SHANGHAI, Feb. 20 (SMM) --
As LME copper prices rebounded slightly overnight, SHFE 1205 copper contract prices, the most active one, opened RMB 520/mt higher at RMB 59,810/mt Friday. SHFE three-month copper contract prices fluctuated around the daily moving average during the whole trading day, with upside resistance at the 5-day moving average and intraday high at RMB 60,200/mt. At the tail of trading, SHFE three-month copper contract prices drifted slightly lower and pared some of earlier gains owing to position closings. Finally, SHFE 1205 copper contract prices closed at RMB 59,750/mt, up RMB 460/mt or 0.78%. Positions for SHFE 1205 copper contracts were down 12,656 lots, and trading volumes were down 82,070 lots. Long investors took the opportunity of copper price corrections to conduct profit-taking, with low interest in keeping up with rising prices. With prevailing upward resistance, copper futures would look for support amid falling prices.
In the spot market, SHFE copper prices rebounded but could not reverse market pessimism towards future copper prices, so cargo-holders continued to sell goods aggressively at high levels, causing copper discounts to expand all the way. Mainstream copper discounts were reported between negative RMB 400-300/mt in Friday’s morning business. Daily traded prices for standard-quality copper were between RMB 59,150-59,350/mt, and RMB 59,200-59,400/mt for high-quality copper. Downstream producers chose to stand on the sidelines owing to replenishment of stocks earlier when copper prices were relatively low, and as they were skeptical about copper price rebounds. As a consequence, spot copper market transactions decreased significantly from the prior day. SHFE copper inventories increased by 18,940 mt to 217,142 mt in the week ending February 17th, highlighting the characteristic of delivery for SHFE current-month copper contracts February 15th.
The most active SHFE aluminum contract for delivery in May hit a high of RMB 16,215/mt last Friday, but pared gains later due to profit-taking and finally closed up RMB 30/mt or 0.19% at RMB 16,175/mt. Latest SHFE aluminum stocks increased in a slower pace by 5,278 mt to 312,097 mt. SMM expects the contract to test support at RMB 16,100/mt in the near term due to weakness in demand and global economies.
Spot aluminum traded between RMB 15,850-15,890/mt in Shanghai, at discounts of RMB 100-130/mt over the SHFE current-month aluminum price. In the morning, losses in SHFE aluminum prices spread to the spot market and goods holders split in terms of selling interest, with supply tightness seen for some brands while sufficiency appeared for others. The downstream buying interest, however, had been low throughout the day. A few middlemen were open to lower-priced supplies when SHFE aluminum prices were climbing. Such buying interest did not last after futures prices pared gains.
Last Friday, most active SHFE lead contract price tended to stabilize after the slump on the previous trading day. In the morning session, prices fluctuated around RMB 15,650/mt after opening at RMB 15,700/mt. In the afternoon, SHFE lead prices moved above moving averages but surrendered some earlier gains at the tail of trading to close at RMB 15,600/m. Trading volumes decreased by 216 lots to 454 lots and positions were up 132 to 1,966 lots.
In China’s domestic spot markets, quotations for well-known brands such as Chihong Zn & Ge, Chengyuan and Shuikoushan were quoted at around RMB 15,600/mt, with discounts against the most active SHFE lead contract price at RMB 50/mt. Quotations for other brands were mainly at RMB 15,530/mt. In the afternoon, SHFE lead prices remained stable, leaving spot prices basically unchanged. Although lead prices tended to stop falling ahead of weekend, downstream buyers were still bearish on lead price trends and only purchased cautiously, while smelters were not willing to move goods at lower prices.
Last Friday, SHFE three-month zinc contract prices opened at RMB 15,720/mt, surging to an intraday high at RMB 15,750/mt in the morning session and then falling along with the Shanghai Composite Index. In the afternoon, a large number of longs left the market as the bailout plan for Greece will not be finally decided until this Monday, so SHFE three-month zinc contract prices plummeted to close at RMB 15,575/mt, down RMB 75/mt. Trading volumes decreased by nearly 90,000 lots to 203,254 lots, and total position increased by 18,374 lots to 178,406 lots.
In domestic spot markets, discounts of #0 zinc against SHFE 1205 zinc contract prices were between RMB 250-280/mt, with traded prices between RMB 15,350-15,400/mt, and discounts of #1 zinc were between RMB 340-350/mt, with traded prices between RMB 15,300-15,350/mt. Downstream buying interest was strong as SHFE zinc prices remained low, with transactions brisk.
Mainstream traded prices of spot tin were between RMB 173,000-176,000/mt in Shanghai last Friday, while Nanshan and Jinlong branded ingots struck deals between RMB 173,000-174,000/mt and a few deals were even done at RMB 172,500/mt for Jiangxi ingots. Deals were extremely difficult to be reached at high prices. Mainstream tin brands of the day were Yunxi, Yunxiang, Nanshan and Jinlong.
During last Friday’s Asian trading hours, LME nickel prices rebounded to certain extent after a high opening. LME nickel prices were under 5-day moving average, and were unlikely to make significantly breakthrough in the short term. The Europe Bloc will release final decisions on a slew of plans on the second round Greek bailout on Monday. It is reported that Greece will try to reach EUR 130 billion bailout deal at the European financial ministers meeting in order to avoid debt default. In addition, the Greek government underscored that the new government will abide by the austerity agreement, boosting market sentiment to certain extent. What’s more, the newly-released economic data from the US prevented LME nickel prices from slipping further, and LME nickel prices shall continue to test sustainability at USD 20,000/mt.
In the Shanghai nickel spot market, mainstream traded prices of nickel from Jinchuan Group were between RMB 140,000-140,200/mt, and mainstream traded prices of nickel from Russia were between RMB 139,000-139,200/mt during the morning trading hours. As LME nickel prices did not change much during the afternoon trading hours, spot nickel prices also remained unchanged. According to market players, inquires increased, but actual transactions were still limited. SMM believes that the limited transactions are mainly due to strong wait-and-see sentiment amid unclear market trend. Generally speaking, trading sentiment was cautious and transactions were moderate last Friday.