SHANGHAI, Apr. 18 (SMM) --
SHFE 1106 copper contract prices, the most active one, opened slightly up RMB 150/mt at RMB 71,300/mt on Friday, and met resistance at RMB 71,500/mt. After 10:00 am, China announced higher CPI and PPI data for March, raising market concerns over tighter monetary policy, and longs started to close positions as a result. In this context, SHFE three-month copper contract prices fell below RMB 71,000/mt, but found support at RMB 70,510/mt. Then, profit-taking by shorts helped narrow daily declines. Finally, the copper for delivery in three months in the SHFE market closed at RMB 70,830/mt, down RMB 320/mt, or a loss of 0.45%. Positions for SHFE three-month copper contract prices were up 1,858 lots, while trading volumes were up 21,162 lots. Total positions in the SHFE copper market were up over 10,000 lots, mainly due to the increase in positions for SHFE 1107 copper contract. Based on price movements on Friday, SHFE three-month copper contract pries found support at RMB 70,500/mt, but a downward trend was still technically available. SMM believes that SHFE copper market will continue to test its support at RMB 70,500/mt.
In the spot market, premiums were between positive RMB 50-200/mt in the morning business as copper prices in the SHFE market moved lower after a high open. Supply of standard-quality copper remained limited, keeping the price gap between high-quality and standard-quality copper within RMB 50/mt, with no availability of standard-quality copper at the midday. Transactions were made between RMB 71,350-71,500/mt. Offers for high-quality copper remained firm, with deals made between RMB 71,470-71,600/mt. In the morning session, the gap between buying and selling price of SHFE current-month copper contracts exceeded RMB 150/mt, leaving difficulties for traders in reaching deals. Market views were mixed towards transactions in the morning. Speculators were hesitant in purchases due to wild price fluctuations, while downstream producers were active in buying goods when spot prices were low. Copper prices in the SHFE market continued to fall in the afternoon session, and so spot traded prices dropped to RMB 71,100-71,400/mt. The overall trading sentiment was higher compared with a day earlier. According to the data announced by the Shanghai Futures Exchange (SHFE), copper stocks were down 6,578 mt to 147,651 mt in the week ending April 15th, an indication that spot consumption was continuing to improve as prices were down.
China’s National Bureau of Statistics released economic data for March on Friday, and the consumer price index (CPI) in March grew by 5.4% on a yearly basis, which was generally in line with market expectations. Rising inflationary pressure caused SHFE aluminum prices to remain weak on Friday, SHFE 1106 aluminum contract prices opened at RMB 16,720/mt, with prices hitting a high of RMB 16,765/mt and touching a low of RMB 16,705/mt. SHFE 1106 aluminum contract prices finally closed at RMB 16,710/mt, down RMB 0.24%, with prices still moving below all moving averages. Trading sentiment was sluggish and trading volumes of SHFE 1106 aluminum contract failed to break through 10,000 lots, with total positions falling slightly. Market players have absorbed the pressure from tightening monetary policies caused by high inflation, and there is low possibility SHFE aluminum prices will continue to fall significantly in the short term. However, SHFE aluminum prices will lack upward momentum due to a lack of speculative funds, with SHFE 1106 aluminum contract prices expected to test the support at RMB 16,700/mt.
Spot aluminum prices were weak as well. Domestic aluminum spot inventories declined consecutively, improving aluminum ingot suppliers’ confidence in spot aluminum prices. In addition, market offers were firm as the delivery date neared. However, downstream buying interest was low due to tightening monetary policies despite of improving downstream consumption. Meanwhile, downstream processors were cautious toward future aluminum prices. As a result, actual transactions were weaker from a day earlier, and traded prices for spot aluminum were between RMB 16,580-16,610/mt in east China on Friday, with premiums of positive RMB 0-30/mt over SHFE current-month aluminum contract prices. Traded prices for low-iron aluminum were between RMB 16,660-16,700/mt. Transactions were muted as well in south China, and most deals were made between RMB 16,580-16,600/mt.
