SHANGHAI, Mar. 16 (SMM) --
SHFE 1106 copper contract prices became the most actively-traded contract, with prices opening up RMB 470/mt at RMB 69,500/mt on Tuesday. After opening, SHFE three-month copper contract prices moved wildly around the daily moving averages, reaching as high as RMB 69,970/mt, but fell back later after meeting resistance at the 5-day moving averages. In the afternoon session, SHFE three-month copper contract prices fell along with dropping LME copper prices, with prices moving between RMB 68,600-68,800/mt, down as low as RMB 68,540/mt. Finally, the copper for delivery in three months in the SHFE market closed at RMB 68,600/mt, down RMB 430/mt, or a loss of 0.62%. Positions for SHFE three-month copper contract prices were up 19,464 lots, while trading volumes were up 29,890 lots. Technically, SHFE copper market is still dominated by the shorts despite struggles at RMB 69,000-70,000/mt between shorts and longs. SHFE copper market is expected to continue to fluctuate at low levels due to the bearish sentiment.
Tuesday was the last trading day of SHFE 1103 copper contract prices. Copper prices in the SHFE market fluctuated widely, but spot premiums saw limited increases. During the first trading session when copper futures prices rallied, spot premiums were between RMB 0-positive 100/mt, but later premiums were mixed along with declines in the SHFE copper market. Middlemen became more pessimistic towards the outlook due to further price declines, and were eager to move goods, while smelters kept offers firm. Although spot premiums were up slightly to positive RMB 30-180/mt, traded prices dropped. Traded prices for standard-quality copper were between RMB 68,900-69,150/mt, and RMB 69,000-69,400/mt for high-quality copper in the morning business. As copper prices in the SHFE market fell further in the afternoon session, spot premiums continued to rise, with offers reported between positive RMB 80-200/mt. Traded prices for standard-quality copper fell to RMB 68,650-68,850/mt, and RMB 68,750-69,000/mt for high-quality copper. Purchasing interest below RMB 69,000/mt remained brisk on Tuesday, and market supply was dominated by domestic goods.
SHFE 1105 aluminum contract prices opened slightly higher at RMB 16,670/mt on Tuesday. Later, Nikkei tumbled fresh explosions rocked a damaged nuclear plant at noon and triggered a rise in radiation levels, sending investors fleeing from riskier assets such as equities and commodities across Asia. As a result, the Shanghai Stock Exchange composite index fell below 2,900 points, resulting in sluggish trading sentiment and allowing SHFE 1105 aluminum contract prices to plummet at the tail of trading. Finally, SHFE 1105 aluminum contract prices closed at an intraday low of RMB 16,445/mt, down RMB 195/mt compared with previous trading day, or down 1.17%. SHFE aluminum prices slumped dragged down by weak market fundamentals, with prices falling faster than other base metals prices. Positions of SHFE 1105 aluminum contract increased by 2,966 lots, but SHFE 1105 aluminum contract prices faced stronger resistance at the 5-day moving average. The low-end of SHFE aluminum price range fell gradually recently, and market pessimism remained unchanged, so SMM predicts SHFE aluminum prices will struggle at RMB 16,600/mt in the short term.
Traded prices for spot aluminum in east China were between RMB 16,420-16,450/mt, with premiums of RMB 0-10/mt against SHFE current-month aluminum contract prices. SHFE aluminum prices fell first but climbed later in the morning session during spot aluminum trading hours, causing mainstream traded prices for spot aluminum to move higher gradually. On the last trading day of SHFE 1103 aluminum contract, traders showed strong willingness to move goods, but market demand remained weak, keeping overall trading sentiment sluggish. SHFE aluminum prices fell significantly in the afternoon session, triggering the wait-and-see sentiment in spot aluminum markets, and traders were reluctant to move goods, keeping overall market sentiment extremely sluggish.
Amid strong wait-and-see sentiment from weak equity and neighboring metals markets, traders in China’s domestic lead markets did not insist on firm offers on Tuesday, despite rises in low-end LME lead prices. Domestic lead ingot prices on Tuesday failed to rise along with LME lead prices and were little changed from a day earlier, with mainstream prices between RMB 17,050-17,150/mt. At present, Hunan province is also conducting environmental protection inspections at local battery producers, keeping downstream demand still soft and further depressing downstream buying interest. Traders generally said that downstream consumption improved slightly on Tuesday due to rising LME lead prices, but overall transactions were still considered weak.
SHFE 1105 zinc contract prices opened lower at RMB 18,050/mt on Tuesday. In the midday, SHFE 1105 zinc contract prices fell to RMB 17,950/mt on news that the nuclear plant in Fukushima exploded, with prices touching the 5-day moving average, and then rallied to close at RMB 18,035/mt, up RMB 105/mt, or up 0.59%. Total positions decreased by 7,514 lots to 195,836 lots, and trading volumes decreased by 210,000 lots to 255,518 lots. SHFE 1106 zinc contract prices opened higher at RMB 18,200/mt, with prices touching RMB 18,385/mt in the morning session, and fell to test RMB 18,100/mt during the day. Total positions increased by 10,068 lots to 160,406 lots, and trading volumes decreased by over 20,000 lots to 376,042 lots. SHFE 1106 zinc contract will become the most actively traded contract on Wednesday.
SHFE 1105 zinc contract prices rose to RMB 18,000/mt on Tuesday, and fell in the midday dragged down by the weakening Shanghai Stock Exchange composite index as a result of Japan’s nuclear plant explosion, with prices rallying to RMB 18,000/mt later. As a result, spot zinc prices rose in response. #0 zinc was traded between RMB 17,600-17,650/mt, with discounts of RMB 400/mt against SHFE 1105 zinc contract prices. #1 zinc was traded between RMB 17,550-17,600/mt. Downstream buying interest was weak at higher prices since they have built stocks previously, leaving the market quiet. Spot discounts remained unchanged in the afternoon. But traded prices of spot zinc were higher than in Shanghai market, with #0 zinc traded between RMB 17,800-17,850/mt.
On Tuesday in Shanghai tin markets, prices continued to fall in response to constantly declining LME tin prices, with tin from Yunnan Tin Group, Gejiu Zili Metallurgy Company, and some minor branded tin traded between RMB 195,000-197,500/mt. Market players’ wait-and-see attitude grew, and trading sentiment was sluggish. However, major branded tin producers remained firm offers. More market players are pessimistic about short-term tin prices due to frequent news of Japan nuclear leakage. Coupled with constantly weak demand, domestic tin prices may fall further in the near future.
LME nickel for delivery in three months opened at USD 25,970/mt and closed at USD 25,870/mt on March 14, down by USD 30/mt from a day earlier, with the highest price at USD 26,124/mt and the lowest price at USD 25,525/mt. Daily trading volumes were 1,932 lots and positions were 112,996 lots. Affected by the nuclear leakage in Japan, LME nickel for delivery in three months opened at USD 25,825/mt during the Asian trading hours on March 15, and fluctuated downward to hit the lowest at USD 25,450/mt. LME nickel inventories were down by 312 mt to 127,674 mt on March 15.
Transactions were still sluggish in the Shanghai nickel spot market as LME nickel prices were still on downward track. Mainstream traded prices of nickel from Jinchuan Group were in the RMB 200,500-201,000/mt range, and mainstream traded prices of nickel from Russia were around RMB 199,500/mt. Operating rate at downstream producers was low due to tight capital supply, and traders were cautious due to uncertainties. Coupled with wait-and-see sentiment, recent transactions were relatively quiet.
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