Shanghai lead listed global attention to volatile domestic and foreign exchange rates

On March 24th, the Shanghai** Exchange Lead** was formally listed. China is the world’s largest producer and consumer of lead. After the listing of lead, China’s say in the global lead market has increased. In recent years, China’s influence on the global basic metal prices has been increasing. This time, Shanghai Lead has attracted worldwide attention. From the price point of view, on the day before the listing of lead, London's metal prices rose, the market sentiment due to the greater market enthusiasm for lead.

The domestic lead price has been under the control of downstream consumption for a long time. At the same time that basic metal prices rose, the spot price of lead increased only slightly. However, due to the strong expectations of Shanghai's lead listings pushing up lead prices, foreign countries have risen in advance for several months. This has caused great differences in domestic and foreign lead prices. However, after the domestic listing, this difference will gradually weaken. The domestic downstream control rights will be weakened, and the smelter's pricing power will increase, which is more conducive to the rationality of prices.

Judging from the trading conditions on the first day of Shanghai Lead, the transactions were active, and the volatility was relatively large. The variety rating was good. According to the statistical data of the exchanges, the lead ** traded 74,000 lots on the first day, of which the main contract was 1109 and 73,000 contracts were sold. Calculated at 25t per hand, the transaction volume reached 1.85 million metric tons, which translated into a combined value of 35.1 billion renminbi. In terms of trading volume, the volume of lead on the first day surpassed that of zinc and aluminum. In 2007, the trading volume of zinc on the first day of trading was 21,600 lots, or 100,000 tons. According to the transaction on the 24th day, the trading volume of Shanghai zinc reached 418,000, or 2.05 million tons, and the turnover of Shanghai aluminum was 54,000 tons, or 270,000 tons. Since lead 25t is a large contract variety, it is not easy to compare with the active Shanghai zinc transaction level on the first day of listing. The main contract of Shanghai and Lead volatility on the first day of trading was 4%, and the mainstream transaction price was 18,950 yuan. The fluctuation was moderate and the activity of the goods was good.

As mentioned above, domestic prices are constrained by consumer companies and lead prices have stagnated. On the one hand, consumption on the other hand is still acceptable. On the one hand, Shanghai-lead shares are listed in advance and the price in the previous period continues to rise. This caused a relatively low internal and external exchange rate. From the perspective of the comparison of import and export costs, the current China's lead export cost ratio is 5.8, and the import cost ratio is 8. The actual spot internal and external price ratio is 6.6. With reference to other metals, the spot price of copper is 7.5, and the spot price of zinc is 7.6. The spot lead is relatively low, which is greatly affected by consumer companies. However, after the listing of Shanghai lead, this situation will be improved. From the perspective of the first day of trading, lead spot prices broke through 17800 for several months, and spot prices have been driven up by the yoke. However, from a trend perspective, consumer companies have stronger control power. They do not mean that they will lose control if they have one. And after all, ** also needs spot support, and ** also needs to deal with delivery issues. Therefore, I believe that in the initial stage of the listing will be driven by the ** pull up, but the control power of consumer companies will not be completely collapsed, the price rise will be subject to the spot market test. On the other hand, after Lunlead’s speculation in Shanghai-lead market was over, Li Duo’s factors gradually digested, and under the stimulation of no other factors, the price increase momentum weakened. Both of these aspects will collectively lead to significant volatility in the exchange rate. Moreover, cross-market arbitrage operation funds also help boost the volatility of the exchange rate. Judging from the actual trade flow, in addition to the special circumstances in 2009, the import and export volume of refined lead in China is basically the same in other years. Trade flows have a role on both sides of the import and export. With reference to the initial listing of zinc, the active performance of the price ratio. We can expect that at the initial stage of listing, the domestic and foreign price ratio will be more active. Domestic spot prices have been driven by rising prices, suppressed by consumer companies, and driven by arbitrage funds.

As a whole, Shanghai-listed lead has attracted worldwide attention. Although Shanghai Lead has 25t per lot, from the first day of trading and market sentiment, the variety activity is good. The domestic spot price for several months of silence also rose to 18,000 yuan/t due to boost, breaking through the previous resistance level. In view of the stagnation of domestic lead prices in the previous period, the domestic and international prices were relatively low. In the latter period, the domestic spot market was led by ** to rise first, and later, due to the suppression of consumer companies, the price fluctuation range expanded. Coupled with the drive of arbitrage funds, the intra- and foreign-currency ratios fluctuate dramatically. This will be beneficial to the fact that lead prices have been controlled by consumer companies from the previous period and transitioned to a more reasonable trajectory.