SMM Daily Review (Oct. 28)

SHANGHAI, Oct. 29 (SMM) --

    Copper:

    SHFE copper prices slipped after soared in the morning, and closed up after bottomed out in the afternoon. SHFE three-month contract copper prices hovered in the RMB 51,500-51,700/mt range in the morning, higher than daily average lines, but struggled to stabilize above RMB 51,000/mt in the afternoon. Positions increased in the morning, and total trading volumes increased significantly to more than 410,000 lots. SHFE spot-month contract copper prices moved in the RMB 51,300-51,400/mt in the morning, but dipped in the afternoon. SHFE copper prices tested 5-day average lines for two consecutive days, waiting for a new direction after short-term fluctuations technically.

    In spot market, spot discounts remained in the RMB 300-350/mt range in the morning, with traded prices of RMB 50,950-51,150/mt. The overnight positions for hedge were restricted by rising SHFE copper prices, hampering the cargo movement in spot market. The warrants of premium copper were more attractive by the end of October, so spot discounts for “Guixi” copper stood firm at RMB 250-280/mt, and other premium copper, such as high-purity copper from Jinchuan Group and goods from Jiangxi Copper, were also difficult to obtain. Spot discounts for parity copper were RMB 350-380/mt, while spot discounts for hydro-copper and low-end copper were RMB 400-500/mt, with traded prices below RMB 51,000/mt. In the afternoon, spot discounts narrowed to RMB 150/mt along with sliding SHFE copper prices, with traded prices hovering in the RMB 50,700-51,000/mt range.

    Recently, the situation of strong forward contract and weak near-by contract in SHFE market, as well as expanding discounts in spot copper market helped increase the market interest in purchasing near-by contracts and selling off forward contracts, and trading volumes between cargo-holders and downstream manufacturers declined.

    Aluminum:

    SHFE aluminum prices opened high and went higher. SHFE three-month contract aluminum prices climbed to RMB 15,560/mt, breaking through August highs and setting a new high in nearly 15 months. Positions increased by more than 30,000 lots in the morning, but declined in the afternoon due to profit-takings. Total turnover reached RMB 24.48 billion unexpectedly. The situation of strong forward contract and weak near-by contract remained in the market, and SHFE spot-month contract aluminum prices found support at RMB 15,000/mt.

    In spot market, spot discounts expanded to RMB 100/mt due to soaring SHFE aluminum prices. CHALCO sold a large amount of goods at RMB 15,000/mt in the morning, raising spot discounts to nearly RMB 200/mt. Market offers for overnight hedge positions were RMB 15,100/mt passively, and offers for imported aluminum from Rusal declined ot RMB 15,030/mt, setting the mainstream aluminum traded prices at RMB 15,050/mt in spot market. However, downstream consumers were reluctant to purchase when aluminum prices were above RMB 15,000/mt, resulting in lackluster trading sentiment. Whether or not aluminum prices can stand firm at RMB 15,000/mt will depend on the profit margins between different contracts in SHFE market tomorrow.

    Lead:

    In Shanghai lead market, SMM lead prices remained unchanged at RMB 15,800-16,000/mt for two consecutive trading days, and actual market traded prices were below RMB 16,000/mt and fell to RMB 15,750/mt. Limited low-priced goods appeared in the market again. Domestic lead prices may fall to RMB 15,600/mt if LME lead prices experience further reductions.

    Zinc:

    SHFE zinc prices failed to stabilize at RMB 17,250/mt, and only moved above daily average line in the morning, but fell rapidly in the afternoon from RMB 17,000/mt to RMB 16,750/mt. Positions declined by more than 26,000 lots due to large volume of profit-takings. SHFE spot-month contract zinc prices found support at RMB 16,500/mt temporarily.

    In spot market, traded prices were about RMB 16,600/mt in the morning, but fell to the range of RMB 16,400-16,500/mt in the afternoon, with ample market supply. Transactions were general when zinc prices were below RMB 16,500/mt. Whether or not spot zinc transactions are brisk will depend on profit margins for arbitrageurs.

    Tin:

    In Shanghai tin market, tin producers kept their offers firm at RMB 118,000/mt, with very scarce cargo movement. Traders moved low-priced low-end tin, trying to attract limited consumers.

    Nickel:

    In Shanghai nickel market, as LME nickel prices stabilized at USD 18,600/mt, so offers for Jinchuan nickel were flat at its ex-works prices of RMB 132,000/mt, while offers for imported nickel were RMB 131,000/mt. Cargo-holders were cautious about cargo movement, and downstream manufacturers began rational purchases when nickel prices were approaching to RMB 130,000/mt.

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