SHANGHAI, Mar. 25 (SMM) --
On Wednesday, SHFE June delivery copper contracts opened slightly lower at RMB 59,620/mt, with prices generally moving around RMB 59,750/mt in morning trade. The three-month delivery copper contract on the SHFE market showed stable performance at the beginning of afternoon business, but plunged at 14:00 due to the US dollar strength, falling as low as RMB 59,030/mt. Later, the most active copper contract on the SHFE market edged up, with prices fluctuating between RMB 59,150-59,250/mt before the end of trading day.
In the spot market, discounts were little changed from yesterday's level in the morning trade, but price gap between standard and high-quality copper narrowed, resulting in smooth sales of high-quality goods. Discounts for Guiye and Tongguan brand copper at negative RMB 250/mt, and discounts for Dajiang brand copper were between negative RMB 280-300/mt. Discounts for imported standard-quality copper were at negative RMB 350/mt. Price fluctuations in the morning trade were within RMB 100/mt, leaving a tighter band of traded prices, between RMB 58,950-59,100/mt.
Continuing price corrections in recent days eroded market confidence, and downstream producers purchased goods on an as-needed basis, with no significant improvement in consumption. In other news, traders and smelters represented slight reluctance to move goods, leading to low trading sentiment. Spot discounts at the beginning of afternoon business were flat with morning levels, while narrowed around 14:00 when copper prices on the SHFE market tumbled, but with limited declines. Spot discounts were around negative RMB 200/mt for high-quality copper, and discounts for standard-quality copper were between negative RMB 230-250/mt. Traded prices in the afternoon trade were in the RMB 58,650-58,950/mt range. Falling prices further depressed the already low-buying market, resulting in limited sales in the afternoon business.
SHFE aluminum prices tried to climb to RMB 16,740/mt in the morning after opening low, but plunged by over 1% in the afternoon as the US dollar index exceeded 81. SHFE three-month aluminum contract prices dipped to RMB 16,465/mt, with prices closing at RMB 16,520/mt, down RMB 130/mt, or down 0.78%. The low-end of SHFE aluminum price range slid gradually restricted by moving averages, and SHFE three-month aluminum contract prices have fallen below RMB 16,500/mt. SHFE current-month aluminum contract prices opened at RMB 16,230/mt, but dipped to RMB 16,165/mt in the afternoon, and finally closed at RMB 16,240/mt. SHFE aluminum prices will continue to fluctuate lower.
In the spot aluminum market, spot discounts moved between RMB 200-250/mt amid weak performance of SHFE aluminum prices, with limited deals made at RMB 16,100/mt and most deals made between RMB 16,080-16,090/mt, and purchasing interest remained low. Spot aluminum prices fell below RMB 16,000/mt, to a range of RMB 15,950-15,980/mt in the afternoon due to plunging SHFE aluminum prices, and the pessimism emerged in the market, further depressing buying interest. Market confidence crumpled after spot aluminum prices fell below RMB 16,000/mt, with the selling pressure expected to increase and the low-end of price range expected to fall further.
Despite of mixed views on market outlook, downstream buying interest in domestic lead market was stimulated when prices fell below RMB 15,500/mt. Hence, domestic lead market reported more purchasing activities, though the LME lead market overnight showed weak performance. Some downstream producers said they were considering buying more goods at the existing price level. However, lead producers represented some unwillingness to sell products below RMB 15,500/mt.
SHFE zinc prices tried to advance to RMB 18,600/mt in the morning after opening low, but slumped by RMB 1.55% to RMB 18,280/mt in the afternoon given the stronger US dollar, with prices finally closing at RMB 18,370/mt. Positions of SHFE three-month zinc contract soared by 17,974 lots, and the turnover rate reached 277.83%. Trading sentiment was brisk in the afternoon, and positions of SHFE 1007 zinc contract grew gradually, with positions up 13,538 lots, and the turnover rate also reached over 185%. SHFE current-month zinc contract prices stood at RMB 18,000/mt. Technically, SHFE three-month zinc contract prices were restricted by all moving average lines, showing no clear market direction.
In the spot zinc market, the fluctuating SHFE zinc prices had trouble in supporting #0 zinc to be traded at RMB 18,000/mt, and #1 zinc was traded at RMB 17,900/mt, while #0 zinc was traded below RMB 18,000/mt. The slump in SHFE zinc prices caused spot zinc prices to decline to RMB 17,800/mt. Traders actively moved goods originally for hedge, but purchasing interest was very low, resulting in lackluster transactions. Spot zinc prices are expected to fall to RMB 17,800/mt, with the low-end of price range may slip gradually in the short term, but consumers still held low interest in purchases at lower prices in view of the emerging pessimism in the market.
On March 23rd, LME tin prices experienced weak performance after a high open, and closed at USD 17,510/mt, slightly down USD 15/mt, with highest price reaching USD 17,800/mt and lowest price at USD 17,510/mt. On March 24th, only LME tin prices were temporarily firm and fluctuated narrowly under the context that neighboring metal prices all declined caused by upward movement of US dollar.
In the Shanghai tin spot market, prices were flat from yesterday's level, with traded prices of major brand tin in the RMB 139,000-140,000/mt range and traded prices of unknown brand tin in the RMB 137,000-138,000/mt range. LME tin price trend was still not clear, while demand from downstream consumers didn't improve and purchasers were still waiting prices to fall further, resulting in few buyers in the market on March 24th. Smelters continued keeping relatively firm offers and traders had difficulty in replenishing stocks at low prices, resulting unwillingness to move goods at low prices by most traders. In this context, buyers and suppliers struggled, and transactions were sluggish in the market.
On March 23rd, LME nickel prices opened at USD 22,300/mt and closed at USD 22,500/mt, with highest price at USD 22,630/mt and lowest price at USD 22,057/mt. Daily trading volumes were 1,342 lots and positions were 98,218 lots. On March 24th, LME prices opened at USD 22,500/mt which is also the highest price of the day. As US dollar experienced relatively firm performance during the Asian trading period, LME nickel prices fluctuated narrowly.
In the spot market, transactions were relatively sluggish compared with yesterday's level. As a trader in Shanghai purchased a large amount of Russian nickel to seek arbitrage, supply of such nickel was tight and offers remained flat, causing few buyers in the market. In addition, some downstream producers moved a large amount of goods in the market, and supply of goods increased accordingly. Prices of imported nickel from Russia were in the RMB 159,000-159,500/mt range and traded prices of nickel from Jinchuan Group were in the RMB 159,800-160,000/mt range.
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