SHANGHAI, Mar. 29 (SMM) --
On Friday, the June delivery copper contract on the SHFE market opened slightly higher at RMB 59,350/mt, with prices fluctuating upward for the whole trading day, and prices finally ended at a daily high level of RMB 60,160/mt, up RMB 840/mt. SHFE copper inventories in the week ended March 26 dropped unexpectedly, putting the rising trend over the past several weeks to an end, with overall inventories down 13,636 mt to 155,465 mt. Declines on SHFE copper inventories will likely boost the LME copper market overnight.
In the morning trade, spot discounts remained in the market, with discounts for copper from Jiangxi Copper at negative RMB 320-330/mt. Discounts for high and standard-quality copper were at RMB negative 350 and negative RMB 400/mt, respectively. Since copper prices on the SHFE market fluctuated widely during the major trading hours, discounts were between RMB 350-450/mt when SHFE April delivery copper contract prices were above RMB 59,500/mt, and discounts were in the negative RMB 250-350/mt range when SHFE April delivery copper contract prices were below RMB 59,300/mt.
Market confidence was improved by strong price performance in the morning business. Coupled with stock replenishment on Friday, market sales were smooth, with brisk trading sentiment reported, dealing in a range of RMB 58,950-59,200/mt. In the afternoon business, copper prices were continuing to move in the price range seen in the morning. Discounts for high-quality copper were between negative RMB 350-370/mt, and discounts for standard-quality copper were in the negative RMB 400-450/mt range, with deals mainly done between RMB 58,900-59,200/mt.
Market is keeping a close eye on the European Union Leader Summit. If the joint EU-IMF aid plan for Greece’s debt issues is accepted by the market, the US dollar will fall from existing high levels. By then, copper prices will gain upward momentum, looking for opportunities to rise above the existing fluctuating range.
On March 26th, LME aluminum prices stabilized as the US dollar slipped. SHFE aluminum prices opened low but moved higher, and finally closed up after closing down for 4 consecutive days, with prices mainly moving above moving averages. SHFE 1006 aluminum contract prices opened low at RMB 16,350/mt, and later climbed to RMB 16,595/mt in the afternoon, with prices ending at RMB 16,560/mt, up 0.94%, or up RMB 155/mt. Total positions declined by about 7,400 lots. SHFE aluminum prices mostly moved above RMB 16,500/mt in the afternoon, but will struggle around this mark next week (March 29th - April 2nd).
SHFE aluminum prices rebounded, reinforcing market belief that any downward room for aluminum prices will be limited, and purchases were up, and offers quoted by cargo-holders inched up as well. In this context, traded prices for spot aluminum increased from RMB 15,930/mt to near RMB 16,000/mt, with spot discounts ranging between RMB 200-250/mt, and with most deals made around RMB 15,980/mt. Large smelters still limited sales when aluminum prices were below RMB 16,000/mt, and overall trading sentiment was brisk. Aluminum prices will face great resistance when moving higher to RMB 16,000/mt.
A wait-and-see attitude dominated domestic lead market, since higher prices failed to stimulate downstream buying interest. Due to doubt on sustainability of price gains, actual trading volume was limited despite of brisk enquiries. Transactions in the Shanghai market were done between RMB 15,300-15,400/mt. LME lead prices showed moderate performance on the electronic trading in the afternoon business, and some traders stood on the sidelines, waiting for a clear market direction from LME lead market.
On March 26th, the US dollar slipped during the Asian trading period, helping support metals prices. SHFE zinc prices opened slightly high, and later moved higher all the way. SHFE 1006 zinc contract prices opened at RMB 18,380/mt, but later declined after soaring to RMB 18,650/mt during the spot trading period at noon, with support reported from moving averages. SHFE zinc prices continued to rebound in the afternoon, with price ending at RMB 18,600/mt, but with resistance found at RMB 18,600/mt. Transactions increased, but total positions declined. Positions of SHFE 1006 zinc contract declined by 27,810 lots, and positions of SHFE 1007 zinc contract were up continuously. SHFE zinc prices will face strong struggles between long and short positions at RMB 18,500/mt in the short term, and will continue to fluctuate widely.
In the spot market, #0 zinc prices were near RMB 18,000/mt, and purchases were up as well, supported by rebounding SHFE zinc prices in the morning session. However, inquiries were down after SHFE zinc prices slipped, but traded prices remained above RMB 17,900/mt. #1 zinc was traded around RMB 17,850/mt.
US dollar was still affected by sovereign debt crisis and advanced further to 82.24, but metal prices were insensitive to the news, with prices declining much slower. On March 25th, LME tin prices closed at USD 17,500mt, up 75/mt from the previous day, with highest level at USD 17,685/mt and lowest level at USD 17,400/mt. On March 26th, US dollar index fell below 82, and LME tin prices moved up.
In the Shanghai spot market, spot prices were basically flat from previous day’s level. Traded prices of major brand tin were in the RMB 138,500-140,000/mt range, and traded prices of unknown brand tin were in the RMB 136,500-138,000/mt range. Overall trading sentiment was sluggish last week. Some end-users entered the market to make purchase on March 26th, resulting relatively brisk transactions.
On March 25t, LME nickel prices opened at USD 22,200/mt, and closed at USD 22,650/mt, with highest level at USD 22,837/mt and lowest level at USD 22,100/mt. Trading volumes were 1,475 lots and positions were 95,845 lots. On March 26th, LME nickel prices opened at USD 22,700/mt and reached the highest level at USD 23,369/mt. Prices were pushed up all the way and easily exceeded the resistance level of USD 23,000/mt.
In the spot market, transactions were stale on March 26th. As price spread between LME nickel prices and domestic nickel prices expanded, arbitragers entered into the spot market to make purchases. Suppliers concerned that the ongoing rising prices would make it difficult for goods movement in a large amount. There were relatively many arbitragers in the market to take advantage of price spread, and domestic nickel prices had momentum to move up as there may have the risk of profit-taking when LME nickel prices were pushed up further. There were few end users in the market, and domestic nickel prices shall still lower than LME nickel prices in the short term. Traded prices of imported nickel were at RMB 162,000/mt and traded prices of nickel from Jinchuan Group were in the RMB 162,500-163,000/mt range.
To contact the writer on this report: Angelawang@smm.cn
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