SHANGHAI, June 11 (SMM) --
Supported by rising LME copper prices, SHFE copper market opened higher, but lacked of upward momentum due to weak performance on China's A-shares market in the morning session. In late business, rallying stocks markets and a drop of US dollar index to around 87.5 helped SHFE copper prices advance. Copper for September delivery on the SHFE market opened at RMB 50,210/mt, and moved cautiously above the daily moving average in the morning session, up only around 1%. SHFE September delivery copper prices climbed in the afternoon trade when China's A-shares markets rallied to 2,580 points. Coupled with LME copper prices reaching as high as USD 6,345/mt, the September delivery copper contract on the SHFE market advanced, closing up 1.7%. At the closing, trading volumes increased, with significant increases in the number of closing positions. Positions for SHFE September delivery copper contract were down 19,406 lots, with turnover rate of 300%. Positions reported declines both for longs and shorts, as shorts chose to stay out of market before the Dragon Boat Festival holiday, while longs opted to make profit taking. China will announce a series of major economic data on Friday, and market takes a positive outlook towards the data. If the data is as positive as expected, SMM believes SHFE copper prices will stand above the 5-day moving average.
Trading sentiment in the spot market was brisk. Spot premiums were between positive RMB 50~200/mt in the morning business, dealing in the RMB 50,750-51,000/mt range. Spot copper prices rallied above RMB 51,000/mt in the afternoon trade due to rising SHFE copper prices, with deals in the RMB 51,200~51,400/mt range. Spot premiums were slightly down to positive RMB 50~150/mt, with unavailability of goods from Jiangxi Copper. As the SHFE/LME copper price ratio dropped below 8.0, supply of high-quality imported goods fell significantly, with hydro-copper and domestic goods, "Copper Crown" brand and "Jinchuan" high-purity copper dominating market supply. SMM expects spot copper prices will increase to RMB 51,500/mt on Friday, with goods replenishment before the holiday expected to continue into tomorrow's morning.
SHFE 1009 aluminum contract prices opened at RMB 14,620/mt, and then moved narrowly around RMB 14,500/mt in the morning, but later soared to RMB 14,700/mt in the afternoon following rising domestic A-shares market, and finally closed at RMB 14,515/mt negatively affected by the withdrawal of long positions, up 0.96%. Positions of SHFE 1009 aluminum contract declined by 2,332 lots, and trading volumes reported 116,000 lots, with deals soaring before closing. Although SHFE aluminum prices stood above the 5-day moving average, technical indicators show uncertainties surrounding further gains in SHFE aluminum prices in the future.
In the spot market, spot aluminum prices stood above RMB 14,100/mt, with deals mainly made at RMB 14,130/mt, and with spot premiums ranging from zero to RMB 20/mt against SHFE spot-month aluminum contract prices in the morning. Spot aluminum prices have advanced to a range of RMB 14,150-14,200/mt at noon, and even climbed to a range of RMB 14,200-14,250/mt in the afternoon. Downstream consumers held low interest in purchases amid higher prices, with market offers also quoted at slight discounts. Although transactions were moderate yesterday, both downstream producers and speculators became cautious as they preferred to make purchases at prices below RMB 14,000/mt. SHFE aluminum prices may stabilize with signs of recovering before Chinese Dragon Boat Festival holiday, and cargo-holders are also willing to move goods to generate cash, but spot transactions will improve at a slower pace.
Domestic lead prices jumped along with producer reluctance in moving goods, limited goods held by traders and positive performance on the LME lead market. Prices in the Shanghai market were quoted up to RMB 14,000/mt from RMB 13,850/mt in the morning. Prices rallied above RMB 14,000/mt in the afternoon, reaching as high as RMB 14,150/mt. Inquiries from downstream producers and traders increased, with improved trading sentiment. However, rapid price rallies and uncertainties towards outlook added to buyer hesitation in purchases. Transactions in the Shanghai market were made around RMB 14,000/mt, with limited trading volumes. Further improvement in transaction depends on stabilizing of lead prices.
