’s China flash manufacturing PMI for December is expected to come in downbeat on Tuesday against a continuing slide in crude and depressed commodities prices. Market participants should remain cautious before the release of the Fed’s minutes.

On Tuesday, LME lead is expected to initially test support at USD 1,950/mt and hover at USD 1,950-1,980/mt, while the most active SHFE 1502 lead contract is set to move at RMB 13,080-13,180/mt. Spot lead prices in China should range between RMB 13,150-13,300/mt.
 

Key words:
SMM LME lead prices
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