SHANGHAI, May 17 (SMM) --
On Friday, SHFE copper market opened low at RMB 56,440/mt, despite of slight increases on the LME copper market overnight, fluctuating lower. In the morning trade, SHFE copper market tried to break out RMB 56,550/mt twice, but failed to materialize, setting a daily low of RMB 56,150/mt. In the afternoon business, SHFE copper market rallied with rebounding domestic stocks market, and finally closed at RMB 56,360/mt from a session high of RMB 56,650/mt, with wild daily price fluctuations. Both positions and trading volumes dropped significantly, with positions for SHFE August delivery copper down 2,060 lots to 196,000 lots, and trading valued at RMB 102.3 billion.
In the spot market, spot premiums were between RMB 0-positive RMB 100/mt. Spot traded prices dropped with falling prices on the SHFE copper market. Traded prices for standard-quality copper were down from RMB 56,480/mt to RMB 56,300/mt, and those for high-quality copper fell to RMB 56,300~56,400/mt from RMB 56,550/mt. Trading sentiment in the morning trade was low, with sluggish transactions reported. Rebounding prices on the SHFE copper market in the afternoon trade stimulated some bargain hunters, but cargo-holders became unwilling to sell goods to an extent, with spot premiums up to positive RMB 50-120/mt, resulting in improvement in transactions. As the delivery date nears, spot premiums are not expected to see large changes, and technical rebounds help cargo-holder confidence towards price stabilizing in the coming week, while the road of rebound will be uneven.
The higher LME aluminum prices failed to stimulate SHFE aluminum prices to open higher on May 14th, and SHFE 1007 aluminum contract prices opened at RMB 15,680/mt, with the highest level and the lowest level at RMB 15,725/mt and RMB 15,625/mt, respectively, with the daily moving range of only RMB 100/mt, and finally prices ended at RMB 15,650/mt, with prices struggling around the 5-day moving average all day, down RMB 15/mt compared with the previous trading day, or down 0.1%. Total positions increased by 1,742 lots to 289,058 lots, and total trading volumes were 98,114 lots.
Traders held high interest in moving goods in the spot markets, leaving downstream consumers in a stronger position, and mainstream traded prices moved lower significantly as a result, and overall market sentiment was neutral as well. Aluminum prices have consolidated at the low-end of price range recently, and SHFE aluminum prices are expected to continue to climb or fall at a slower pace in the near term.
Downstream producers remained on the sidelines during the last trading day of the week, with no large purchases reported. Traders, with no clear market directions available were reluctant to reduce prices greatly if no buying interest was heard from downstream producers, given high price offers from lead producers and falling supply of low-priced goods. Deals in the Shanghai market were done in the RMB 15,200-15,250/mt range.
SHFE three-month zinc contract prices moved narrowly around RMB 17,000/mt on May 14th, and market pessimistic sentiment eased as LME zinc prices began stabilizing. Positions of SHFE three-month zinc contract prices declined by 6,476 lots, with declines mainly short positions. However, overall spot transactions were general on the last trading day of last week. #0 zinc was traded between RMB 16,500-16,580/mt in Shanghai, with spot discounts moving around RMB 300/mt against SHFE 1007 zinc contract prices, while #1 zinc was traded between RMB 16,450-16,500/mt. Although market supply was limited, downstream consumers still purchased goods on an as-needed basis, and with no phenomena of stock build-up at lower prices.
In addition, a number of downstream consumers preferred to make deals by SHFE 1005 zinc contract in futures market as the delivery date nears, and transactions were very brisk in futures market as a result. SHFE zinc inventories increased by 23,556 mt in the week ended May 14th from a week earlier, with total inventories reaching a new high of 286.4 kt. SMM predicts growth in LME zinc inventories will slow in the coming week.
Market confidence re-established on May 14th as Spain and Portugal had taken initiative measures to reduce deficit to counter debt crisis. In this context, LME tin prices closed at USD 17,800/mt, up USD 100/mt from a day earlier, with highest price at USD 17,850/mt and lowest price at USD 17,600/mt. Daily trading volumes were 109 lots and positions were 20,520 lots. On May 14th. LME tin prices were weighed down and opened low at USD 17,700/mt as the US dollar advanced, and later fell to USD 17,550/mt.
In the Shanghai tin spot market, the pessimistic market sentiment extended and transactions were sluggish. Cargo-holders kept firm offers and were reluctant to lower offers as they believe current market is in a stalemate and transactions are unlikely to improve. Purchasing interest won’t improve unless tin prices rise significantly. In this context, prices remain flat and demand was soft. Prices of unknown brand tin were between RMB 142,800-143,000/mt, and prices of tin from Yunnan Gejiu Zili Metallurgy Co.,Ltd, Yunnan Chengfeng Non-ferrous Metals Co., Ltd, Liuzhou China Tin Group Co., Ltd. and Yunnan Tin group were between RMB 143,500-144,500/mt.
LME nickel prices fluctuated at low levels after a low open at USD 22,600/mt on May 13th, but later were boosted to rebound as high as USD 23,159/mt following initiative measures to reduce deficit to counter debt crisis by Spain and Portugal. LME nickel prices closed at USD 22,790/mt, up USD 199/mt from a day earlier. Daily trading volumes were 1,785 lots and positions were 96,257 lots. LME total nickel inventories were 142,080 mt, down 540 mt.
Goods held by cargo-holders were very limited, as financial situation was not optimistic both at home and abroad and market players remained cautiously. Supply of low-priced goods was rarely seen in the market, and profits for traders were extremely thin as ex-works prices from Jinchuan Group were near cost level at traders, resulting in firm offers from cargo-holders in the morning trading session. The US dollar index fluctuated at 85.5, which weighed down base metal prices. Spot prices didn’t fall slightly until LME nickel prices fell during the Asian trading period. Prices of Falconbridge's nickel and nickel from Russia and Jinchuan Group were between RMB 176,000-176,500/mt, and transactions were sluggish.
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