SMM Base Metals Market Daily Review (2015-1-16)

SHANGHAI, Jan. 19 (SMM) –

Copper
Copper for March delivery on the Shanghai Futures Exchange, the most active contract, started Thursday’s night session at RMB 41,320/mt and then rallied to RMB 41,710/mt. The price of the SHFE 1503 copper contract surrendered a chunk of gains afterwards to end up RMB 330/mt at RMB 40,850/mt. Trading volumes for the most active contract totaled some 390,000 lots, while positions decreased by 3,136. Trading volumes for the SHFE 1504 copper contract amounted to 180,000 lots, while positions added by 11,868.

SHFE copper hovered below major moving averages, meeting resistance at RMB 41,050/mt, and finished up RMB 520/mt, or 1.28% at RMB 41,040/mt. Trading volumes for the most active contract shed by 364,000 lots, while positions fell by 9,240. Trading volumes for the SHFE 1504 copper contract stood at 90,444 lots, while positions added by 18,428.

Spot copper in Shanghai was quoted Friday at a RMB 40-150/mt premium to the SHFE 1502 copper contract. Standard- and high-quality copper sold for RMB 41,120-41,420/mt and RMB 41,150-41,500/mt, respectively.

Cargo holders continued to sell at a premium seen on Thursday, but downstream producers were buying only modestly. Spot premiums narrowed as SHFE copper rose almost RMB 300/mt on Friday. Some middlemen entered the market, while downstream producers became less active after building large quantities of input stocks on Thursday. Trading slowed on Friday, with transactions done most by middlemen.

Spot copper was offered at a RMB 70-170/mt premium and traded at RMB 41,250-41,430/mt in the afternoon trading. SHFE copper inventories in the week ending January 16 increased 24,150 mt to 136,816 mt, up 18,983 mt to 112,219 mt in Shanghai.

Aluminum
Last Thursday night, SHFE 1503 aluminum contract dropped to RMB 12,720/mt after starting at RMB 12,855/mt, and finished the night session at RMB 12,760/mt. Trading volumes totaled 1,114 lots, with positions down 254 to 50,076.

Last Friday, the most active contract dropped due to profit-taking at highs, but rebounded above the 10-day moving average in the afternoon as investors closed short positions. Finally, the contract ended at RMB 12,820/mt. Trading volumes totaled 44,358 lots, with positions down 3,010 to 136,906. Any potential upside space should be limited as investors are cautious.

Spot aluminum largely traded between RMB 12,750-12,760/mt in Shanghai on Friday, premiums of RMB 10-20/mt over SHFE 1502 aluminum contract, versus RMB 12,760-12,770/mt in Wuxi and Hangzhou. SHFE aluminum moved higher, allowing sellers in physical market to raise offers. Trading was brisk. In the afternoon, trading became muted.

Lead
Lead for March delivery on the Shanghai Futures Exchange, the most active contract, started Thursday’s night session at RMB 12,200/mt and soared almost RMB 400/mt at one stage before ending up RMB 225/mt at RMB 12,230/mt.

SHFE lead closed up RMB 170/mt and 1.42% at RMB 12,175/mt. Trading volumes for the SHFE 1503 lead contract shrank 3,118 lots to 20,170 lots, while positions shed 3,222 to 21,698.

Supplies from Chihong Zn & Ge in Shanghai were quoted Friday at RMB 125,00-12,550/mt, an around RMB 200/mt premium to the most active SHFE 1503 lead contract. Traded prices were RMB 12,450/mt for Humon and Shuangyan. Supplies from Chihong Zn & Ge, Chengyuan and Nanfang were in shortage on Friday. Chihong Zn & Ge and Humon both reported sales. Traders were buying spot lead actively while building short positions on futures market. After lead prices rebounded sharply, lead-acid battery producers became even unwilling to buy against mounting finished goods inventories.

Zinc
SHFE 1503 zinc contract prices opened at RMB 15,915/mt Thursday evening, then fell to RMB 15,800/mt, and closing at RMB 15,800/mt, down RMB 35/mt or 0.22%. Trading volumes were down 184,478 to 154,466 lots, and total positions decreased 786 to 176,588. SHFE 1503 zinc contract prices opened at RMB 15,815/mt on Friday, then rebounded to an intraday high of USD 15,880/mt with LME zinc prices, but erased some gains at the end of trading, and closing at RMB 15,810/mt, up RMB 25/mt or 0.16%. Trading volumes decreased 240,952 to 260,234 lots. Total positions were down 8,554 to 168,820. SHFE 1503 zinc contract prices are expected to have little room to rise in the near term.

#0 zinc prices were between RMB 16,050-16,140/mt, with spot premiums of RMB 230-300/mt against SHFE 1503 zinc contract prices. #1 zinc prices were RMB 15,980-16,010/mt. #1 zinc prices were firm on limited supply from smelters. SHFE 1503 zinc contract prices fluctuated around RMB 15,800/mt after opening, then rose to RMB 15,850/mt during 10:30-11:30 am. Spot premiums held firm on limited supply. Imported zinc prices were down as cargo holders liquidated inventories, causing the price spread between imported zinc and the prevailing to expand to over RMB 100/mt. This muted domestic zinc transactions. Traders pushed for lower prices, and downstream buyers purchased only at lower prices but modestly, leaving overall trading quiet. SHFE 1503 zinc contract prices consolidated in the afternoon, with spot premiums between RMB 250-290/mt and trading quiet.

Tin
In Shanghai spot tin market, weak demand and eagerness to sell sent prices down. Mainstream traded prices were RMB 125,000-127,500/mt last Friday. Nanshan and Jinlong brand tin traded around RMB 125,000/mt, RMB 126,500/mt for Yunxiang, Yunheng and Tianti brand tin, and RMB 125,500/mt for Yunxi brand tin.

Nickel
SMM #1 nickel prices were between RMB 107,000-107,300/mt. LME nickel prices lacked ability to rebound in the morning, while spot nickel prices in Shanghai held stable. Goods at some cargo holders were tight and traded prices were between RMB106,800-107,100/mt. Spot nickel prices rose slightly in the afternoon, and downstream buyers purchased actively, with trading brisk. Traded prices were between RMB 106,900-107,200/mt in the afternoon. Jinchuan raised nickel prices by RMB 500/mt to RMB 107,500/mt.