SHANGHAI, Oct. 23 (SMM) --
SHFE copper prices opened high and went higher, and fluctuated mildly around daily average line. SHFE three-month contract copper prices climbed to RMB 51,100/mt, and SHFE spot-month contract copper prices also moved around RMB 50,800/mt. The trading sentiment was brisk, and trading volume increased significantly, raising optimistic market sentiment. However, almost no price spread among different contracts left no profit margins to speculators in futures market, but the performance of spot market showed the possibility of arbitrage.
In spot market, spot discounts expanded to RMB 300-400/mt, as copper prices stood firm at RMB 50,000/mt and tried to move up to test RMB 51,000/mt, and traded prices hovered in the RMB 50,300-50,500/mt range, but transactions were weak, and downstream consumers adopted a wait-and-see attitude. The situation of strong SHFE copper price and weak spot copper price intensified, and spot discounts will continue to expand amid ample supply and weak demand when SHFE copper prices climb further, which will likely create the opportunity of arbitrage.
SHFE aluminum prices opened high but went lower. SHFE three-month contract aluminum prices slipped after opened at RMB 15,100/mt, and mainly tested RMB 15,000/mt, and finally closed at RMB 14,980/mt, with positions up slightly. SHFE spot-month contract aluminum prices fluctuated around RMB 14,900/mt, and closed at RMB 14,850/mt restricted by short players' behavior to close positions.
Aluminum spot market showed worse performance. Domestic aluminum prices were greatly affected by low-priced imported aluminum today. Rusal aluminum was traded at RMB 14,870-14,880/mt, with discounts of RMB 50/mt, while Alcoa aluminum was traded at RMB 14,830/mt, with discounts of RMB 100/mt. In this context, discounts for domestic aluminum expanded to RMB 30-50/mt. CHALCO moved goods at RMB 14,900/mt, but transactions was very limited. Current aluminum spot market will remain unchanged until this week. Aluminum prices will still struggle to move up to test RMB 15,000/mt during this week.
In Shanghai lead market, SMM raised lead prices by RMB 200/mt to the range of RMB 15,900-16,100/mt. Smelters still kept their offers firm, with offers near to RMB 16,000/mt, while downstream consumers remained quiet, but the lower traded prices have risen to the range of RMB 15,850-15,900/mt. Domestic lead prices faced greater pressure on the upward track to RMB 16,000/mt, and are expected to move up to RMB 16,000/mt unless LME lead prices soared again.
SHFE zinc prices opened high and went higher. SHFE zinc prices fluctuated narrowly and stood firm above RMB 16,000/mt, with positions and trading volumes up further. The optimistic sentiment was higher, and SHFE three-month contract zinc prices climbed to RMB 16,650/mt, and closed at RMB 16,450/mt, while SHFE spot-month contract zinc prices fluctuated above daily average line, and stood firm at RMB 16,000/mt, and then hit RMB 16,300/mt and closed at RMB 16,100/mt.
Spot discounts were RMB 300/mt against SHFE spot-month contract zinc prices, and spot zinc prices were restricted below RMB 16,000/mt, an indication of supply surplus in zinc market. Consumers showed no interest in purchases despite of the upward momentum for zinc prices, a sign of the high inventories of zinc semis and limited orders from downstream manufacturers. However, current price spread between SHFE zinc price and spot zinc price has expanded to RMB 500/mt, leaving profit margins for speculators.
In Shanghai tin market, mainstream traded prices fell to the range of RMB 116,500-117,000/mt. As selected smelters moved cargos at lower prices in order to ease capital pressure, traders became pessimistic towards market outlook due to a lack of market confidence and were keen on moving goods to generate cash, so transactions increased slightly.
In Shanghai nickel market, traders raised offers as Jinchuan Group lifted nickel ex-works prices by RMB 2,000/mt to RMB 136,000/mt and LME nickel prices inched up as well, but transactions remained limited due to the weak performance on nickel electronic trading and the scarcity of purchases by end-users. Actual traded prices for imported nickel fell slightly to RMB 134,500-135,000/mt, while Jinchuan nickel was traded at RMB 135,500-136,000/mt, and the trading sentiment remained lukewarm.
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