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SMM Lead Market Morning Review (2015-1-22)

Release time:2015-01-22

Jan 22, 2015 01:43 GMT   Source:SMM

 

 

SHANGHAI, Jan. 22 (SMM) – LME lead overnight moved steadily in the Asian trading session, but dipped to USD 1,864/mt in the European trading session. The price of the soft metal rebounded afterward following the release of European Central Bank (ECB)’s quantitative easing proposal and ended down only USD 3/mt at USD 1,899/mt. Trading volumes for three-month lead on the London Metal Exchange gained 539 lots to 5,376 lots, while positions shed 3,633 to 119,185. LME lead inventories dwindled 75 mt to 215,600 mt on Wednesday.

Lead for March delivery on the Shanghai Futures Exchange, the most active contract, rallied to RMB 12,695/mt after opening at RMB 12,445/mt in Wednesday’s night session and closed up RMB 155/mt, or 1.24% at RMB 12,650/mt. Trading volumes for the SHFE 1503 lead contract totaled 6,052 lots, while positions shrank 398 to 18,170 in the night session.

The ECB’s Executive Board has proposed a program that would enable the central bank to buy 50 billion euros in bonds per month starting in March for at least a year. This round of bond purchases will total at least 600 billion euros and as much as 1.1 trillion euros. The earlier-than-scheduled release of the QE plan may signal that the ECB could act more aggressively than widely expected. In response, major European stocks rose, while LME base metals rebounded on Wednesday.

US housing starts increased 4.4% MoM to an annualized 1.09 million in December, a high not seen since 2007, with groundbreaking for single-family homes up sharply. A recovering labor market, low mortgage rates as well as stronger consumer confidence all helped boost demand for residential houses. Expansion in the country’s real estate market is expected to continue this year. US stocks closed with gains on Wednesday, aided by inspiring economic indicators.

Speaking at the World Economic Forum in Davos, Chinese Premier Li Keqiang said that China’s economy is entering a “new normal” of slower, but healthier growth. He added that China will maintain a medium-high growth rate and implement active fiscal policy and prudent monetary policy. The People’s Bank of China renewed RMB 269.5 billion in its Medium-term Lending Facility (MLF) and added RMB 50 billion in this open market operation in an attempt to keep liquidity sufficient on Wednesday.

The US dollar index ended down 0.15%, while the euro closed up 0.33% versus the greenback on Wednesday. Swiss stocks finished lower, but other major world stocks rose. LME lead fell, whereas other base metals closed higher.

The ECB’s proposal to initiate QE as early as in March has turned sentiment bullish on the base metals markets. LME lead is expected to hover at USD 1,880-1,920/mt, while the most active SHFE 1503 lead contract is set to fluctuate between RMB 12,500-12,700/mt on Thursday. Spot lead in China should trade at RMB 12,550-12,700/mt.
 

Key words:
SMM LME lead prices
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