LEAD TODAY: All quiet after yesterday’s burst of activity

Short Term:
Medium Term:
Long Term:
R1 2310 20 DMA
R2 2325
R3 2458.50 Feb 13 high
R4 2576.50 Nov 2016 high
S1 2224 Recent low
S2 2213 38.2% Fibo (May-Nov rally)
S3 2162 UTL

DMA – daily moving average

Fibo – Fibonacci retracement level

H&S – head-and-shoulder pattern

(H)S/RL – (horizontal) support/resistance line

MACD – moving average convergence divergence

RL – resistance line

UTL – uptrend line


  • Prices are trying to get back into the high ground. The recent sell-off found support above the 38.2% Fibo of last year’s rally but prices are now below the 20 DMA.
  • Before the mid-February upside break, we had been saying that we expected prices to hold in the $2,200-2,400 range. They are now back in that range.
  • We did not expect a breakout until the fundamental news had caught up with the price gains already seen this year/last year so from now we expect further sideways range-trading.

Macro factors

The run-up in lead prices yesterday may well have been option-related because prices climbed up through the strikes at $2,250 and $2,300 per tonne. There is a lack of follow-through buying today.

LME lead stocks are fairly flat. At 189,900 tonnes, they are not much changed, having ranged between 188,575 tonnes and 190,325 tonnes since the start of February. SHFE stocks climbed 5,989 tonnes last week to 67,935 tonnes, up from 28,726 tonnes at the start of the year.

The lead market was in a 5,500-tonne deficit in December 2016, after recording a 16,000-tonne defict in November but a 7,800-tonne surplus in October, according to International Lead and Zinc Study Group data. For 2016 as a whole, the market as in a surplus of 11,000 tonnes – so it was effectively balanced.

With the concentrate market showing tightness, we expect primary refined production to struggle to keep up with demand, although higher lead prices should be seeing a good flow of old scrap into the market – if it has not already flowed in, that is. But higher lead and zinc prices are also incentivising some miners to restart – still, even when restarts are announced, it takes time for production to ramp-up.



We feel that lead prices are already fairly high and that it will take more evidence of a supply deficit, such as a drawdown in exchange stocks, before prices can push higher.

All trades or trading strategies mentioned in the report are hypothetical, for illustration only and do not constitute trading recommendations.
Kathleen Retourne

About Kathleen Retourne

Kathleen has been reporting on commodity markets since 2006. She joined FastMarkets in 2011 and has immersed herself into the metal industry, specialising in LME coverage. Follow her on twitter @kathretourne