1. Prices Trend
The lead market (November 4-8) was slightly lower. The average price of the domestic market was 16481.25RMB/t at the beginning of the week, 16218.75RMB/t at the end of the week, decreasing 1.59% this week.
On Nov 9, the Lead Commodity Index was 98.71, the same as that of yesterday, 26.34% lower than the peak of 134.01 in the cycle (Nov 29, 2016), and 32.27% higher than the lowest point of 74.63 (Mar 19, 2015). (Cycle: Sep 1, 2011 to date)
2. Market Analysis
Domestic market: This week, the spot lead market price was 16,150-16,550RMB/t, the spot lead price was slightly lower, the market was bearish, traders had a high enthusiasm for selling, but the downstream orders were limited, and the procurement was mainly for renewable lead. Recently, with the increase of lead ore processing fee, the rising operation rate of smelter and the high inventory of smelter, the demand for primary lead has been low. At present, the consumption of lead-acid battery is off-season. Affected by the cost, the demand for primary lead is still dominated by recycled refined lead.
Major domestic events:
Lead: The short-term PB prices continue to be weak. Logic: The high prices of PBD have been greatly reduced, and the support for PB prices has been weakened. From the perspective of domestic fundamentals, the supply and demand of domestic lead is expected to weaken. Due to environmental protection factors, the production of recycled lead in Anhui, Hebei and other parts of the country is limited. With the increase of lead ore processing fee, the starting of primary lead keeps stable and has a rising trend. In terms of consumption, the battery consumption of electric vehicles is in the off-season, the demand for replacement of automobile battery still needs to wait for a pick-up, the demand for replenishment of storage by battery enterprises becomes weak, and the overall consumption is becoming weak in the season. In terms of exports, domestic lead exports have been flowing out slightly in recent days, but with the further expansion of lead export losses, further outflow may be limited. At present, the inflection point of domestic lead ingot inventory has been confirmed. Therefore, the short-term PB prices are expected to continue to be weak.
Nonferrous Industry: The easing monetary policy caused by the Fed's interest rate cut and the Sino US trade wnegotiation ushered in a better atmosphere. Gold prices fell. The central bank launched a one-year MLF operation of 400 billion RMB, with the bid winning rate of 3.25%, 5 basis points lower than the previous period, the RMB broke 7, and market confidence recovered.
3. Prospects for the Future Market
There are still a lot of data in Europe and the United States next week. The economic weakness makes loose monetary policy in various parts of the world one after another. After five consecutive positive days this week, the U.S. dollar may have a high continous rebound blocked. The domestic RMB was also collated near 7. The macro monetary policy has a positive effect on basic metals’ continous rebound and growth, but the more appealing thing is that next week is the delivery cycle of 1911 contract. More metal varieties will change according to the strength of their own fundamentals, in line with the structural change of the monthly price differences. Strong items are alert to high-level pressure. Weak metals or low-level key integers will test the support effectiveness, and the strength differences will increase.
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