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SMM Lead Market Morning Review (2015-1-12)

Release time:2015-01-12

Jan 12, 2015 01:55 GMT   Source:SMM

 

 

SHANGHAI, Jan. 12 (SMM) – LME lead started last Friday at USD 1,850/mt and hovered at USD 1,850-1,860/mt in the Asian trading session. The price of the soft metal initially dipped to USD 1,840/mt in European and US trading hours, but rebounded to USD 1,870/mt at the tail of the trading before ending up USD 6/mt at USD 1,860/mt. Trading volumes for three-month lead on the London Metal Exchange shed 759 lots to 3,475 lots, while positions gained 870 to 116,047. LME lead inventories decreased 1,200 mt to 220,775 mt last Friday.

Lead for March delivery on the Shanghai Futures Exchange, the most actively traded contract, opened last Friday’s night session at RMB 12,350/mt and then fluctuated at RMB 12,300-12,350/mt. The price of the SHFE 1503 lead contract followed LME lead up to RMB 12,455/mt at some stage and closed down RMB 70/mt at RMB 12,350/mt.

US nonfarm payrolls added by 252,000 in December, higher than a 240,000 rise expected, while its unemployment rate fell further to a 6-year low of 5.6% for the same month. The encouraging economic indicators helped with a sharp rebound in the US dollar index, while putting a dent in non-US currencies. Nevertheless, average US wages fell last month and are up just 1.7% YoY, the smallest increase since October 2012. As such, the US dollar index retreated to close down 0.44% at 91.94 last Friday.

The National Bureau of Statistics (NBS) reported last Friday that China’s CPI rose 2% YoY last year. In December, CPI rose 1.5% YoY, whereas PPI fell 3.3% YoY, the biggest monthly fall in 27 months and down for a 34th month in a row. The continuous fall in PPI indicates a slowdown in the economy and poses deflationary risks, which has raised market expectations that the Chinese government may launch infrastructure construction projects to kick-start growth.

Reuters reported that that the European Central Bank (ECB) is considering a hybrid approach to government bond purchases ahead of its upcoming policy meeting. Such an approach would combine the ECB buying debt with risk sharing across the euro zone and, in a nod to German qualms, separate purchases by national central banks. Meanwhile, Greece’s presidential election to be held earlier than scheduled January 25 has fueled worries over the euro zone and the global economy.

Crude oil prices closed down 0.88% at USD 48.36/bbl last Friday. Members of the Organization of Petroleum Exporting Countries (OPEC) have become divided on oil prices. Iran and Venezuela announced to work more closely with each other to counter the fall of the crude price. Iran’s Supreme Leader Ayatollah Ali Khamenei described the recent plunge in oil price as politically motivated

US stocks fell across the board last Friday. Gold rebounded 1.16% to close at USD 1,222.84/oz. LME lead closed higher, but other base metals ended with losses.

As such, LME lead is set to move at USD 1,850-1,880/mt on Monday, while the most active SHFE 1503 lead contract is expected to fluctuate at RMB 12,280-12,430/mt. Spot lead prices in China should range between RMB 12,500-12,600/mt.