SHANGHAI, June 4 (SMM) --
Supported by rebounding LME copper prices at the closing, SHFE copper prices opened high on Thursday, but any upward momentum was weak. In the afternoon business, SHFE copper prices rallied with rising stocks markets, but still lacked of rising momentum, gradually easing gains. SHFE September delivery copper prices opened at RMB 54,000/mt, and failed to hit RMB 54,140/mt despite of several efforts, dropping as low as RMB 53,380/mt. Finally, SHFE September delivery copper prices closed at 53,820/mt, up RMB 400/mt or 0.75%. Trading volumes and positions continued to increase. Trading volumes for the day exceeded 580,000 lots, and positions approached 190,000 lots, with turnover rate of more than 305%. Positions for all copper contracts on the SHFE market were down 3,998 mt. Technically, any downward room for SHFE copper prices is expected to moderate, with improved low-end, and the fluctuating band expected between RMB 53,500-54,300/mt.
In the spot market, the SHFE/LME copper price ratio dropped below 8.0, reducing supply of imported copper. Rising SHFE copper prices also restricted sales of goods for arbitraging. ENM dominated market supply of high-quality imported copper, and sales of goods from Jiangxi Copper remained brisk. Supply of domestic standard-quality goods was relatively limited, and low-end goods were mainly imported hydro-copper, but transactions were depressed. Spot premiums stabilized in the positive RMB 50~250/mt. in the morning business, spot copper prices were between RMB 53,700-53,900/mt due to falling SHFE copper prices. Traded prices in the afternoon trade rose to RMB 53,800-54,050/mt along with rising trends on the SHFE copper market. Downstream producers were not interested in purchasing goods in view of slight price increases, and with sell-offs by some traders. Short sentiment remains strong in the market, leaving difficulties for continuing price rebounds.
SHFE aluminum prices experienced significant declines on June 2nd. SHFE 1008 aluminum contract prices soared to a daily high of RMB 15,095/mt in the morning session on June 3rd after opening slightly higher at RMB 15,005/mt, but later slumped to a daily low of RMB 14,855/mt, with prices mainly moving narrowly around RMB 15,000/mt in the afternoon. Total positions declined by 3,034 lots to 283,256 lots, while total trading volumes were 147,310 lots. SHFE 1008 aluminum contract prices moved below all moving averages all day, with all technical indicators showing a weakening trend.
Spot market divergence intensified as aluminum prices tumbled. Downstream purchasing interest was mixed, while suppliers were reluctant to move goods, resulting in slightly tight supply, and overall trading sentiment was modest. Aluminum prices fell again to test the low-end of price range, and aluminum producers continued to suffer losses amid falling aluminum prices and rising costs, so special attention should be paid to possible production cuts at aluminum producers in the future.
Plagued by weakening LME lead prices, domestic lead prices saw marked declines on Thursday. In the morning business, transactions were mainly done in the RMB 14,400-14,450/mt range in the Shanghai market. Despite of further declines in the low-end, downstream producers showed little purchasing interest due to pessimistic outlook, with inquiries mainly among traders.
SHFE zinc prices fell to the daily price limits on June 2nd, with zinc prices struggling at the RMB 15,000/mt mark and with the pessimism toward market outlook growing. SHFE zinc prices tried to move higher after opening lower in the morning session on June 3rd, but the strong short position momentum weighed down zinc prices. SHFE 1009 zinc contract prices fluctuated around RMB 15,200/mt, with the lowest prices reported at RMB 15,010/mt, and finally prices ended at RMB 15,215/mt. Trading volumes of SHFE 1009 zinc contract set a new high of 2.7 million lots on June 3rd, while positions increased by 45,000 lots to 333,800 lots. The turnover rate reached 800%, indicating short-term transactions were extremely brisk and speculators entered zinc market with the aim of taking profits in the short term.
Spot market sentiment was very lukewarm, and downstream producers adopted a wait-and-see attitude as zinc prices moved on a downward track. #0 zinc was mainly traded between RMB 14,850-14,900/mt in Shanghai market, with spot discounts moving around RMB 150/mt against SHFE 1008 zinc contract prices. A portion of smelters were reluctant to move goods, with offers relatively firm.
Declining pace of base metal prices became slower along with the rebound of the US equity market and crude oil prices on June 2nd. LME tin prices opened at USD 17,600/mt on June 2nd and closed at USD 17,730/mt, down USD 20/mt from a day earlier, with the highest price at USD 17,730/mt and the lowest price at USD 17,500/mt. Daily trading volumes were 156 lots and positions were 18,009 lots. LME tin prices opened at USD 17,750/mt on June 3rd, moving stably between USD 17,600-18,000/mt.
In the Shanghai tin spot market, spot prices were unchanged from a day earlier. Traded prices of major brand tin were between RMB 142,000-142,500/mt and mainstream traded prices of unknown brand tin were between RMB 141,000-141,200/mt. The overall trading sentiment continued to be sluggish this week, with relatively strong wait-and-see sentiment prevailing in the market. Traders only had very thin profit, and replenished goods cautiously. Downstream companies continued to wait prices to fall in the future, and only made purchases on an as-needed basis.
LME nickel prices opened at USD 20,300/mt on June 2nd, and closed at USD 19,900/mt, down USD 600/mt from a day earlier, with highest price at USD 20,300/mt and the lowest price at USD 19,250/mt. Daily trading volumes were 3,382 lots and positions were 89,332 lots. On June 3rd, LME nickel prices opened at USD 19,950/mt, reaching the highest price at USD 20,299/mt and touching the lowest price at USD 19,900/mt. Prices rebounded slightly by USD 200/mt on June 3rd following a two-day sharp decline. However, the global fundamentals of nickel changed slightly, as the European stainless steel low-demand season is expected to come. Bearish sentiment was strong in the market, and downward momentum continued.
In the Shanghai spot nickel market, traded prices of nickel from Jinchuan Group were between RMB 162,000-163,000/mt in the morning session, and prices of imported nickel were between RMB 161,300-161,500/mt. Market supply was in a surplus with the increasing arrival of imported nickel, and traded prices of imported nickel were stable. Few downstream consumers entered the market, and transactions were still dominated by traders.
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