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October 2017 | Base Metals


Lead: New 6-year highs


Even though lead prices are already high by historic levels, the apparent tightness in China threatens to drag lead prices higher still. This may come about by way of a pick-up in Chinese imports, which draws down LME stocks further. For now we would expect lead prices to be well supported into this dip and for them to try higher again before long.

Vehicle sales, option declaration, falling stocks led to new price peak Lead’s recent show of strength had been driven by strong buying in China, so what was interesting is that the buying continued last week when China was on holiday. Exceptionally strong US total vehicle sales of 18.6m units in September, compared with 16.1m in August, no doubt helped fuel the rally as it showed strong replacement demand for the cars lost as a result of hurricanes Harvey and Irma. Option declaration last week with some out-the-money call options with $2,600/tonne strikes, were also thought to be a temporary driving force. The buying interest pushed LME 3m prices as high as $2,620.50/tonne on...

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