SMM Base Metals Market Daily Review (2015-6-5)

SHANGHAI, Jun. 8 (SMM) –

Copper
The most active SHFE copper contract moved narrowed around RMB 42,900/mt last Friday and dipped to a low of RMB 42,740/mt before finishing the daytime trading at RMB 42,810/mt, down RMB 680/mt. Positions in the most active copper contract increased 4,660 and trading volumes grew 88,380 lots. Positions in SHFE 1509 copper contract climbed 9,402.

SHFE reported that copper inventories at its registered warehouses were down 10,670 mt to 145,383 mt last week.

Spot copper was still offered at premiums of RMB 40-90/mt to SHFE 1506 copper contract in Shanghai Friday morning. Traded prices were RMB 43,070-43,130/mt for standard-quality copper and RMB 43,090-43,170/mt for high-quality copper.

Spot copper supply remained ample, causing spot premiums to narrow. But prices of standard-quality copper were resistant to declines due to tight supply. Some speculators bought spot and sold futures. Bearish mood loomed among downstream buyers after SHFE copper prices fell to RMB 43,000/mt, so most deals were done between traders.

Aluminum
Last Friday, massive entry of shorts caused SHFE 1508 aluminum contract to drop to RMB 13,000/mt before ending at RMB 13,010/mt. Trading volumes totaled 36,360 lots, and positions were up 608 to 133,402. Prices are likely to fall below RMB 13,000/mt in the near term on growing bearishness.

Spot aluminum largely traded between RMB 12,860-12,870/mt in Shanghai last Friday, discounts of RMB 90-100/mt over SHFE 1506 aluminum contract, versus RMB 12,840-12,860/mt in Wuxi, and RMB 12,890-12,900/mt in Hangzhou. Sellers rushed to sell, but processors bought only as needed and pushed for lower prices. In the afternoon, market turned quiet as sellers and buyers couldn’t agree over pricing.

Lead
SHFE 1508 lead opened at RMB 13,205/mt Thursday evening and ended down RMB 5/mt at RMB 13,145/mt.

The contract kept fluctuating Friday and finished the day at RMB 13,100/mt, down RMB 50/mt or 0.38%. Trading volumes fell 1,006 to 2,768 lots while positions rose 388 to 11,250.

In spot market, Nanfang brand settled at RMB 13,680-13,690/mt, a RMB 520/mt premium over SHFE 1508 lead, versus RMB 13,660-13,670/mt for Chengyuan brand, RMB 13,620/mt for Shuangyan (packed in plastic) brand and RMB 13,300/mt for older Honglu goods.

Spot supply was abundant though smelters held back sales. Deals for primary lead failed to turn better due to low downstream operating rate and cheaper secondary lead.

Deals were made at RMB 13,520-13,600/mt in Henan market with trades soft. But trades picked up in Guangdong with local goods shipping to Jiangxi. And the prices were offered at RMB 13,350/mt in Guangdong.

Zinc
SHFE 1507 nickel contract prices opened at RMB 108,470/mt Monday evening, then fluctuated between RMB 108,400-108,700/mt, and closed at RMB 108,450/mt, down 0.15%. Trading volumes decreased 1,470 to 208,000. Total positions increased 5,654 to 127,000. SHFE 1507 nickel contract prices opened at RMB 108,470/mt on Tuesday, then plunged as a large number of longs left the market, and closed at RMB 106,430/mt, down 1.86%. Trading volumes decreased 77,000 to 467,000, and total positions declined 4,930 to 116,000.

#0 zinc prices were between RMB 16,230-16,260/mt, RMB 50-30/mt below SHFE 1508 zinc contract prices. #1 zinc prices were RMB 16,210-16,220/mt. SHFE 1508 zinc contract prices fluctuated between RMB 16,270-16,290/mt, down RMB 70/mt, but spot discounts did not narrow noticeably. Some smelters held back goods, but traders released more goods, leaving supply ample. Downstream buyers most took a wait-and-see attitude, and tracked also lacked buying interest, leaving overall transactions quiet. SHFE 1508 zinc contract prices slid to RMB 16,200/mt in the afternoon, with spot discounts of #0 zinc narrowing RMB 20-30/mt and trading quiet.

Tin
In Shanghai spot tin market, mainstream traded prices fell to RMB 113,500-115,000/mt last Friday, dragged down by SHFE tin. Goods from Yunnan Tin Group traded at RMB 114,500-115,000/mt. Both supply and demand was weak.

Nickel
SMM #1 nickel prices were between RMB 95,000-98,600/mt. Traders sold goods proactively as premiums of Jinchuan nickel against the most actively traded nickel contracts on the Wuxi electronic trading fell to RMB 2,500/mt, with the price spread between Jinchuan and Russian nickel narrowing further. Downstream buyers purchased as needed, leaving trading muted and traded prices between RMB 95,300-98,200/mt. Downstream buying interest improved in the afternoon after nickel prices dropped, but most were inclined to buy Russian nickel. Premiums of Jinchuan nickel are expected to decrease this week, with traded prices between RMB 95,200-97,900/mt.