SMM Daily Review (Oct. 19)

SHANGHAI, Oct. 20 (SMM) --

    Copper:

    SHFE copper prices were driven up by rising LME copper prices and soaring A-share prices in stock market, and transactions were brisk, and positions of three-month contracts increased significantly by more than 11,800 lots. SHFE three-month contract copper prices moved up along with daily average line and closed at RMB 49,500/mt, with a daily growth rate of 1.2-1.35%.

    However, spot market underperformed SHFE market. Spot discounts for premium copper expanded from RMB 50/mt in the morning to RMB 150/mt in the afternoon along with climbing SHFE copper prices, and discounts for parity copper increased to RMB 250/mt in the afternoon from RMB 150/mt in the morning. Traded prices increased to the range of RMB 49,150-49,350/mt at noon from the range of RMB 49,100-49,250/mt in the morning, but the consumption waned when copper prices were above RMB 49,000/mt.

    Last Friday, SHFE copper inventories soared by more than 10,000mt during the week after holiday, and both ample market supply and weak demand hampered any upward movement for copper prices. However, the slips in the US dollar become a key factor to support copper prices. 

    Aluminum:

    SHFE aluminum prices opened low, and closed at daily high in pre-market driven up by rising A-share prices in stock market. SHFE three-month contract aluminum prices surged to RMB 15,000/mt, but positions of three-month contracts continued to decline. Although SHFE three-month contract aluminum prices hit 20-day average line, aluminum prices still faced difficulties to break through the pressure level of RMB 15,000/mt.

    In spot market, CHALCO kept moving cargos, and sold goods at RMB 14,900/mt from 10:30, and other low-end aluminum was traded at RMB 14,880-14,900/mt. Aluminum prices failed to climb to RMB 15,000/mt due to sufficient spot supply and rational demand. However, the lift in crude oil and alumina prices will help support aluminum prices.

    Lead:

    In Shanghai lead market, SMM lead prices remained unchanged, and traded prices remained at RMB 15,600/mt, with lukewarm trading sentiment. The higher LME lead prices helped support domestic lead prices, and smelters also felt confident in stabilizing offers. However, downstream consumers stood on the sidelines given long-term fluctuations in lead prices.

    Zinc:

    SHFE zinc prices opened low and but went higher. Today, both positions and trading volume increased significantly. The RSI indicator maintained upward momentum, indicating the optimistic market sentiment. Spot transactions were worse, and the price spread of RMB 400/mt between three-month contracts and spot-month contracts was favorable for arbitrageurs. Spot zinc prices climbed gradually supported by rising SHFE zinc prices, and traded prices for #0 zinc inched up to RMB 15,700/mt, but downstream demand remained weak, and most consumers adopted a wait-and-see attitude on Monday. Spot zinc prices will fluctuate in the RMB 15,500-16,000/mt range in the near future.

    Tin:

    In Shanghai tin market, "YT" brand remained a major brand, with traded prices in the RMB 117,000-117,500/mt range. Consumption remained weak. Both LME tin prices and domestic tin prices fluctuated narrowly in anticipation of clear market direction.

    Nickel:

    In Shanghai nickel market, offers for Jinchuan nickel increased to RMB 134,000/mt from RMB 133,500/mt along with rising LME nickel prices. Offers for imported nickel climbed to RMB 133,000/mt passively, which was only RMB 1,000/mt lower than domestic nickel prices. In this context, imported nickel lost price advantages, and its transactions were worse amid weary demand. 

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