Last Friday, SHFE lead prices fell to RMB 18,505/mt before rallying to a daily high of RMB 18,780/mt due to an increase of 5.38% in China’s CPI in March, but met resistance at the 5-day moving average. Later, prices were weighed down to below daily moving averages after investors’ profit-taking at RMB 18,620-18,725/mt, and fell to hit RMB 18,520/mt at the tail of trading, but finally rebounded to close at RMB 18,580/mt, down RMB 25/mt. Trading volumes were 6,146 lots, up 3,846 lots; positions were 8,818 lots, up 244 lots.
In China’s lead spot markets, market players showed strong wait-and-see sentiment last Friday due to weak Shanghai Stock Exchange composite index and poor performance in neighboring base metals, despite rebounding SHFE lead prices with rising LME lead prices. In response, transactions in domestic lead spot markets were quiet last Friday, with well-known branded lead quoted between RMB 17,300-17,380/mt and unknown branded lead between RMB 17,250-17,300/mt tracking SMM offers. In the afternoon, prices for well-known branded lead moved lower to RMB 17,300-17,350/mt following falling LME and SHFE lead prices. The relatively high CPI in China kept strong wait-and-see sentiment in the market over the weekend.
Last Friday, SHFE 1106 zinc contract prices opened at RMB 18,420/mt. China’s CPI for March released during the morning session rose 5.4% YoY, which has been absorbed by the market since market players were expecting so. SHFE 1106 zinc contract prices failed to stabilize at the 20-day moving average to fall to RMB 18,250-18,300/mt, with prices finally closing at RMB 18,270/mt, down RMB 185/mt. Trading volumes decreased by over 40,000 lots to 218,094 lots, and total positions decreased by 476 lots to 188,310 lots.
SHFE zinc prices fell to RMB 18,250/mt, down from RMB 18,450/mt, with spot discounts remaining unchanged at RMB 350-370/mt. Traded prices of #0 zinc were between RMB 17,950-18,000/mt, while #1 zinc was traded between RMB 17,900-17,950/mt. Traders were still taking a wait-and-see attitude given low discounts, which were even RMB 100-150/mt against SHFE spot-month zinc contract prices. Spot transactions were quiet ahead of the weekend. SHFE zinc prices fell in the afternoon, but spot discounts still remained between RMB 350-370/mt, with traded prices around RMB 17,950/mt. Transactions were still weak. Last week, inventories on the SHFE grew by 10,598 mt to 384,882 mt.
In Shanghai tin markets, tin spot prices rose last Friday from a day earlier due to stabilizing LME and SHFE tin prices, with goods below RMB 210,000/mt limited. Tin from Yunnan Tin Group, and Jinhai, Jinxing, Jinlong as well as Kaiyuan branded tin largely traded between RMB 210,000-213,000/mt, some transactions for tin from Yunnan Tin Group were made between RMB 213,000-214,500/mt. Overall trading sentiment was quiet, as volatile prices triggered strong wait-and-see sentiment last week.
LME nickel for delivery in three months opened at USD 26,300/mt and closed at USD 25,978/mt on Thursday, down by USD 272/mt from a day earlier, with the highest price at USD 26,450/mt and the lowest price at USD 25,750/mt. LME nickel prices began to slip and hit the lowest of USD 25,950/mt after opening at USD 26,000/mt and advancing to the highest of USD 26,400/mt during the morning Asian trading hours on Friday, with certain support at USD 26,000/mt. At president, prices moved below all day moving averages, with great resistance ahead. The firm US dollar weighed on LME nickel prices to certain extent. LME nickel inventories were up down by 702 mt to 120,480 mt.
In the Shanghai nickel spot market, spot prices advanced to certain extent from a day earlier. Mainstream traded prices were in the RMB 195,500-196,500/mt range. Overall transactions were sluggish. Downstream consumption was sluggish, and deals were largely done among traders. Fight between shorts and longs was intense, and market players largely adopted a wait-and-see attitude, with cautious sentiment reported.
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