Shanghai lead hits 2-month high on low stocks, but demand still weak - Financial Post

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SINGAPORE — Shanghai lead hit a two-month high on Tuesday on low supply and data signaling inventory withdrawals from warehouses outside China in the coming days, although the metal’s demand outlook remained weak.

The most-traded lead contract on the Shanghai Futures Exchange (ShFE) jumped as much as 3.5% to 14,340 yuan ($2,022.42) a tonne, the highest since March 11, before easing to close 2.1% higher at 14,150 yuan a tonne.

Three-month lead on the London Metal Exchange (LME) fell 0.8% to $1,659 a tonne at 0701 GMT, reversing course after gaining as much as 0.7% earlier in the session to hit its highest since April 20.

LME on-warrant lead stocks were slashed by a fifth to 56,900 tonnes, a three-week low, data released on Monday showed, indicating possible withdrawals of inventories in the coming days.

In China, lead stocks are estimated to have risen slightly in the past weeks but were still at low levels, lending some support to prices.

“There is limited battery scrap supply in the market, as people drove less in the past months,” said analyst Dina Yu of CRU Group, adding that total lead stocks in China were around 9,000 tonnes as of last week, around 500 tonnes higher than mid-April levels.

However, weak demand triggered by restrictions to curb the COVID-19 pandemic is seen putting a lid on prices of the metal used mostly in car batteries.

“Impacted by the sluggish export market as well as the seasonal drop in battery demand, lead prices may lack momentum to rise further,” Yu said, noting that ShFE prices may continue to fluctuate around 13,000-14,000 yuan a tonne in the near term.

FUNDAMENTALS

* SPREADS: The discount of LME lead cash over the three-month contract shrunk to near its five-week low of $19.20 a tonne, indicating tighter near-term supplies.

* OTHER PRICES: LME copper eased 0.2% to $5,245 a tonne, nickel fell 0.6% to $12,275 a tonne, while Shanghai copper fell 1.4% to 43,040 yuan a tonne and nickel dropped 1.1% to 101,040 yuan a tonne.

* COPPER: The copper market will see a supply surplus of 200,000 tonnes this year, a Chilean industry group said.

* CHINA AUTOS: China’s monthly auto sales rose for the first time in almost two years, but the annual number will likely be slashed by up to 25% if the pandemic continues, an industry body cautioned.

* For the top stories in metals and other news, click or

($1 = 7.0905 yuan) (Reporting by Mai Nguyen; editing by Uttaresh.V and Devika Syamnath)

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Shanghai lead hits 2-month high on low stocks, but demand still weak - Financial Post
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