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August 2017 | Base Metals


Lead: Forecast raised after breakout


For some weeks, lead’s upside has been capped by resistance around $2,350/tonne. We have been reluctant to raise our short-term price forecasts until this level has been broken. Now it has, and the door is open to $2,450-2,500/tonne, supported by the bullish backdrop of low and falling stocks, and tight supply-side dynamics. Weaker Chinese auto sales data and the lack of short-covering potential may become headwinds, however.

Breakout... Lead prices broke higher last week, clearing resistance that had built up below $2,350/tonne since July 3. Prices set a high at $2,387/tonne on Thursday, August 3, and the break higher now opens the way for a challenge of the two previous highs seen in March and February at $2,391.50/tonne and $2,458.50/tonne, respectively. ...but the rally will struggle unless funds get more bullish The fact that prices have run higher in the seasonally slow summer months is interesting. Normally this is a quiet time for battery manufacturers, and the funds have generally not been showing much interest as the gross long and short money managers’ positions have been declining, as has open...

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