SHANGHAI, June 1 (SMM) --
SHFE copper market generally fluctuated with performance in China’s stocks market on Monday when US and UK markets were closed. Domestic stocks market moved higher after opening, and buying activities emerged at low levels in the morning trade, helping SHFE copper prices advance briefly. However, SHFE September delivery copper contract felt great pressure at RMB 55,800/mt, failing to gain further twice. SHFE copper prices fluctuated above the daily moving average. In the afternoon, stocks market plunged after the National Development and Reform Commission (NDRC) announced a gradual reform on resources and property tax, dropping below 2,600 points, down 2.4%, and finally closed at 2,592.15 points, the largest single month loss decline in 9 months. In this context, the shorts rushed into SHFE copper market, and the longs withdrew from the market in panic. Finally, the September delivery copper contract prices ended at RMB 55,050/mt, down as much as 1.33%. Positions for SHFE September delivery copper contract were up 10,100 lots. Positions for all copper contracts on the SHFE market saw a decline of 849 lots in long positions to 55,700 lots, and short positions a growth of 1,792 lots to 64,069 lots. The strengthening short positions weighed down the market. SHFE copper prices will face challenges at RMB 55,000/mt on Tuesday.
In the spot market, variety and volume of imported goods dropped significantly on Monday, as LME base metals market was closed, even though the SHFE/LME copper price ratio was around 8.1 in the morning business. Price gap between domestic high-quality and standard-quality copper was only at RMB 50/mt, limiting sales of domestic standard-quality copper. Spot discounts were between negative RMB 150/mt- RMB 0/mt in the morning trade. Standard-quality copper was traded in the RMB 55,400~55,550/mt, while deals for high-quality copper were done between RMB 55,450~55,650/mt. With plunging prices on the SHFE copper market in the afternoon session, spot premiums were heard at RMB 0/mt-positive RMB 50/mt, with traded prices down to RMB 55,300-55,500/mt. The strong short sentiment is expected to negatively affect market confidence in improvement of spot premiums tomorrow.
SMM believes spot copper prices will experience fluctuations at around RMB 55,000/mt. Some buying interest will be likely stimulated after entering June, which will support the low-end copper price. SMM predicts spot copper prices to move in the RMB 54,000-56,000/mt range for the week.
The US and UK markets were closed on Monday. SHFE aluminum prices opened slightly lower in the morning session, and SHFE 1008 aluminum contract prices fluctuated in a wide band after opening at RMB 15,300/mt, and later surged to as high as RMB 15,375/mt, but later dipped to below the 5-day moving average, with the lowest prices reported at RMB 15,255/mt. Stock markets fell rapidly before closing, but SHFE aluminum prices dropped at a slower pace compared with SHFE copper and zinc prices due to lower positions, with prices finally ending at RMB 15,290/mt, down RMB 110/mt compared with the previous trading day, or down 0.71%. Total trading volumes were 96,934 lots, and positions declined by 782 lots to 275,958 lots.
Yesterday was the last trading day of May, and downstream fabricators’ buying interest was lower, and the falling aluminum prices also spurred the wait-and-see sentiment in the market. Although market supply was sufficient, traders kept offers firm, with spot discounts narrowing slightly, and overall market sentiment was lukewarm.
Domestic lead prices have stabilized at around RMB 14,600/mt recently. However, purchasing interest was low on the last trading day of May along with pessimistic outlook among downstream producers, and no direction from LME lead markets. Domestic lead smelters remain reluctant to sell goods at prices below RMB 15,000/mt, leaving buyers and sellers still in a stalemate. Transactions in the Shanghai market were done between RMB 14,650-14,750/mt on Monday.
SHFE zinc prices fluctuated widely and lacked upward momentum given the negative news in the Euro zone revealed last Friday. Short-covering helped push up zinc prices in the morning session, but SHFE 1009 zinc contract prices pared most gains following falling domestic A-shares market in the afternoon, with prices finally closing at RMB 16,050/mt, and with the highest prices reported at RMB 16,275/mt. Trading volumes reported 1.527 million lots, and positions increased by more than 40,000 lots, with struggles between long and short positions intensifying around RMB 16,000/mt.
Spot market was weaker than SHFE zinc market. #0 zinc was mainly traded between RMB 15,650-15,700/mt in the Shanghai market, and spot discounts against SHFE 1008 zinc contract prices expanded from RMB 330/mt to RMB 380/mt along with rising SHFE zinc prices in the morning, an indication of weak spot market. Market players became pessimistic toward zinc price outlook as the demand will turn weak, and some market players even believe zinc prices may experience a double-dip, and the shortage of market confidence will hamper zinc prices from rebounding.
LME tin prices firstly surged but later slipped last Friday, with prices early surging at USD 18,250/mt and later falling to end at USD 17,800/mt, down USD 175/mt from a day earlier, which was mainly dragged down by the decline of the euro as well as the European and American stock markets. LME tin prices fluctuated around the 30-day moving average, showing weak upward momentum in the short term, but LME tin inventories fell to 20,060 mt, the lowest level since September 2009, which helped stabilize LME tin prices.
In the Shanghai tin spot market, spot prices lacked of directions as LME market was closed on Monday. In face of pressure from falling LME tin price last Friday, unknown brand tin suppliers lowered prices to move goods for cash, with offers heard below RMB 141,500/mt. In addition, consumption was sluggish and consumers largely adopted a wait-and-see attitude. Sine major brand tin suppliers had already lifted tin prices at the end of last week, they chose to keep offers stable on Monday, with difficulties in lifting prices for the foreseeable future. Actual transactions were sluggish in the market.
LME nickel prices opened at USD 21,800/mt, and closed at USD 21,050/mt on May 28th, with highest price at USD 21,850/mt and the lowest price at USD 21,050/mt. Daily trading volumes were 1,350 lots and positions were 90,010 lots. Inventories were 138,786 mt, up 138 mt.
In the Shanghai nickel spot market, prices were lacking of directions as LME market was closed on Monday, and transactions were sluggish. Offers of nickel from Jinchuan Group were between RMB 171,500-172,000/mt in the morning session, and prices gradually slipped with traded prices of nickel from Jinchuan Group at USD 171,500/mt in the afternoon session. Offers of imported nickel were at RMB 171,000/mt and traded prices were between RMB 169,500-170,000/mt. Wait-and-see sentiment was relatively strong, and transactions were relatively sluggish. Market players were concerned that the property taxes may be levied, and overall market sentiment was relatively pessimistic.
To contact the writer on this report: angelawang @smm.cn
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