SHANGHAI, July 19 (SMM) --
SHFE copper market on Friday opened high. The October delivery copper contract on the SHFE market showed lack of momentum after opening at RMB 53,110/mt. In the morning session, SHFE October delivery copper prices moved narrowly, and in the afternoon session dived to RMB 52,510/mt from RMB 53,170/mt, as China A-share market dropped below 2,400 points. The most actively-traded copper contract was later buoyed at RMB 52,500/mt due to buying interest, rallying all the way. Finally, SHFE October delivery copper prices closed at RMB 53,120/mt, returning to the fluctuating range in the morning session. Positions for SHFE October delivery copper contract were down 2,042 lots to 209,000 lots, and trading volumes were less than 400,000 lots.
In the spot market, spot premiums were quoted at around positive RMB 200/mt in the morning trade, and market inquiries were unexpectedly brisk after several days' wait-and-see attitude, resulting in smooth transactions, and helping spot premiums rally all the way. During major trading hours, spot premiums were generally between positive RMB 200-300/mt, and premiums for high-quality copper reached as high as positive RMB 400-450/mt when SHFE copper prices dived in the afternoon session. Transactions were generally made between RMB 53,650-53,800/mt for the day, and low-priced goods were traded in the RMB 53,400-53,600/mt in the afternoon business. Buying interest at lower prices in the afternoon trade showed both traders and downstream producers' high enthusiasm for low-priced goods.
Based on data tallied by Shanghai Futures Exchange (SHFE), SHFE copper stocks grew by 2,779 mt over the past week, ending its declines in nearly 10 weeks. Spot premiums narrowed before the delivery date, and price of near-by month contracts were higher than that of forward month contracts, stimulating action in delivering goods. In addition, it is a traditional low demand period in July, contributing to growth of inventories.
The bullish LME aluminum prices failed to boost SHFE aluminum prices, and SHFE 1010 aluminum contract prices opened slightly higher at RMB 14,930/mt, with prices mainly fluctuating quietly. Base metals prices plummeted in the afternoon, and SHFE aluminum prices dipped to RMB 14,845/mt in response, but later rebounded rapidly, with prices finally closed at RMB 15,010/mt. Positions slumped by 11,766 lots to 235,380 lots, and trading sentiment remained bearish, with total trading volumes reported at 57,642 lots.
Spot discounts expanded to RMB 50/mt against SHFE 1008 aluminum contract prices after transitioning into a new contract month, but actual traded prices increased from a day earlier. Most downstream producers preferred to stay out of the market with the exception of some producers, who replenished stocks for the weekend, with overall trading sentiment moderate. Aluminum prices outperformed other base metals prices, since both overseas and China's visible aluminum stocks declined consecutively since 2Q, leaving a signal of improving market fundamentals. However, actual market conditions are not optimistic, especially for domestic market. In general, aluminum prices will be mainly affected by other base metals prices trends, as well as expectations of aluminum consumption.
Domestic lead prices rallied on Friday following slight increases on the LME lead market and supply tightness. Well-known branded goods were earlier quoted at above RMB 15,000/mt, and later fell to RMB 14,950/mt following low trading sentiment. Prices for unknown goods were at RMB 14,850/mt, and supply was limited, as smelters continued to control selling volumes.
SHFE 1010 zinc contract prices moved narrowly around RMB 15,200/mt, and finally closed at RMB 15,230/mt supported by higher buying and strengthening China's A-shares market despite of a significant drop at noon. Positions dropped slightly by 5,568 lots compared with the previous trading day, while trading volumes fell by 80,000 lots to 1.68 million lots.
Spot market sentiment was general, and downstream producers made appropriate purchases. #0 zinc was mainly traded around RMB 15,050/mt in Shanghai market, with spot discounts ranging between RMB 130-180/mt against SHFE 1010 zinc contract prices, while #1 zinc was traded around RMB 15,000/mt. Zinc prices rebounded in the afternoon, but actual spot trading volumes were limited. SHFE zinc prices show an upward trend in the short term, but long position momentum was weak amid sluggish market consumption and soft domestic stock markets, and market players are waiting for a clear direction. SHFE 1010 zinc contract prices are expected to strive for standing steady at RMB 15,500/mt.
LME tin prices opened at USD 17,900/mt and closed at USD 17,975/mt last Thursday, up USD 75/mt from a day earlier, with highest price at USD 18,100/mt, and the lowest price at USD 17,900/mt. Daily trading volumes were 169 lots and positions were 17,045 lots. LME tin inventories reduced by 10mt to 16,150mt. LME tin prices opened at high at USD 18,100/mt, but later slipped to USD 17,930/mt last Friday, fluctuating narrowly along with other base metals. Economic prospect is still major concern in the market, and base metal prices are still experiencing corrections, waiting for a clearer trend from economic data.
In the Shanghai tin spot market, supply of goods further reduced. Mainstream traded prices of tin from Yunnan Tin group and Yunnan Gejiu Zili Metallurgy Co., Ltd were between RMB 139,000-139,500/mt and mainstream traded prices of unknown brand tin were around RMB 138,500/mt. Overall trading sentiment was sluggish. Offers from smelters remained flat, with lackluster trading sentiment reported in the market.
LME nickel prices opened at USD 19,300/mt and closed at USD 19,374/mt last Thursday, up USD 74/mt from a day earlier, with the highest price at USD 19,523/mt and the lowest price at USD 19,150/mt. Daily trading volumes were 1,243 lots and positions were 89,167 lots. Inventories reduced by 234mt to 119,562mt. LME nickel prices opened at USD 19,499/mt last Friday, reaching the highest price at USD 19,499/mt and touching the lowest price at USD 19,250 lots, with the latest at USD 19,275/mt, down USD 224/mt from a day earlier. The sluggish manufacture data released from the US on Thursday dampened market sentiment, and base metal prices continued to fluctuate narrowly in thin trading volumes.
In the Shanghai nickel spot market, overall trading sentiment continued to be sluggish. Supply of low-priced goods was rarely seen in the market, and transactions were largely done among traders. Traded prices of nickel from Jinchuan Group were at RMB 155,000/mt and traded prices of imported nickel were between RMB 153,000-153,500/mt.
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