SMM Base Metals Market Daily Review (2015-1-8)

SHANGHAI, Jan. 9 (SMM) – 

 

Copper for March delivery on the Shanghai Futures Exchange, the most active contract, started at RMB 44,650/mt in Wednesday’s night session and then rose slightly to close flat at RMB 44,660/mt. During the night session, trading volumes for the SHFE 1503 copper contract totaled over 100,000 lots, while positions gained by 1,002.

 

SHFE copper fluctuated narrowly around RMB 45,780/mt ahead of the morning trading session, but later finished up RMB 20/mt, or 0.04% at RMB 44,680/mt. Trading volumes for the most active contract decreased 109,000 lots, while positions fell 3,126 lots.

 

Spot copper in Shanghai was quoted Thursday at a RMB 40-160/mt discount to the SHFE 1501 copper contract. Standard- and high-quality copper sold for RMB 45,380-45,540/mt and RMB 45,420-45,600/mt, respectively.

 

The SHFE/LME copper price ratio remained high following a small rebound in SHFE copper, allowing for further inflows of imported copper. In addition, cargo holders ramped up sales as the price gap between the SHFE 1501 and 1502 copper contracts expanded to over RMB 400/mt. The resulting increase in copper supply pushed spot discounts up, with discounts for high-quality copper up to more than RMB 100/mt by the midday. Middlemen became less active on Thursday, while downstream producers bought mostly as needed, leaving trading light. Spot copper was offered at a RMB 100-160/mt discount in the afternoon trading and traded slightly lower at RMB 45,350-45,500/mt 

 

Aluminum      

On Wednesday night, SHFE 1503 aluminum contract tracked LME aluminum up to RMB 12,845/mt after starting at RMB 12,780/mt, and finished the night session at RMB 12,780/mt. Trading volumes totaled 25,416 lots, with positions down 540 to 168,010. 

 

On Thursday, the most active contract was range-bound for most of the day before ending at RMB 12,805/mt. Trading volumes totaled 47,172 lots, with positions down 1,694 to 166,856. Prices remain under downward pressure due to negative macro front and market sentiment.  

 

Spot aluminum largely traded between RMB 12,740-12,750/mt in Shanghai on Thursday, premiums of RMB 10-20/mt over SHFE 1501 aluminum contract, versus RMB 12,720-12,740/mt in Wuxi and RMB 12,760-12,770/mt in Hangzhou. Processors stilled stayed out of the market out of pessimism, forcing cargo holders to cut offers. In the afternoon, some raised offers after front-month contract moved higher, but trading was muted due to doubts over whether the price rise would be sustainable.

 

Lead for March delivery on the Shanghai Futures Exchange, the most active contract, advanced to RMB 12,475/mt after opening Wednesday’s night session at RMB 12,380/mt, and ended down RMB 65/mt at RMB 12,345/mt.

 

SHFE lead rebounded slightly to hover at RMB 12,390-12,410/mt and closed down RMB 10/mt, or 0.08% at RMB 12,395/mt. Trading volumes for the most active contract shed 2,850 lots to 8,806 lots, while positions added 708 lots to 23,146 lots.

 

Supplies from Chihong Zn & Ge in Shanghai traded Thursday at RMB 12,550-12,560/mt, an around RMB 160/mt premium to the most active SHFE 1503 lead contract. Traded prices were RMB 12,540-12,550/mt for Nanfang and Chengyuan, and RMB 12,530/mt for Humon. Smelters stepped up sales on Thursday, while traders rushed to buy to replenish stocks. Lead-acid battery producers bought modestly since they have built some stocks earlier.  

 

SHFE 1503 zinc contract prices opened at RMB 16,560/mt Wednesday evening, then dipped to RMB 16,420/mt, and closing at RMB 16,450/mt, down RMB 215/mt or 1.29%. Trading volumes were up 28,148 to 103,490 lots, and total positions increased 686 to 162,426. SHFE 1503 zinc contract prices opened at RMB 16,460/mt on Thursday, then met resistance at RMB 16,500/mt, and closed at RMB 16,465/mt, down RMB 200/mt or 1.2%. Trading volumes increased 5,246 to 180,220 lots. Total positions were down 934 to 160,806. SHFE 1503 zinc contract prices are expected to inch down this evening.

 

#0 zinc prices were between RMB 16,710-16,750/mt, with spot premiums of RMB 230-260/mt against SHFE 1503 zinc contract prices. #1 zinc prices were RMB 16,630-16,650/mt. SHFE 1503 zinc contract prices fluctuated between RMB 16,480-16,510/mt, down RMB 150/mt, causing spot premiums to expand to RMB 230-260/mt. With sluggish orders, some zinc alloy and galvanized pipe/tube producers have suspended production, and the others mainly consume inventories on hand. Smelters and traders sold actively. When combined with inflows of imported zinc, spot supply was ample, with spot premiums widening slightly. Huize #0 zinc prices were RMB 16,750-16,760/mt, RMB 260-270/mt above SHFE 1503 zinc contract prices. Shuangyan #0 zinc prices were RMB 16,740-16,750/mt, RMB 250-260/mt above SHFE 1503 zinc contract prices. Qilin and Qinxin zinc prices were between RMB 16,720-16,730/mt, RMB 230-240/mt above SHFE 1503 zinc contract prices. Tiefeng and Tongguan #0 zinc prices were between RMB 16,710-16,720/mt, RMB 220-230/mt above SHFE 1503 zinc contract prices. SMC zinc prices were between RMB 16,700-16,710/mt, RMB 220/mt above SHFE 1503 zinc contract prices. Indian, Netherlandish, Norwegian and Namibia’s zinc prices were between RMB 16,660-16,680/mt, RMB 180/mt above SHFE 1503 zinc contract prices. SHFE 1503 zinc contract prices remained steady in the afternoon, and spot prices also remained largely unchanged, with trading muted.

 

In Shanghai spot tin market, ample market supply and weak demand weighed mainstream traded prices down to RMB 127,000-130,000/mt on Thursday. Nanshan and Jinlong brand tin traded at RMB 127,000/mt, RMB 128,000-128,500/mt for Tianti and Yunxiang brand tin, and RMB 128,000-129,500/mt for Yunxi brand tin.    

 

SMM #1 nickel prices were between RMB 110,700-111,000/mt. Jinchuan Group moved goods on rising prices, allowing supply tightness to ease. Downstream buyers purchased as needed, with transactions quiet and traded prices between RMB 110,600-111,000/mt. Prices remained stable in the afternoon, and traders stayed on the sidelines. Downstream buying interest was weak on sufficient inventories on hand, with traded prices between RMB 110,600-111,000/mt. Jinchuan raised nickel prices by RMB 1,000/mt to RMB 111,000/mt.