SMM Daily Review (Oct. 23)

SHANGHAI, Oct. 26 (SMM) --

    Copper:

    SHFE copper prices received support from international market and domestic securities market, and opened low, and then stabilized in the morning, and later closed up in the afternoon. SHFE three-month contract copper prices climbed to RMB 51,300/mt, and fluctuated around RMB 50,800/mt in the morning, and moved at RMB 51,150/mt in the afternoon, while SHFE spot-month contract copper prices also stood firm at RMB 51,000/mt in the afternoon, and SHFE copper prices continued to maintain upward momentum.

    In spot market, trading volume increased from yesterday levels for two reasons. First, SHFE copper prices rebounded, stimulating the purchasing interest of market players. Second, consumers were brisk in stock replenishment after week-long sluggish transactions. Cargo-holders did not expand discounts. Spot discounts for parity copper were in the RMB 350-400/mt range, while spot discounts for premium copper remained at RMB 300/mt, and discounts for a portion of “Jiangtong” copper stood firm at RMB 280/mt. Traded prices grew from RMB 50,350-50,600/mt in the morning to RMB 50,600-50,700/mt in the afternoon, while spot discounts stood firmer, an indication of optimistic copper price outlook.

    Aluminum:

    SHFE aluminum prices slipped in the morning, but went higher in the afternoon. SHFE spot-month contract aluminum prices failed to climb above RMB 15,000/mt despite of moving above daily average line. SHFE three-month contract aluminum prices stabilized at RMB 15,000/mt, and inched up to RMB 15,100/mt supported by short-coverings. Positions of three-month contract increased by 4,980 lots, indicating the optimistic sentiment of market players improved.

    In spot market, offers by CHALCO were RMB 14,900/mt, setting the highest spot aluminum prices today. Transactions were weak in the morning, but recovered in the afternoon. Today, Rusal quoted at RMB 14,850-14,870/mt, limiting the lowest spot aluminum prices, so other low-end aluminum was traded at RMB 14,870-14,880/mt, and trading volume increased supported by optimistic market outlook. Spot aluminum prices faced difficulties to break through RMB 15,000/mt. If SHFE aluminum prices can stand firm at RMB 15,100/mt next week, spot discounts may expand further. However, if no low-priced imported aluminum is available, prices for domestic aluminum will keep firm, which will help limit the discounts.

    Lead:

    In Shanghai lead market, SMM set the upper lead prices at RMB 16,000/mt, indicating that market players felt difficulty to break through RMB 16,000/mt. Slight reduction in LME lead prices failed to dampen the optimistic confidence and firm offers of cargo-holders, and limited deals were done in the RMB 15,850-15,900/mt range, while offers for high-end lead remained firm at RMB 16,000/mt. Downstream producers were standing on the sidelines, and lead prices still faced greater pressure at RMB 16,000/mt given weak transactions.

    Zinc:

    SHFE zinc prices opened flat. SHFE three-month contract zinc prices stabilized at RMB 16,550/mt in the morning, and later climbed to RMB 16,785/mt in the afternoon driven up by rising LME zinc prices and bullish domestic A-share stock market, an indication of new pressure around RMB 16,800/mt. SHFE spot-month contract zinc prices moved up and closed at RMB 16,400/mt supported by daily average line, but with greater resistance. The price spread between different contracts narrowed, and spot discounts expanded further.

    In spot market, zinc prices stood firm at RMB 15,950/mt in the morning, and offers for #0 zinc were RMB 16,000/mt, and trading volume increased significantly during weekend upon bullish market sentiment. Spot zinc prices inched up to RMB 16,000/mt in the afternoon, and cargo-holders were reluctant to sell goods and were waiting for a higher zinc prices next week. The price spread between SHFE zinc prices and spot zinc prices have been more than RMB 600/mt, leaving more profit margins for cargo-holders. Generally, zinc market is recovering gradually.

    Tin:

    In Shanghai tin market, Yunnan Tin Corporation raised offers to RMB 120,000/mt, but market players remained quiet about its price adjustment, resulting in limited cargo movement. However, the market sentiment improved anyway, and traders raised tin prices to RMB 117,000/mt immediately after other low-end tin was sold out at RMB 116,500/mt. The trading sentiment was brisk. Whether or not domestic tin prices can rebound further will depend on LME tin price trends.

    Nickel:

    In Shanghai nickel market, cargo-holders reduced nickel prices by RMB 1,000/mt from previous trading day in the morning, and Jinchuan nickel was traded at RMB 135,000/mt, while imported nickel prices were RMB 134,000/mt. The failure of LME nickel price hike in the afternoon failed to stimulate the purchasing interest of consumers. The situation of slow pace of LME nickel prices to follow other base metal prices and worse domestic nickel prices will remain unchanged in the short term.

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