SHANGHAI, Jun. 15 (SMM)--
As LME copper narrowed gains overnight, SHFE 1209 copper contract, the most active one, started RMB 140/mt down at RMB 53,820/mt Thursday. After the opening, as longs bought SHFE 1210 copper contract in large quantities, SHFE 1209 copper contract was pushed up stably. Near the midday, LME copper rose rapidly by nearly USD 100/mt, helping the most active copper contract on the SHFE increase above RMB 54,000/mt before quickly hitting an intraday high at RMB 54,410/mt. However, in the afternoon session, as LME copper retreated below USD 7,400/mt on a rallying US dollar index, and since the Shanghai Composite Index slid below 2,300, SHFE copper sank below the daily moving average and gradually narrowed daily gains. But SHFE 1209 copper contract still closed RMB 130/mt or 0.24% higher at RMB 54,090/mt, with trading volumes increasing by 55,684 lots but positions falling by 8,394 lots. Trading volumes and positions for SHFE 1210 copper contract added by 78,446 lots and 21,810 lots, respectively, highlighting the continuous shift of the most active copper contract. SHFE copper found temporary support at RMB 53,500/mt.
SHFE copper prices started lower, but the SHFE/LME copper price ratio continued to improve, propelling cargo-holders in spot markets to move goods for cash. However, domestic copper cargo-holders were unwilling to sell. Spot copper premiums were quoted between positive RMB 20-100/mt in Shanghai in the morning business. Traded prices for standard-quality copper were between RMB 54,700-55,000/mt, and RMB 54,750-55,100/mt for high-quality copper. Some traders opted to buy owing to a drop in premiums on high-quality copper, while the price differential between SHFE 1206 and 1207 copper contract prevailed. Downstream producers, though, kept on their toes. SHFE copper prices rose rapidly by nearly RMB 300/mt near the midday, restricting spot copper market activity, and causing spot copper premiums fall sharply to below positive RMB 100/mt. In this context, market transactions stagnated at prices above RMB 55,000/mt. In the afternoon, SHFE copper fell from early highs, but most cargo-holders in spot copper market quoted discounts and enticed some traders to enter the market ahead of the delivery day for SHFE current-month copper contract. Traded prices slid to RMB 54,950-55,050/mt in the afternoon.
Italian and Spanish debt yields climbed. Greek stocks prices jumped before the Greek election. US CPI and employment data disappointed, dragging the US dollar index below 82. LME aluminum opened at USD 1,960/mt during Asian trading and climbed slightly, shortly breaking through the 5-day moving average and fell back. It settled down USD 6.5/mt or 0.33% at the 2-year low USD 1,953.5/mt. Transacted contracts increased a slight 1,978 lots to 8,929 lots. Total positions dropped 3,518 lots to 734,822 lots. LME aluminum stocks surged 25,800 mt overnight to 4,860,925 mt. LME aluminum opened slightly higher this morning and SHFE aluminum is expected to see a slight rebound and stay within ranges.
The Greek election is near. Surging Greek stocks prices overnight also boosted confidence in European and US equity markets. The US dollar index dipped below 82 due to weak economic data. Risk aversion is still strong though, and will continue to limit the moving band of LME aluminum prices to USD 1,950-1,970/mt. The most active SHFE aluminum contract is expected to open slightly higher at RMB 15,880/mt supported by LME aluminum performance and hover within a narrow range later. Pressure at the 10-day moving average has yet to be tested. Its trading band should be RMB 15,850-15,900/mt. Spot aluminum prices should continue to struggle near RMB 15,900/mt. Both premiums and discounts should stay within RMB 20/mt.
On Thursday, most investors still waited for the result of Greek election and stayed out of the market to avoid risk events. SHFE lead prices opened at RMB 15,005/mt and hovered narrowly around RMB 15,000/mt to close at RMB 14,980/mt, down RMB 35/mt from the previous trading day. Trading volumes were down 120 lots to 90 lots, while positions were up 20 lots to 2,238 lots.
Branded lead in China's spot lead market including Nanfang were quoted at RMB 15,100/mt, with spot premiums of RMB 100/mt against the most active SHFE lead contract price. Mengzi and brands from Gejiu region were quoted between RMB 15,020-15,040/mt. Offers of Shenqian was at RMB 14,980/mt. Smelters reported normal sales and dealer were more willing to sell. But downstream buyers were cautious.
On Thursday, SHFE 1209 zinc contract prices opened at RMB 14,780/mt and fluctuated between RMB 14,750-14,780/mt. As the end of trading, as the US dollar index plunged, SHFE 1209 zinc contract prices climbed and touched an intraday high of RMB 14,845/mt, fluctuating between RMB 14,800-14,830/mt. At the end of trading, SHFE 1209 zinc contract prices rolled back previous gains due to the weak Shanghai Composite Index, and finally closed at RMB 14,770/mt, down RMB 20/mt or 0.14%. Trading volumes increased by 704 lots to 55,318 lots, and total position decreased by 2,914 lots to 166,032 lots.
In domestic spot markets, discounts of #0 zinc against SHFE three-month zinc contract prices were RMB 70-80/mt, with traded prices between RMB 14,680-14,690/mt. As SHFE zinc prices rose in the midday, discounts of #0 zinc expanded to RMB 80-120/mt, with traded prices between RMB 14,690-14,700/mt. #1 zinc was quoted between RMB 14,650-14,680/mt. Inquiries increased as traders arbitraged with higher zinc prices, and most transactions were made among traders of registered brands. But downstream buying interest was low. Spot markets were quiet while SHFE zinc prices rose, with investors remaining cautious.
In Shanghai tin market, most transactions were done between RMB 150,500-152,000/mt Thursday and market continued a downtrend. Some transactions were concluded at RMB 150,500/mt. Nanshan, Jinlong, Jinhai and Yunxiang were mainly traded between RMB 150,500-151,000/mt, while mainstream traded prices for Yunheng and Yunxi were between RMB 151,500-152,000/mt. Production at smelters did not improve, leaving market supply still insufficient. Meanwhile, demand downstream stayed poor. Market player were expecting directions of macroeconomic conditions.
On Thursday, mainstream prices of Jinchuan nickel were between RMB 124,300-124,600/mt, while mainstream Russian nickel prices were between RMB 121,400-121,600/mt. LME nickel prices rose slightly after opening, but spot quotes were firm since there was still arbitrage room. In the afternoon, mainstream prices of Jinchuan nickel rose to RMB 124,500-124,800/mt, while mainstream Russian nickel prices also climbed to RMB 121,500-121,800/mt. But transitions were muted, with downstream buying interest low.