SHANGHAI, Dec. 24 (SMM) –
The copper for delivery in three months in the SHFE market opened flat at RMB 68,910/mt and fluctuated at around RMB 69,000/mt after briefly reaching RMB 69,190/mt. After 10:30 am, SHFE three-month copper contract prices fell as low as RMB 68,110/mt. In the afternoon session, SHFE three-month copper contract prices rallied with rebounding stocks prices, and fluctuated narrowly at around RMB 68,500/mt. Finally, the copper for delivery in three months in the SHFE market closed at RMB 68,660/mt, down RMB 550/mt, a drop of 0.79%. Positions for SHFE three-month copper contracts were down 7,892 lots to around 188,000 lots, and trading volumes fell to 180,000 lots, a sign of profit-taking by longs. SHFE copper market closed lower for a second straight day, and the support at the 10-day moving averages seems weak.
In the spot market, discounts were offered between negative RMB 400-550/mt despite of further corrections in the SHFE market, and transactions were made between RMB 67,550-67,800/mt before sharp price declines in the SHFE market. During the major spot trading hours, SHFE copper prices dived again, but spot discounts failed to narrow significantly, with discounts generally between negative RMB 400-550/mt. Only discounts for Guixi brand copper were between negative RMB 350-400/mt, and traded prices fell to RMB 67,250-67,450/mt. Cargo-holders were eager to move goods, especially for domestic goods, with discounts at around negative RMB 550/mt, and down further to negative RMB 600/mt in the afternoon session. Transactions improved after price declines, but the overall downstream purchasing interest failed to increase significantly. Waning trading volumes in the spot market and ample supply indicated that downstream producers remained wary of purchases at high levels, and consumption remained sluggish, leaving the phenomenon of a strong LME and weak SHFE copper market unchanged.
Positively affected by strengthening LME aluminum prices, SHFE 1103 aluminum contract prices opened higher at RMB 16,750/mt, and later climbed rapidly to break through RMB 16,800/mt. Although SHFE 1103 aluminum contract prices fell slightly to hit a low of RMB 16,705/mt negatively affected by other base metals prices, prices still closed higher at RMB 16,785/mt, up RMB 80/mt. SHFE aluminum prices moved on an upward track recently, and SMM predicts long position momentum in SHFE aluminum market may continue in the short term.
Spot aluminum market sentiment was neutral, and spot aluminum prices in east China failed to keep pace with SHFE aluminum prices, with spot discounts widening to between RMB 190-210/mt against SHFE current-month aluminum contract prices, and aluminum prices were between RMB 16,200-16,230/mt. Some suppliers were still moving goods for cash at the end of year, but buyers only made purchases moderately, keeping trading sentiment sluggish.
On Thursday, trading sentiment in China’s domestic lead markets remained sluggish amid slight declines in LME lead prices, and trading sentiment failed to increase. Prices in domestic lead markets fell to some extent, with mainstream prices between RMB 16,850-16,950/mt. Despite restrained production at some smelters, selling sentiment maintained high. Domestic lead markets are expected to keep lackluster in the near term amid the current high capital pressures.
On Thursday, SHFE zinc prices slipped and moved around the daily moving average with prices fluctuating between RMB 18,800-18,900/mt. In the midday, SHFE zinc prices dipped to a daily low of RMB 18,755/mt dragged down by LME zinc prices, and later pared some losses boosted by the stronger Shanghai Stock Exchange composite index. SHFE zinc prices closed at RMB 18,905/mt, but with prices still meeting pressure at 60-day moving average and supported by 5-day and 10-day moving averages. Trading volumes significantly decreased by nearly 200,000 lots to 393,014 lots, and total positions decreased by 13,858 lots. A large number of long positions left the market after profit-taking, and market sentiment was depressed.
SHFE 1103 zinc contract prices weakened on Thursday, with prices fluctuating between RMB 18,800-18,900/mt in the morning session. Spot transaction was weak. In the morning session, #0 zinc was traded between RMB 18,200-18,250/mt, with discounts of RMB 600-650/mt against SHFE 1103 zinc contract prices. Spot discounts remained unchanged when SHFE zinc prices slumped to a low of RMB 18,755/mt. Downstream buyers purchased at lower prices, and #0 zinc was traded modestly above RMB 18,200/mt; #1 zinc was traded between RMB 18,150-18,200/mt. SHFE zinc prices rallied to the daily moving average driven up by Shanghai Stock Exchange composite index, and spot discounts remained between RMB 600-650/mt. #0 zinc was traded around RMB 18,200/mt. Transactions improved in the afternoon, but the overall trading sentiment was still lackluster.
On Thursday, overall trading sentiment remained muted in Shanghai tin markets. Some unknown brand tin such as Nanshan and Weitai was traded between RMB 160,300-160,500/mt; while well-known brand tin was high-priced, with limited transactions. At present, both market supply and terminal demand is limited. Coupled with low buying interest from the current tight capital, overall prices in domestic tin markets are relatively stable recently.
On Thursday, LME nickel market opened at an intraday high at USD 24,200/mt and move stably during the early trading hours. However, LME nickel prices fell to test USD 23,700/mt around 3:00 pm during the Afternoon trading hours. Trading volumes were thin before the Charismas eve, and nickel fundamentals were poor at present. China’s imports of nickel ore hit new high, up by 81.84% YoY and up by 13.86% MoM, indicating increased capacity of NPI. In addition, exports of China’s stainless steel are also increasing, weighing on nickel prices. Funds may flow into other market but avoid entering nickel market during the pre-holiday or post-holiday period. In this context, LME nickel prices are expected to slip slightly.
In the Shanghai nickel spot market, mainstream traded prices of nickel from Russia were around RMB 181,000/mt and mainstream traded prices of nickel from Jinchuan Group were around RMB 182,500/mt. Transactions were mainly done in the morning trading session, with very thin trading volumes reported in the afternoon trading hours. Downstream demand for nickel plate was still limited. Traders were reluctant to move goods at low prices, despite that LME nickel prices were on downward track.
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