SHANGHAI, June 10 (SMM) --
On Wednesday, copper for September delivery on the SHFE market, the most active contract opened slightly higher at RMB 49,530/mt, and moved steadily between RMB 49,600-49,800/mt in the morning. Before closing the morning session, SHFE September delivery copper contract lacked of upward momentum, and with dominant short positions, and fell back to RMB 49,500/mt as a result. In late business, SHFE September delivery copper prices maintained weak, dropping as low as RMB 49,190/mt. However, the September delivery copper prices on the SHFE market surged to RMB 50,520/mt, led by strong performance on stocks markets from rising bank sectors at 14:00 pm, and finally ended at RMB 50,380/mt, up 1.96% or RMB 970/mt. Positions for all copper contracts on the SHFE market were up 8,326 lots, with high interest in going longs, and trading volumes reached up to 798,386 lots, leaving brisk trading sentiment.
In the spot market, premiums were reported in the positive RMB 100-200/mt. In the morning business, standard-quality copper was traded between RMB 50,000-50,100/mt, and deals for high-quality copper were done in the RMB 50,100-50,200/mt range. Buyers showed doubts over sustainability of price rebounds and rising room due to lack of upward momentum on the SHFE market in the morning session, with a cautious attitude reported. Supply of imported copper reduced from no profit opportunities. Hence, trading sentiment in the morning trade was well low compared with yesterday's morning business. In the afternoon business, strengthening stocks and SHFE copper market improved market confidence about price rebounds, and cargo-holders maintained spot premiums stable at positive RMB 100-200/mt, with unwillingness to move goods heard, injecting market confidence to hold on support at RMB 50,000/mt and test RMB 51,000/mt.
During the last two trading days of the week, SMM believes spot premiums will remain in the short term, given the upcoming Chinese Dragon Boat festival holiday and the coming delivery date. In late week, China will release a series of major economic data, and particular attention should be paid to it.
Bank shares advanced in the afternoon, sending stock markets surging by 2.78%, and SHFE 1009 aluminum contract prices increased as well, with prices soaring from RMB 14,350/mt, to RMB 14,720/mt before closing, and finally prices ended at RMB 14,720/mt, up RMB 555/mt, with the growth rate up from 1.55% to 3.92%. SHFE 1009 aluminum contract prices touched the 5-day moving average, with positions increasing by 5,242 lots and trading volumes growing to 116,160 lots. There are two trading days left before Chinese Dragon Boat Festival holiday, and if stock markets stabilize with signs of rebounding in the short term, speculators will increase long positions, with short position momentum expected to fade temporarily.
The increases in LME and SHFE aluminum prices stimulated downstream buying interest in spot markets, but the upward movements for traded prices were uneven. Cargo-holders offered RMB 14,000/mt in the morning session, and purchases and inquiries by downstream consumers and speculators were brisk. Transactions were bullish at the level flat at SHFE current-month aluminum contract prices, with most deals made between RMB 13,970-13,980/mt, but downstream consumers would become hesitant to purchase goods above RMB 14,000/mt when cargo-holders intended to raise offers to a premium of RMB 20/mt against SHFE current-month aluminum contract prices amid rising spot aluminum prices. However, SHFE aluminum prices soared to break the RMB 14,200/mt mark in the afternoon, boosting trader confidence in short-term aluminum prices. Downstream producers will replenish stocks at lower prices before Chinese Dragon Boat Festival holiday, helping support aluminum prices.
Domestic lead prices were supported by rising LME lead prices on Wednesday. In the morning, mainstream offers were quoted between RMB 13,600-13,700/mt, and domestic lead prices moved higher along with rallying LME lead prices, with offers reported at RMB 13,800/mt for well-known branded goods. Currently, domestic lead producers remain reluctant to sell goods, and sales for arbitrage reasons were also hampered by stabilizing LME lead prices. Hence, traders reported limited spot supply, and selling interest reduced as well in the afternoon when LME lead prices strengthened. Transactions in the Shanghai market were traded in the RMB 13,600-13,750/mt.
SHFE zinc prices opened high supported by rising LME zinc prices, but SHFE 1009 zinc contract prices opened at RMB 13,870/mt, weaker than LME zinc prices. SHFE 1009 zinc contract prices moved around RMB 14,050/mt in the morning, and spot transactions were moderate amid rising SHFE zinc prices, but downstream consumers still purchased goods cautiously. #0 zinc was traded between RMB 13,700-13,800/mt in Shanghai market, with spot discounts moving around RMB 80/mt against SHFE 1008 zinc contract prices, while #1 zinc was traded between RMB 13,680-13,750/mt, with market supplies remaining limited.
SHFE zinc prices climbed to the daily price limits at noon driven up by advancing domestic A-shares markets. SHFE 1009 zinc contract prices finally closed at RMB 14,350/mt, and positions declined by 30,000 lots, but long positions grew significantly compared with the previous two days, indicating struggles between long and short positions intensifying. However, it is worth noting that large amounts of short positions entering the market previously did not exit the market yesterday. In this context, zinc prices still face strong upward pressure. Special attention should be paid to the preliminary data of copper and aluminum imports and exports in May to be released on June 10th.
LME tin prices opened at USD 15,775/mt on June 8th and closed at USD 16,060/mt, up USD 360/mt, with highest price at USD 16,100/mt and the lowest price at USD 15,750/mt. Daily trading volumes were 290 lots and positions were 18,701 lots. Base metal prices all closed with gains on June 8th due to support from climbing euro and the stable equity markets. LME tin prices that experienced significant decline also rebounded slightly, but any room will be limited as markets are still weighed by bearish sentiment. LME tin prices opened at USD 16,050/mt on June 9th, struggling around USD 16,000/mt.
Trading sentiment was still not brisk in the Shanghai tin spot market, despite that LME tin prices rebounded slightly. Transactions were still sluggish, with both traders and downstream companies still bearing bearish sentiment. On June 9th, transactions were dominated by major brand tin, with mainstream traded prices of major brand tin between RMB 136,500-138,000/mt, while supply of unknown brand tin was limited, with traded prices between RMB 136,000-136,500/mt.
LME nickel prices opened at USD 18,400/mt on June 8th, and closed at USD 18,450/mt, unchanged from a day earlier, with highest price at USD 18,560/mt and the lowest price at USD 17,836/mt. Daily trading volumes were 1,020 lots and positions were 89,637 lots.
On June 9th, LME nickel prices opened at USD 18,350/mt, with highest price at USD 19,372/mt and the lowest price at USD 18,230/mt, prices fluctuating on upward track after testing the lowest level of USD 18,200/mt. Whether or not the prices can remain above 5-day moving average is not clear yet, and players are recommended to adopt a wait-and-see attitude and remain cautious under current situation. If LME nickel prices close with gains for three consecutive days, prices will be expected to move up to test the supporting level of 10-day moving average.
In the Shanghai spot nickel market, overall trading sentiment was largely stable but slightly weak, with mainstream traded prices of nickel from Jinchuan Group between RMB 150,000-151,500/mt and traded prices of unknown brand nickel between RMB 148,000-150,000/mt. Many traders entered the market to replenish stocks but only few downstream consumers entered the market, with ample supply of goods reported in the market. Jinchuan Group cut ex-works nickel prices by RMB 6,000/mt to RMB 150,000/mt. It is quite a coincidence that Jinchuan Group cut nickel prices at the very moment when LME nickel prices rebounded, thus creating certain arbitrage opportunity. In this context, purchasing interest from traders and downstream buyers may be stimulated if prices remain stable in the future.
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