SHANGHAI, Apr. 7 (SMM) --
SHFE copper market extended its gains on the first trading day after the three-day Qingming holiday, supported by positive economic data overseas. The July delivery copper contract on the SHFE market opened at RMB 63,100/mt and closed at RMB 63,370/mt, up RMB 660/mt or 1.05% from the previous level.
In the spot market, discounts narrowed from a week earlier. Discounts for high-quality copper were between negative RMB 350-280/mt, dealing in the RMB 61,850-62,050/mt range; discounts for standard-quality copper were in the negative RMB 420-370/mt, with transactions done between RMB 61,750-61,850/mt; discounts for hydro-copper were between negative RMB 450-400/mt. Strengthening copper prices and arbitrage trading activities limited spot supply, while downstream buying interest was low when LME copper prices approached USD 8,000/mt, mainly purchasing goods on an as-needed basis, with stable transactions reported.
Market views are divided on copper price outlook after copper prices hit a new high. Optimists believe copper prices will climb higher, and a traditional high demand period in April will support domestic copper prices. Some neutralists believe LME copper prices will fluctuate at USD 8,000/mt, with intense struggle expected between long and short positions.
SHFE 1006 aluminum contract prices fluctuated around RMB 16,780/mt after opening slightly high at RMB 16,730/mt, but jumped in the afternoon driven up by rising LME aluminum prices, with prices soaring to as high as RMB 16, 870/mt. SHFE 1006 aluminum contract prices pared some previous gains before closing, with prices finally ending at RMB 16,815/mt, up RMB 120/mt compared with the previous trading day, or up 0.72%. Total positions surged by 14,342 lots to 309,552 lots, and trading volumes increased to 137,990 lots. Technically, SHFE three-month aluminum contract prices moved around 5-day moving average.
In the spot market, SHFE aluminum prices moved higher following continuously rising LME aluminum prices. Meanwhile, downstream fabricators’ inquiries were up, resulting in slightly improving market sentiment. Aluminum prices enter the upward track gradually, but whether or not market fundamentals can lend support to aluminum prices remains unknown.
Trading sentiment in domestic lead market was lackluster in the morning business, caused by downstream producers' reluctant move to buy products at prices above RMB 15,500/mt. In the afternoon trade, inquiries and downstream purchases increased following a strong LME lead market, but smelters and traders showed unwillingness to move goods due to improved confidence from bullish trends in copper and zinc markets, leaving limited sales. Transactions in the Shanghai market were done in the RMB 15,650-15,700/mt range.
SHFE zinc prices opened high and went higher, and zinc market sentiment was brisk all day supported by the fact that SHFE aluminum prices set a new high. SHFE 1007 zinc contract prices opened at RMB 19,540/mt, and closed at RMB 19,690/mt, up 0.34%, with the highest level reported at RMB 19,790/mt. Positions increased by 17,196 lots to 209,640 lots, with increases mainly from long positions, and the long sentiment was gaining in the market.
Spot market sentiment was also better than before, and although yesterday was the first trading day after the three-day Qingming holiday, and SHFE zinc prices moved higher, traded prices for Shanghai #0 zinc climbed gradually to RMB 18,720/mt from RMB 18,680/mt supported by rising copper and aluminum prices, with the highest traded prices reported at RMB 18,750/mt, and with spot discounts narrowing against SHFE 1007 zinc contract prices. #1 zinc was traded between RMB 18,650-18,700/mt, and a limited number of traders or producers of #1 zinc were unwilling to move goods, resulting in limited market supply. In general, the optimism was emerging in the market, but any upward room for zinc prices to rise is believed to be limited since copper prices have been on the high side.
On April 6th, LME tin prices opened at USD 18,700/mt, up USD 300/mt compared with the level on April 1st, but later slipped to certain extend.
In the spot market, transactions were sluggish due to a lack of LME prices as guidance and from high offers from suppliers. In the afternoon session, transactions in the spot market became brisk immediately after LME tin prices opened at USD 18,700/mt, but were mainly made among traders to replenish stocks, with most downstream producers still adopting a wait-and-see attitude. Standard quality tin from Yunnan Tin group was mainly traded at RMB 142,500/mt, and unknown brand tin was mainly traded between RMB 141,500-141,800/mt, slightly up from last Friday level, and overall trading sentiment was relatively brisk. Downstream producers could only adopt a wait-and-see attitude due to high cost pressure given that tin prices has been soaring. However, traders believed that wait-and-see sentiment from downstream producers won't last long as downstream producers have to replenish stocks to meet production demand since they had insufficient raw materials on hand, if tin prices continue to advance. With regard to future market outlook, spot tin prices will receive support temporarily from bullish LME tin prices as well as from high offers from smelters, but the fact that lackluster downstream demand will prevent tin prices from rising further can not be ignored.
LME market was closed on April 2nd and April 5th due to the Good Friday and the Easter Day respectively. On April 6th, LME nickel prices opened at USD 25,246/mt in electronic trading, testing the highest level at USD 25,300/mt for two times and testing the lowest level of USD 24,800/mt.
In the spot market, Jinchuan Group raised ex-works prices again by RMB 2,000/mt to RMB 173,000/mt. However, transactions in the spot market haven't picked up along with rising nickel prices from Jinchuan Group, and overall trading sentiment was moderate, with few purchasers entering the market to buy relatively low-priced goods. In the morning session, nickel from Jinchuan Group was mainly traded between RMB 170,500-171,000/mt, and traded in the RMB 171,000-172,000/mt range in the afternoon session. Supply of goods was ample in the market, with few imported nickel. Inventories in the warehouses were mainly piled up by arbitrage traders.
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