relation between supply and demand
According to the principle of microeconomics, when the supply of a commodity exceeds the demand, its price falls, and vice versa. At the same time, prices in turn will affect supply and demand. That is, when prices rise, supply will increase and demand will decrease. Conversely, demand will rise and supply will decrease. Therefore, prices and supply and demand affect each other. An important indicator of supply and demand is inventory. Lead inventory is divided into reporting inventory and non reporting inventory. The reported inventory, also known as "explicit inventory", refers to the inventory of the exchange. Unreported inventory, also known as "hidden inventory", refers to the inventory held by manufacturers, traders and consumers worldwide. Since these inventories will not be published regularly, it is difficult to make statistics, so the inventory change is generally measured by the inventory of the exchange.
International and domestic economic development
Lead is an important non-ferrous metal. The consumption of lead is highly related to economic development. When a country or region develops rapidly, the consumption of lead will also increase synchronously. Similarly, the economic recession will lead to a decline in the consumption of lead in some industries, which will lead to fluctuations in the price of lead. When analyzing the macro-economy, two indicators are very important. One is the economic growth rate, or GDP growth rate, and the other is the industrial production growth rate.
Prosperity of downstream industries
The main use of lead is lead-acid batteries, which are mainly used in automobiles, communication power supplies, electric bicycles and other purposes. Therefore, the downstream demand industries for lead are relatively concentrated, and the prosperity of these industries directly affects the consumption of lead. Analyzing the changes of these downstream industries can have a more comprehensive grasp of lead consumption.
Import and export policy
The import and export policy, especially the tariff policy, is an important means to balance the domestic supply and demand by adjusting the import and export costs of commodities to control the import and export volume of a commodity. Due to the rapid growth of domestic demand and the increasingly prominent resource bottleneck, the state does not encourage the export of energy consuming smelting products. Since 2006, China has successively reduced or cancelled export tax rebates for many products, even increased export tariffs, and canceled preferential policies for processing with supplied materials. The increase in export costs effectively curbed exports. On January 1, 2004, the export tax rebate of refined lead in China was reduced from 15% to 13%; From September 15, 2006, the export tax rebate of refined lead was cancelled, and the export tax rebate of lead materials was reduced to 8%; From July 1, 2007, the export tax rebate of lead materials and lead products was reduced to 5%; From July 15, 2010, the export tax rebate of lead materials and lead products will be canceled. The change of China's trade policy is significantly reflected in the export of refined lead. According to the trade policy in 2006, the export tax rebate of refined lead was cancelled. Before the implementation of the "rush to export" policy, a large amount of refined lead was exported, making the export volume of that year the highest in history. In 2007, the export volume dropped sharply. In 2009, with the support of domestic and international price comparison, the import volume of refined lead increased significantly, exceeding the export volume, and China became a net importer of refined lead for the first time.
Trading direction of the fund
Although the history of the fund industry is very long, it did not develop vigorously until the 1990s. At the same time, the degree of fund participation in commodity futures trading has also increased significantly. Judging from the evolution of the commodity market in the last decade, funds have played a role in fuelling the flames in many big quotations. There are large and small funds, and the operation methods vary greatly. Generally speaking, funds can be divided into two categories. One is macro funds, such as arbitrage funds, which are large in scale, ranging from several billion dollars to tens of billions of dollars, mainly for strategic long-term investment. The other is short-term funds, which are managed by CTA (Commodity Trading Advisors). They are small in size, generally around $100 million. They rely on technical analysis for short-term operations, so they are also called technical funds. Since the fund has a deeper understanding of the macro fundamentals, understanding the trend of the fund is also the key to grasp the market. Judging from the trend of the commodity market in recent years, funds are the huge driving force behind the rapid and substantial rise.
Production cost of lead
Production cost is the basis of measuring commodity price level. Different mines and smelting enterprises have different estimates of lead production costs. The most common economic analysis is to use "cash flow breakeven cost", which decreases with the increase of by-product value. In the process of lead smelting, the output of by-product silver is large, so the price change of silver also has an impact on the production cost of lead.
