SMM Base Metals Market Daily Review (2015-1-9)

SHANGHAI, Jan. 12 (SMM) –

Copper
Copper for March delivery on the Shanghai Futures Exchange, the most active contract, dipped to RMB 44,450/mt in Thursday’s night session after starting at RMB 45,000/mt and closed down RMB 240/mt at RMB 44,500/mt. During the night session, trading volumes edged up to some 150,000 lots, while positions gained by 7,434.

SHFE copper hovered around RMB 44,500/mt early on Friday, but fell by the midday to close down RMB 490/mt, or 1.1%, at an intraday low of RMB 44,250/mt. Trading volumes for the most active contract added by 176,000 lots, while positions increased by 10,670. Trading volumes for the SHFE 1504 copper contract increased by 85,058 lots, while positions rose by 16,292.

Spot copper in Shanghai was quoted Friday at a RMB 100-180/mt discount to the SHFE 1501 copper contract. Standard- and high-quality copper sold for RMB 45,080-45,240/mt and RMB 45,120-45,300/mt, respectively.

A fall in SHFE copper allowed further outflows of hedged goods, while imported copper remained ample in the market. Most cargo holders raised discounts to boost sales as the price gap between the SHFE 1501 and 1502 copper contracts expanded to nearly RMB 500/mt. A small number of middlemen bought spot copper while building short positions on the futures market. Downstream producers barely entered the market on Friday. Spot copper was offered at a RMB 100-160/mt discount and traded at RMB 45,200-45,280/mt in the afternoon trading. SHFE copper inventories added 751 mt to 112,666 mt last week.

Aluminum
Last Thursday night, SHFE 1503 aluminum contract drifted lower after starting at RMB 12,850/mt, and finished the night session at RMB 12,805/mt.

China’s CPI hovered at 5-year low, while PPI fell sharply. However, short sellers closed positions in the afternoon, pushing the most active contract up to RMB 12,900/mt. The contract ended last Friday at RMB 12,855/mt. Trading volumes totaled 62,750 lots, with positions down 5,722 to 161,134. A lack of positive news implies that any upside potential might be limited.

Spot aluminum largely traded between RMB 12,800-12,820/mt in Shanghai last Friday, premiums of RMB 10-20/mt over SHFE 1501 aluminum contract, versus RMB 12,790-12,810/mt in Wuxi and RMB 12,860-12,870/mt in Hangzhou. Processors entered the market due to a rally in SHFE aluminum and approaching weekend. In the afternoon, some raised offers to RMB 12,860-12,880/mt as front-month contract rose further, but trading was muted.

Lead
Lead for March delivery on the Shanghai Futures Exchange, the most active contract, surged to RMB 12,520/mt after opening Thursday’s night session at RMB 12,455/mt, but later retreated to close up RMB 30/mt at RMB 12,425/mt.

SHFE lead initially fell to RMB 12,350/mt, but later rebounded to RMB 12,400-12,440/mt before ending up RMB 5/mt, or 0.04% at RMB 12,400/mt. Trading volumes for the most active contract shrank 2,284 lots to 6,522 lots, while positions gained 1,066 to 24,212.

Supplies from Chihong Zn & Ge and Chengyuan in Shanghai traded Friday at RMB 12,550-12,560/mt, a RMB 150/mt premium to the most active SHFE 1503 lead contract. Traded prices were RMB 12,520-12,540/mt for Humon and Yubei. Smelters curtailed sales on Friday, with the market dominated by hedged goods from traders, while downstream producers remained out of the market, leaving trading light.

Zinc
SHFE 1503 zinc contract prices opened at RMB 16,595/mt last Thursday evening, then dipped to RMB 16,410/mt, and closing at RMB 16,470/mt, down RMB 45/mt or 0.27%. Trading volumes were up 6,100 to 109,590 lots, and total positions increased 2,444 to 163,250. SHFE 1503 zinc contract prices opened at RMB 16,470/mt on Friday, touching RMB 16,600/mt in the afternoon then falling back down, and closing at RMB 16,455/mt, down RMB 60/mt or 0.36%. Trading volumes increased 22,878 to 203,098 lots. Total positions were down 2,452 to 158,354. SHFE 1503 zinc contract prices are expected to test support from the 20-day moving average this evening.

#0 zinc prices were between RMB 16,680-16,710/mt, with spot premiums of RMB 220-250/mt against SHFE 1503 zinc contract prices. #1 zinc prices were RMB 16,600-16,630/mt. SHFE 1503 zinc contract prices fluctuated around RMB 16,460/mt, down RMB 20/mt, with spot premiums between RMB 240-270/mt. Sales at smelters slowed due to a large influx of imported zinc, and cargo holders lowered spot premiums to RMB 220-250/mt. Trading remained quiet, though some downstream buyers replenished goods as needed. Shuangyan and Huize #0 zinc prices were RMB 16,700-16,710/mt, RMB 240-250/mt above SHFE 1503 zinc contract prices. Qilin and Qinxin zinc prices were between RMB 16,680-16,700/mt, RMB 220-230/mt above SHFE 1503 zinc contract prices. Tongguan #0 zinc prices were between RMB 16,660-16,680/mt, RMB 200-220/mt above SHFE 1503 zinc contract prices. Indian, Netherlandish, Norwegian and Russian zinc prices were between RMB 16,620-16,640/mt, RMB 160-180/mt above SHFE 1503 zinc contract prices. SHFE 1503 zinc contract prices rose RMB 50/mt at the end of trading, causing spot premiums to narrow RMB 20/mt. Spot premiums of Shuangyan zinc were around RMB 220/mt at one point, causing some bargain hunters to enter the market, but trading was muted.

Tin
In Shanghai spot tin market, overall trading was modest last Friday, with cheaper goods gaining more favor. Mainstream traded prices were RMB 126,500-130,000/mt. Feidie brand tin flowed into the market. Nanshan and Jinlong brand tin traded at RMB 126,500/mt, RMB 127,000-128,000/mt for Tianti, Feidie and Yunxiang brand tin, and RMB 128,000-129,500/mt for Yunxi brand tin.

Nickel
SMM #1 nickel prices were between RMB 110,500-110,700/mt, and LME nickel prices consolidated. The US dollar index fell slightly, while crude prices experienced corrections. Spot nickel prices in Shanghai dropped slightly, with trading muted and traded prices between RMB 110,500-110,900/mt. Prices remained stable in the afternoon, and downstream buyers stayed on the sidelines, with traded prices between RMB 110,600-110,900/mt.