SHFE zinc prices opened slightly higher yesterday following rising LME zinc prices on June 9th, and China's import and export data released at 10:00 am posted a significant year-on-year growth, but China's imports of unwrought copper and scrap copper both reported month-on-month declines in May, so metals markets showed modest response. SHFE 1009 zinc contract prices began a new round of increases in the afternoon driven up by stronger stock index futures market, but faced stronger pressure at RMB 14,350/mt. Meanwhile, large amounts of long positions exited the market, dampening SHFE 1009 zinc contract prices, and finally prices closed at RMB 14,170/mt, up 1.07%. Positions of SHFE 1009 zinc contract increased by more than 9,000 lots to 290,000 lots, while trading volumes again jumped above 2 million lots, reaching 2.039 million lots.
Spot zinc market remained neutral. Although the Shanghai Futures Exchange will be closed for five days due to Chinese Dragon Boat Festival holiday, downstream producers still stood on the sidelines, and showed lower interest in replenishing stocks. #0 zinc was traded around RMB 13,950/mt in Shanghai market in the morning, with spot discounts moving around RMB 200/mt against SHFE 1009 zinc contract prices, with offers for some branded zinc reported at RMB 14,000/mt. Zinc market remained stagnant in the afternoon despite of rising zinc prices. Although traders were eager to move goods, market prices remained firm, with spot discounts unchanged. Market supplies of #1 zinc declined recently, helping narrow the price spread between #1 zinc and #0 zinc, and #1 zinc was traded around RMB 13,920/mt yesterday.
LME tin prices opened at USD 16,050/mt and closed at USD 16,400/mt on June 9th, up USD 340/mt, with highest level at USD 16,400/mt and the lowest level at USD 15,950/mt. Daily trading volumes were 170 lots and positions were 18,380 lots. Investors' sentiment was highly boosted by Reuters' report that China's exports increased by 50% in May, and the EU dollar climbed, resulting that all base metal prices closed with gains. On June 10th, LME tin prices opened at USD 16,300/mt and fluctuated narrowly on downward track after testing USD 16,500/mt. Market concern over the EU debt crisis the tightening monetary policies continued, and metal prices performance was still weak.
Shanghai tin spot market was still sluggish, despite that LME tin prices rebounded above USD 16,000/mt. Spot prices gradually stabilized, but transactions were still largely quiet, with few downstream consumers in the market. Traders told that telephone enquiries increased to certain extent today, but actual transactions didn't increase significantly. Major brand tin dominated market supply, and unknown brand tin had very limited supplying volumes, with mainstream traded prices between RMB 136,500-138,500/mt reported in the market. Although major brand tin smelters lowered offers, traders still didn't increase replenishment as LME tin prices were not stable and downstream consumption was sluggish, resulting in low volumes of goods supplying in the market.
Prices opened at USD 18,350/mt on May 26th and closed at USD 19,080/mt on June 9th, up USD 630/mt from a day earlier, with highest price at USD 21,790/mt and the lowest price at USD 21,000/mt. Daily trading volumes were 2,459 lots and positions were 90,170 lots. On June 10th, LME nickel prices climbed to test the resistance level of 10-day moving average after prices closed with gains for three consecutive days, but still meeting resistance at 10-day moving average and falling back. SMM remains cautious that prices can stand above 10-day moving average, and the possibility that prices may be weighed to decline again in the future still existed. However, as the US dollar slipped after previous surge over the short term, LME nickel prices shall receive support at USD 18,000/mt.
In the Shanghai nickel spot market, overall transactions were stable. Mainstream traded prices of nickel from Jinchuan Group were between RMB 152,500-153,000/mt and traded prices of imported nickel were between RMB 152,000-152,500/mt. The rebound the LME nickel prices further expanded price spread between market mainstream traded prices and ex-works prices from Jinchuan Group, triggering stock replenishment between traders and also attracting bargain buying from downstream consumers, and some traders also showed unwillingness to move goods. As imported nickel finally found an opportunity to gain profit, supply of imported nickel increased to certain extent. In order to guarantee the sales share and market competitiveness, the possibility for Jinchuan Group to lift ex-works prices before the Dragon Boat Festival is small.
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