SHANGHAI, Jun. 4 (SMM) –
As LME copper fluctuated feebly overnight, the most active SHFE copper contract for September delivery started RMB 50/mt lower at RMB 54,400/mt last Friday. The contract fell abruptly immediately following the opening as China’s PMI released by the China Federation of Logistics & Purchasing was lower than expected, but then rose and hovered narrowly around RMB 54,500/mt after gaining buying support at RMB 54,210/mt. The contract reached an intraday high at RMB 54,730/mt. However, owing to large-scale position closings at the tail of trading, SHFE 1209 copper contract finally reversed early gains before closing RMB 120/mt or 0.22% down at RMB 54,330/mt, with trading volumes and positions increasing by 39,292 lots and 5,652 lots, respectively. Long and short investors held divergent views during the day, but both of them opted to leave the market to avert risks before the weekends. Despite improved cash flows, total positions for all SHFE copper contracts increased sharply by 11,762 lots during the first trading day of June, and total trading volumes also added significantly by 17,748 lots. This meant SHFE copper prices would suffer more selling pressures from short investors and search support at lower price levels for the foreseeable future.
SHFE copper prices met resistance to rebound as China’s PMI was reported to fall further in May according to the China Federation of Logistics & Purchasing. Spot copper premiums, though, held stable between positive RMB 180-270/mt in Shanghai in the morning business. Traded prices for standard-quality copper were between RMB 55,400-55,480/mt, and RMB 55,450-55,550/mt for high-quality copper. Cargo-holders held divergent views before the weekends. Those who wanted to shun risks chose to sell aggressively for cash, while copper smelters held back goods. Traders exhibited little interest in buying, but some downstream producers with improved cash flows bought as needed, leading to modest market transactions in the morning. In the afternoon, as SHFE copper prices slid from earlier highs, mainstream offers for spot copper premiums inched up to positive RMB 180-280/mt. However, market participants were wary of operations, leaving market transactions little changed from the morning business levels. SHFE copper stocks decreased by 10,445 mt to 147,044 mt last Friday, a suggestion that some downstream producers made purchases as copper prices retreated during the week.
The most active SHFE aluminum contract for September delivery settled down RMB 20/mt or 0.13% at RMB 15,935/mt last Friday, after struggling near RMB 15,955/mt amid stimulus expectations triggered from a worse-than-expected contraction in May CPI and a poor demand outlook. Positions added 3,004 lots to 100,274 lots. SHFE aluminum futures should remain weak and test support at RMB 15,900/mt this week as pressure has been coming from several sides.
Spot aluminum was traded at RMB 15,930-15,960/mt in Shanghai, with low-iron aluminum trading at RMB 16,010-16,040/mt. Stagnating SHFE aluminum prices weakened spot aluminum’s ability to rebound. As cash flow pressure began to ease in early June, goods holders became less willing to lower quotations. Downstream processors purchased a little to replenish stocks before the weekend. Trading warmed in Wuxi and Hangzhou, with their mainstream trading bands and traded volumes climbing a little bit, but stayed light in Shanghai.
China’s May PMI was reported down from the previous figures both according to HSBC and China Federation of Logistics & Purchasing. SHFE lead prices opened at RMB 15,030/mt and rose to RMB 15,085/mt due to buying support but fell slightly in the afternoon influenced by domestic stocks. At the tail of trading, prices rallied again to close at RMB 15,080/mt. Trading volumes decreased by 114 lots to 134 lots, while positions were up 64 lots to 2,120 lots.
In China’s domestic spot market, quotations were rare as market remained cautious waiting for US nonfarm payrolls. Quotations for Chihong Zn & Ge were at RMB 15,160/mt, while Hengchang was quoted at RMB 15,000/mt. Transactions were limited with both sellers and buyers waiting on the sidelines.
Last Friday, SHFE 1209 zinc contract prices opened at RMB 14,790/mt and dipped to RMB 14,735/mt in the morning session due to China’s shrinking PMI and since the US dollar index surged to 83.3. As the Shanghai Composite Index rose, SHFE 1209 zinc contract prices rebounded to RMB 14,870/mt, but then fell to fluctuate between RMB 14,810-14,840/mt. In the afternoon, SHFE three-month zinc contract prices were dragged down by falling Shanghai Composite Index, and finally closed at RMB 14,770/mt, down RMB 15/mt or 0.1%. Trading volumes decreased by 36,940 lots to 69,608 lots, and total position increased by 4,086 lots to 146,000 lots. Trading volumes increased by 24,812 lots to 104,626 lots, and total position increased by 4,820 lots to 175,950 lots.
In domestic spot markets, #0 zinc was traded between RMB 14,730-14,750/mt in the morning session. As SHFE zinc prices rose, discounts were between RMB 50-80/mt, with traded prices between RMB 14,750-14,770/mt. #1 zinc prices were between RMB 14,700-14,720/mt. Traders purchased at lower prices, but turned cautious as prices rose, and smelters were holding goods, while downstream buying interest was low.
In Shanghai tin market, mainstream traded prices were between RMB 153,000-155,000/mt on Friday, down slightly from the previous trading day with transactions sparse. Jinlong, Nanshan, Yunxiang were mainly traded between RMB 153,000-153,500/mt, while most transactions for Yunxi were concluded between RMB 154,500-155,000/mt. Smelters were still not willing to move goods, leaving supply limited. Market confidence was depressed by the remaining low LME tin prices, combined with the extremely weak demand, pessimism prevailed in the market, leaving barely any transactions.
Last Friday, Jinchuan Group lowered nickel prices to RMB 124,000/mt to due to weak demand, despite LME nickel prices rose, while mainstream Russian nickel prices were also lowered to RMB 121,400-121,500/mt. Downstream buying interest improved. But as the market was cautious ahead of the released of US non-farm data, the overall transactions were muted.