SHANGHAI, June 7 (SMM) --
SHFE copper market opened 2% lower on Friday, and moved narrowly around daily average for the trading day. SHFE September delivery copper prices opened at RMB 52,440/mt, and briefly advanced to RMB 53,090/mt, but were depressed by sell-offs in the market. In the afternoon session, SHFE September delivery copper prices hit as low as RMB 52,320/mt following lower stocks markets, and finally closed at RMB 52,990/mt, down RMB 850/mt or 1.58%. Trading volumes and positions continued to grow. Trading volumes were 645,000 lots, and positions were 205,874 lots, with turnover rate of 313.34%. Trading valued at RMB 170.1 billion. Positions for SHFE September delivery copper contract were up 16,092 lots, and positions for all copper contracts grew 15,525 lots. SHFE copper prices have been far below the moving average, approaching to a year low. Technically, copper prices remain on a downward track. SMM believes SHFE copper prices will continue to fluctuate at low levels, and look for support at low levels.
In the spot market, the SHFE/LME copper price ratio improved to 8.05 on Friday, and spot premiums rose to positive RMB 200-350/mt, leaving amply supply of imported lead in the morning. Supply of domestic high-quality copper was limited, with firm prices. Price gap between imported and domestic copper was at premiums of around RMB 150/mt. Since SHFE copper prices moved around RMB 53,000/mt, close to a new one-year low, downstream producers showed improved interest in replenishing goods at low levels, with brisk trading sentiment in the morning. Deals were done between RMB 53,250-53,450/mt in the morning. Supply of goods reduced in the afternoon, and trading sentiment turned quiet, and traded prices edged down with falling prices on the SHFE copper market, but finally secured support at RMB 53,000/mt.
According to data from Shanghai Futures Exchange (SHFE), copper stocks on the SHFE continued to fall during this week, down 4,974 mt to 152,724 mt. SHFE copper stocks dropped for a fifth week, with a cumulative decrease of 36,717 mt.
SHFE 1008 aluminum contract prices opened lower at RMB 14,850/mt on June 4th negatively affected by plunging LME aluminum prices, and then fluctuated in a narrow band in the morning session. SHFE 1008 aluminum contract prices slumped to a record low of RMB 14,620/mt negatively affected by falling stocks markets in the afternoon, but later hit the daily high of RMB 14,880/mt before closing as both long and short positions closed positions, with prices finally closing at RMB 14,750/mt, down RMB 195/mt compared with the previous trading day, or down 1.3%. Total positions surged by 13,398 lots to 296,654 lots, while trading volumes reached 216,402 lots. Both positions and trading volumes soared, an indication of intensifying struggles between long and short positions at current aluminum price levels, and more investors preferred to make short-term profits.
Downstream acceptance of lower aluminum prices increased gradually following tumbling SHFE aluminum prices, and trading sentiment was brisk in spot markets, helping push up spot premiums to RMB 20/mt against SHFE current-month aluminum contract prices. The price range of aluminum prices edged down persistently, and base metals prices remained weak, and SMM predicts SHFE aluminum prices will continue to test the low-end of price range.
Domestic lead prices weakened further along with depressed LME lead prices. Transactions in the Shanghai market were done in the RMB 14,200-14,300/mt range. Domestic lead prices dropped below RMB 14,200/mt after LME lead prices hit a new low of USD 1,625/mt. Low market prices suggested market uncertainties and optimism towards outlook.
SHFE three-month zinc contract prices opened low and moved lower on June 4th, with prices falling to the daily price limits before closing. SHFE three-month zinc contract prices finally closed at RMB 14,470/mt, down 5.02%. Trading volumes reported 1.73 million lots, and positions increased by 14,000 lots to 348,000 lots, and the turnover rate near 500% was an indication of brisk transactions in SHFE zinc market.
In spot markets, #0 zinc was mainly traded around RMB 14,400/mt in Shanghai market, with spot discounts moving around RMB 100/mt against SHFE 1008 zinc contract prices. However, SHFE zinc prices slumped at noon, and although smelters were unwilling to move goods, traders were eager to sell goods, with limited offers for #0 zinc reported at RMB 14,200/mt, but downstream producers only purchased on an as-needed basis.
LME tin prices opened at USD 17,750/mt on June 3rd and closed at USD 17,500/mt, down USD 230/mt from a day earlier, with highest price at USD 17,920/mt and the lowest price at USD 17,200/mt. Daily trading volumes were 297 lots and positions were 17,843 lots. As market still haunted by the concern from the European debt crisis, the US dollar advanced further to exceed 87. LME tin prices experienced relatively stable performance compared with other base metal prices. On June 4th, LME tin prices opened at USD 17,475/mt on June 4th and fell as low as USD 17,250/mt.
In the Shanghai tin spot market, mainstream traded prices of major brand tin were between RMB 141,500-142,000/mt and traded prices of unknown brand tin were between RMB 140,000-140,500/mt. Unknown brand tin dominated market transactions due to its competitive prices. Downstream consumers continued to make purchases on an as-needed basis and transactions were still sluggish.
LME nickel prices opened at USD 19,950/mt, and closed at USD 18,649/mt on June 3rd, down USD 1,251/mt from a day earlier, with highest price at USD 20,293/mt and the lowest price at USD 18,546/mt. Daily trading volumes were 3,772 lots and positions were 89,306 lots. On June 4th, LME nickel prices opened at USD 18,800/mt and still fluctuated weakly, reaching the highest level at USD 18,900/mt and touching the lowest level at USD 18,300/mt.
In the Shanghai nickel spot market, traded prices of nickel from Jinchuan Group were between RMB 164,500-165,000/mt and the traded prices of imported nickel were between RMB 163,500-164,000/mt. Supply of goods was ample, and transactions were still dominated by traders. Transactions by traders in spot market remained stable, but wait-and-see attitude from downstream consumers were strong.
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