SMM Base Metals Market Daily Review (2015-1-21)

SHANGHAI, Jan. 22 (SMM) –

Copper
Copper for March delivery on the Shanghai Futures Exchange, the most active contract, started at RMB 41,510/mt and later followed LME copper down to RMB 41,110/mt. The price of the SHFE 1503 copper contract rebounded at the tail of the trading and closed up RMB 40/mt, or 0.10% at RMB 41,380/mt. Positions for the most active contract added 3,788 to 279,986, while trading volumes totaled some 152,000 lots.

On Wednesday, SHFE copper initially rose almost RMB 200/mt to RMB 41,590/mt, but later pulled back to test support at RMB 41,200/mt. The price of the red metal later dipped to RMB 41,110/mt and finished down RMB 80/mt, or 0.19% at RMB 41,260/mt. Positions for the SHFE 1503 copper contract shed 7,560 to 268,638, while trading volumes tumbled by some 70,000 lots. Positions for the SHFE 1504 copper contract increased 12,436 to 243,784, while trading volumes amounted to about 240,000 lots.

Spot copper was quoted at a RMB 50-130/mt premium to the SHFE 1502 copper contract in Shanghai on Wednesday. Standard- and high-quality copper sold for RMB 41,520-41,660/mt and RMB 41,560-41,720/mt, respectively. As SHFE copper fluctuated in a wide range and lacked impetus to rise, many cargo holders continued to sell to raise cash, leaving sufficient high-quality copper in the market. Hydro-copper prices were little changed due to limited supply. Most middlemen and downstream producers stayed out of the market on Wednesday, leaving trading quiet. Spot copper was offered at a RMB 60-120/mt premium in the afternoon trading, with a narrower price gap between different brands. The market was dominated by standard-quality copper, and trading remained sluggish.

Aluminum
On Tuesday night, SHFE 1503 aluminum contract slipped to RMB 12,750/mt after starting at RMB 12,820/mt, and finished the night session at RMB 12,815/mt. Trading volumes totaled 13,980 lots, with positions down 1,774 to 131,330.

On Wednesday, the most active contract fell to RMB 12,745/mt before ending at RMB 12,775/mt. Trading volumes totaled 36,746 lots, with positions down 4,274 to 128,830. Given the changes in positions on the SHFE, SHFE 1504 aluminum contract may become the most active one today.

Spot aluminum largely traded between RMB 12,660-12,670/mt in Shanghai on Wednesday, discounts of RMB 50-60/mt over SHFE 1502 aluminum contract, versus RMB 12,660-12,680/mt in Wuxi and Hangzhou. Sellers cut offers out of bearish, but consumption remained sluggish. In the afternoon, trading came to a virtual standstill.

Lead
Lead for March delivery on the Shanghai Futures Exchange, the most active contract, started at RMB 12,555/mt and then fell to RMB 12,470-12,500/mt before ending up RMB 90/mt, or 0.73% at RMB 12,495/mt.

On Wednesday, SHFE lead fluctuated largely between RMB 12,480-12,520/mt and ended up RMB 110/mt, or 0.89% at RMB 12,515/mt. Trading volumes for the SHFE 1503 lead contract shrank 2,064 lots to 8,622 lots, while positions shed 696 to 18,568.

Supplies from Chihong Zn & Ge traded at RMB 12,600/mt in Shanghai on Wednesday, a RMB 200/mt premium to the most active SHFE 1503 lead contract. Traded prices were RMB 12,540/mt for Humon and Shuangyan, and RMB 12,590/mt for Chengyuan. Smelters sold at firm prices as lead remained in tight supply. Traders bought only as needed against recent volatile lead prices. Lead-acid battery producers were unwilling to buy against mounting finished-goods inventories and cash shortfalls.

Zinc
SHFE 1503 zinc contract prices opened at RMB 16,140/mt Tuesday evening, then hovered between RMB 16,055-16,110/mt, and closing at RMB 16,125/mt, up RMB 125/mt or 0.78%. Trading volumes were down 7,292 to 64,364 lots, and total positions decreased 36 to 162,028. SHFE 1503 zinc contract prices opened at RMB 16,125/mt on Wednesday, then inched up but met resistance at USD 16,200/mt, and closing at RMB 16,155/mt, up RMB 155/mt or 0.97%. Trading volumes increased 14,888 to 181,386 lots. Total positions were down 5,546 to 156,518. SHFE 1503 zinc contract prices are expected to rebounded this evening.

#0 zinc prices were between RMB 16,300-16,370/mt, with spot premiums of RMB 180-220/mt against SHFE 1503 zinc contract prices. #1 zinc prices were RMB 16,240-16,250/mt. SHFE 1503 zinc contract prices surged initially before falling back to RMB 16,130/mt after opening, with spot premiums between RMB 190-220/mt. SHFE 1503 zinc contract prices inched up to RMB 16,150-16,160/mt during 10:30-11:30 am, causing spot premiums to narrow RMB 10/mt. Smelters increased supply, but held a few brands due to low operating rates ahead of the Chinese New Year holiday. Some cargo holders held prices firm. Downstream buyers were inclined to purchase lower-priced imported zinc over domestic zinc. When combined with market pessimism, overall transactions were muted. Huize #0 zinc prices were RMB 230-240/mt above SHFE 1503 zinc contract prices. Shuangyan #0 zinc prices were RMB 16,350-16,370/mt, RMB 210-220/mt above SHFE 1503 zinc contract prices. Mengzi, Qilin, and Qinxin zinc prices were between RMB 16,330-16,350/mt, RMB 190-210/mt above SHFE 1503 zinc contract prices. Feilong zinc prices were between RMB 16,320-16,340/mt, RMB 180-200/mt above SHFE 1503 zinc contract prices. Tiefeng #0 zinc prices were between RMB 16,300-16,310/mt, RMB 160-170/mt above SHFE 1503 zinc contract prices, with spot premiums as low as RMB 140/mt. Indian, Peruvian, Russian and Brazilian #0 zinc prices were RMB 16,200-16,230/mt, RMB 70-90/mt above SHFE 1503 zinc contract prices. SHFE 1503 zinc contract prices remained steady in the afternoon, with spot premiums largely unchanged.

Tin
In Shanghai spot tin market, mainstream traded prices remained stable between RMB 125,500-127,500/mt on Wednesday. Supply of cheap goods fell, but supply of goods from Yunnan remained plentiful. Yunxiang, Yunheng and Yunxi brand tin traded between RMB 126,000-127,500/mt.

Nickel
SMM #1 nickel prices were between RMB 108,500-108,900/mt. Spot nickel prices in Shanghai rose in the morning as LME nickel prices inched up. With inflow of imported nickel, traders sold actively. But downstream buyers took a wait-and-see attitude, leaving overall transactions muted, and with traded prices between RMB 108,400-108,800/mt. Supply increased in the afternoon with the inflow of Russian nickel. Spot nickel price gains were limited, with traders moving goods actively. But trading was quiet, with traded prices between RMB 108,700-109,100/mt. Jinchuan raised nickel prices by RMB 1,500/mt to RMB 109,000/mt.