SHANGHAI, Mar. 9 (SMM) --
On Monday, SHFE copper market climbed further after a higher open, with SHFE June delivery copper contract closing at a daily high level of RMB 60,690/mt. Trading volume fell, but positions experienced increases. SHFE forward-month copper contracts all rallied above RMB 61,000/mt, and SHFE current month copper contract ended at RMB 59,850/mt, testing RMB 60,000/mt. Price increases of all copper contracts on the SHFE market were around 2%, with prices all rising above the 5-day moving average, and with an upward track available based on the KDJ indicator.
In spot copper markets, buying interest was depressed by jumping copper prices on the SHFE market, resulting in depressed transactions. Suppliers were mixed on sales of goods. Suppliers of domestic copper were unwilling to move goods at discounts in the range of negative RMB 200-300/mt in view of the upcoming delivery, with limited supply. However, suppliers of imported copper adjusted copper spot discounts, in order to promote sales. On Monday, the price gap between high and standard-quality copper was only RMB 50/mt. Spot transactions in the morning session were done between RMB 59,400-59,550/mt, and traded prices rallied with higher copper prices on the SHFE market to the RMB 59,500-59,600/mt range in the afternoon business.
On March 5th, LME aluminum prices set a new high within nearly one month supported by a weaker US dollar, and then advanced to USD 2,260/mt, with prices finally closing at USD 2,225/mt. LME aluminum prices again climbed to the USD 2,250/mt mark yesterday, helping push up SHFE aluminum prices. SHFE aluminum prices opened slightly high, and then advanced all the way. Positions of SHFE 1006 aluminum contract increased by more than 19,600 lots, and SHFE aluminum prices moved strongly above moving average lines during spot trading period, with prices hitting the highest level of RMB 17,135/mt and later closing at RMB 17,075/mt, up 1.19%.
SHFE 1006 aluminum contract prices stood firm at RMB 17,000/mt, and got the support from technical indicators, with prices expected to break through the sustainability of the resistance at 60-day moving average line in the short term. SHFE spot-month aluminum contract prices tested the stability of RMB 16,500/mt yesterday, with prices closing above RMB 16,550/mt, up more than 1%. SHFE spot-month aluminum contract prices will test the 30-day moving average line. The US dollar index will test the 80 mark, with technical indicators showing signs of fluctuating lower. LME aluminum prices have risen for five consecutive days, and have stood above all moving average lines yesterday, so LME aluminum prices will stand firm at USD 2,250/mt, while SHFE 1006 aluminum contract prices will also move higher to RMB 17,250/mt.
Yesterday, trading sentiment was bullish in the spot aluminum market, and traded prices advanced following rising SHFE aluminum prices, with deals mainly made between RMB 16,280-16,320/mt in the morning, while traded prices climbed from RMB 16,300/mt to RMB 16,350/mt in the afternoon. The situation of weak SHFE nearby aluminum contracts and weak SHFE forward aluminum contracts boosted market confidence. Spot discounts remained at RMB 200/mt, attracting arbitrageurs to enter the market, and market offers advanced steadily as a result, but only limited consumers purchased goods. Spot aluminum prices have risen to RMB 16,500/mt in Guangdong market, and spot aluminum prices also tried to test the RMB 16,500/mt mark in east China market, but the sell-off pressure at higher prices will hamper the upward momentum in aluminum prices. Aluminum prices will continue to climb steadily this week, and spot discounts will narrow gradually as the delivery date nears.
Trading sentiment in domestic lead market on Monday improved slightly compared with a week earlier, and this may be caused by stabilizing lead prices from March 4th. Coupled with larger price gains on the LME market during Asian trading hours, market pessimistic sentiment waned to some extent, with higher interest in purchasing goods. Traded prices were between RMB 15,650-15,750/mt range, and with deals done at RMB 15,850/mt in the afternoon trade following a firmer LME lead market. Downstream producers told SMM that negative impact on operating rates from shortages of staff was limited, and orders after the holiday improved from pre-holiday levels.
If LME lead prices stabilize, transactions in domestic lead market are expected to improve further.
SHFE zinc prices led metals prices increases yesterday, and SHFE three-month zinc contract prices opened high at RMB 18,870/mt in the morning, and then moved higher strongly, with prices finally closing at RMB 19,235/mt, up 4.45%, and positions increased significantly. It is worth noting that signs of increases in long positions from Zhejiang provinces appeared, and zinc prices are expected to move on an upward track in the short term.
However, spot zinc prices rose at a much slower pace compared with SHFE zinc prices. #0 zinc was traded around RMB 18,350/mt in the Shanghai market, and spot discounts have expanded from a range of RMB 700-750/mt to a range of RMB 800-850/mt against SHFE 1006 zinc contract following advancing SHFE zinc prices, and spot discounts even widened to RMB 900/mt in the afternoon, with traded prices for #0 zinc were RMB 18,300/mt. Market supply was sufficient, but the rising zinc prices failed to improve downstream purchasing interest, with total trading volumes very limited. The downstream consumers were pessimistic with regard to the soaring zinc prices given limited improvement in current market consumption. However, it is worth noting that the weak performance of spot market yesterday also affected SHFE zinc market, but SHFE zinc prices remained on an upward track, and trading volumes and positions were positive, so zinc prices will continue to move higher in the short term.
Last Friday, LME tin prices finally opened at USD 17,400/mt after a long time struggle between long positions and short positions. On March 8th, market sentiment was inspired by February’s lower-than-expected employment figure from the US as well as unchanged economic policy from China. In this context, LME tin prices were pushed to USD 17,600/mt, and later declined due to pressure from short positions, with prices finally closing at USD 17,350/mt, slightly up USD 70/mt.
In the Shanghai tin market, transactions remained sluggish from last Friday’s level. Although upstream producers further lifted their offers and reported limited supply of goods to attract consumers, downstream consumers were still hesitant to make purchases at current price level, with cautiously wait-and-see sentiment expanding the market. Traders also made high offers along with producers under the context that they had high cots due to difficulty in finding low-prices goods and due to the fact that they were still positive towards LME tin price trend. On March 8th, overall trading sentiment was sluggish, with mainstream traded prices in the RMB 141,000-141,500/mt range. Transactions were mainly made with goods from Yunnan Tin group, Yunnan Chengfeng Non-ferrous Metals Co., Ltd, Yunnan Gejiu Zili Metallurgy Co.,Ltd and Guangxi Pinggui Feidie Co., Ltd.
Last Friday, LME nickel prices opened at USD 22,400/mt and closed at USD 22,405/mt, with highest level reaching USD 22,750/mt and lowest level touching USD 22,203/mt. Trading volumes were 1,724 lots and positions were 101,430 lots. Since Australia may further increase interest rate, while China still hasn’t stepped into peak consumption period and USD dollar index is expected to further strengthen, commodity prices are expected to continue experience fluctuations. On March 8th, LME nickel prices opened at USD 22,450/mt, with relatively narrow fluctuation range, and prices moved up to test USD 22,700/mt, with relatively brisk transactions.
In the Shanghai nickel market, overall trading sentiment was relatively sluggish. On March 8th, transactions were still mainly made among traders, and supply of goods was relatively ample in the market. Traded prices of imported nickel were in the RMB 160,000-160,500/mt range, with few exceptions at USD 161,000/mt, and prices of nickel from Jinchuan Group were in the RMB 161,000-162,000/mt range. Transactions were brisk at low-end prices, but most end users still adopted a cautiously wait-and-see attitude. There were only few transactions in the market, and domestic nickel prices had difficulty in keeping pace with LME nickel prices.
To contact the writer on this report: Angelawang@smm.cn
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