SHANGHAI, Mar. 1 (SMM) --
SHFE 1205 copper contract prices, the most active one, opened RMB 150/mt up at RMB 60,880/mt Wednesday. After the opening, SHFE copper prices followed LME copper prices to rise stably after gaining support near the 5-day moving average of RMB 60,600/mt. In the afternoon session, as LME copper prices steadied above USD 8,600/mt, SHFE copper prices climbed further to a high RMB 61,150/mt after breaking out resistance at RMB 61,000/mt. At the tail of trading, SHFE copper prices suffered sell-offs and narrowed early gains since Chinese stock markets closed down by nearly 1%. Finally, SHFE 1205 copper contract prices closed at RMB 61,070/mt, up RMB 340/mt or 0.56%. Positions for SHFE 1205 copper contract were down 3,112 lots, but trading volumes were up 30,354 lots. SHFE copper prices were extremely likely to move higher, but would test RMB 61,000/mt repeatedly for the near future.
SHFE copper prices moved higher after a high open. Spot copper market transactions, though, fell after initially rising due to the last trading day of the month. Spot copper discounts were reported between negative RMB 420-320/mt in Wednesday's morning business. Traded prices for standard-quality copper were between RMB 59,800-59,950/mt, and RMB 59,850-60,000/mt for high-quality copper. Market transactions were modest at prices below RMB 60,000/mt in the morning business, with high-quality copper favored by market buyers, but hydro-copper supply decreased significantly owing to excessive discounts. At the tail of trading in the morning business, SHFE copper prices surged, but spot copper supply fell, keeping spot copper discounts little changed. As a large number of market players were optimistic over future copper prices, cargo-holders were awaiting a drop in copper discounts to move goods. Market transactions were restricted at above RMB 60,000/mt. In the afternoon session, SHFE copper prices rose further, so some hedged copper was locked, causing spot copper supply to decrease further. Spot copper discounts held the morning business levels as a result in the afternoon business, while traded prices edged higher to between RMB 59,900-60,050/mt.
The most active SHFE aluminum contract for delivery in May closed down RMB 10/mt or 0.06% at RMB 16,250/mt during Wednesday's trading. The moving band is RMB 16,235-16,275/mt. Transactions were less than 8,000 lots. The contract has been stagnant even in the face of gains in LME aluminum and SHFE copper prices. Support at the 5-day moving average has prevented heavy losses in the contract, though. SMM expects the SHFE three-month aluminum contract to see longer stagnation in the near term.
Spot aluminum traded between RMB 15,880-15,910/mt, at discounts of RMB 130-160/mt over the SHFE current-month aluminum price in Shanghai. The low end dropped slightly to RMB 15,880/mt due to tight cash flow at month's end and losses in SHFE aluminum prices. Trading stayed light as supply was sufficient while demand is weak.
On Wednesday, SHFE lead prices opened at RMB 16,250/mt and moved between RMB 16,220-16,300/mt in the morning. Later, SHFE lead prices rose to touch a high of RMB 16,385/mt and fell to finally close at RMB 16,315/mt, up RMB 50/mt. Trading volumes decreased by 226 lots to 402 lots and positions were down 112 to 1,830 lots.
In China's domestic spot markets, quotation for Chihong Zn & Ge were at RMB 16,100/mt earlier with inquiries rarely seen due to the high prices, but dropped to RMB 16,050/mt later, with discounts against the most active SHFE lead contract price between RMB 200-250/mt. However, traded prices were actually between RMB 16,000-16,040/mt. Other brands such as Hanjiang and Yubei were quoted at RMB 16,020-16,050/mt and only limited deals were made. Quotations for lead from Gejiu region were at RMB 15,950-16,000/mt. In the afternoon, spot prices moved up slightly, with Chihong Zn & Ge quoted at RMB 16,060/mt and lead from Gejiu region quoted at RMB 16,000/mt, but transactions were sparse. Since lead prices kept rising, smelters were more actively selling goods, while inquiries for brands at lower prices increased but few purchases were made at high prices, leaving transactions modest.
On Wednesday, SHFE three-month zinc contract prices opened at RMB 16,120/mt, and plummeted below the moving average, dragged down by the Shanghai Composite Index and as large numbers of shorts sold goods. But boosted by LME zinc prices, SHFE three-month zinc contract prices gained back previous losses to close at RMB 16,140/mt, up RMB 65/mt. Trading volumes decreased by over 80,000 lots to 115,654 lots, and positions decreased by 6,600 lots to 187,688 lots.
In domestic spot markets, discounts of #0 zinc were between RMB 350-400/mt, with limited supply for registered brands and with traded prices between RMB 15,700-15,750/mt. #1 zinc was traded around RMB 15,700/mt. Downstream buyers were cautious, while smelters increased goods supply at higher prices.
Spot tin prices narrowed further to RMB 174,000-175,000/mt in Shanghai on Wednesday while trading stayed light. Yunnan tin brands dominated the market while Jiangxi brands were hardly seen. Yunxiang and Yunshan branded ingots struck deals between RMB 174,000-174,500/mt and Yunxi and Yunheng concluded transactions between RMB 174,500-175,000/mt. Though downstream demand stays weak, market supply is on the decrease. That is due to smelters' lower selling interest caused by stagnation of the high end price. Light trading is still the predominant scene during recent days.
During Wednesday's Asian trading hours, LME nickel prices rebounded to USD 20,000/mt after opening at USD 19,925/mt. During the European trading hours, the ECB's second round LTRO may be the major factor affecting movement of euro. On one hand, the euro may be boosted as the LTRO will increase liquidity in the market. On the other hand, if the euro may be weakened if ECB's three-year LTRO exceeds budget.
In the Shanghai nickel spot market, spot nickel prices slipped due to LME nickel price decline. During the morning trading hours, mainstream traded prices of nickel from Jinchuan Group were around RMB 139,500/mt, and mainstream traded prices of nickel from Russia were between RMB 138,800-139,000/mt. During the afternoon trading hours, traded prices of spot nickel fell to RMB 138,800/mt due to sluggish demand. Downstream demand was still lackluster, resulting in moderate trading volumes. According to market players, prices of Jinchuan nickel were near production costs, and spread between imported Russian nickel price and traded Russia nickel price also reduced, leaving limited profit margin for traders.