SHANGHAI, Jul. 5 (SMM) –
As LME copper steadied at the highs overnight, SHFE 1210 copper contract, the most active one, started RMB 100/mt up at RMB 56,020/mt Wednesday. Following suits in LME copper, the contract climbed to RMB 56,300/mt after the opening. However, as the US dollar index rebounded, LME copper came under pressure and began sliding. Coupled with a slipping Shanghai Composite Index, SHFE 1210 copper contract also trended down and touched a low at RMB 55,810/mt in the afternoon. Finally, the most active copper contract for October delivery still closed RMB 50/mt or 0.09% higher at RMB 55,970/mt, with trading volumes and positions decreasing by 162,000 lots and 9,562 lots, respectively. SHFE copper prices tested support at the 60-day moving average as both shorts and longs conducted intraday operations, awaiting directions from central banks’ moves later and trying to hold to the 60-day moving average effectively.
SHFE copper prices slipped after initially surging, so the SHFE/LME copper price ratio continued to fall, depressing imported copper cargo-holders’ interest in moving goods. In consequence, spot copper discount quotes narrowed from the previous session. Mainstream spot copper offers were between discounts of negative RMB 70/mt and premiums of positive RMB 50/mt in Shanghai in the morning business. Traded prices for standard-quality copper were between RMB 56,150-56,330/mt, and RMB 56,200-56,430/mt for high-quality copper. Some cargo-holders of high-quality copper still offered slight discounts in the morning and enticed some traders to make purchases. However, spot copper discounts narrowed rapidly near the midday as copper prices retreated, and high-quality copper offers turned into slight premiums. Downstream producers stuck to the sidelines, so market transactions were still dominated by traders and speculators. In the afternoon, as SHFE copper prices continued to come under pressure, mainstream spot offers were between discounts of negative RMB 40/mt and premiums of positive RMB 40/mt, while traded prices inched down to RMB 56,100 -56,250/mt. Trading sentiment was lower in the afternoon than that in the morning.
The most active SHFE aluminum contract for October delivery gapped higher at RMB 15,595/mt on Wednesday following an overnight surge in LME aluminum prices. The light metal showed more resistance to losses than other base metals, but also a lack of upward momentum, hitting a high of only RMB 15,685/mt. Even though other base metals trimmed gains in the afternoon, the contract stabilized as shorts took profits, before settling up RMB 185/mt or 1.2% at RMB 15,645/mt. Positions dropped 4,380 lots to 112,852 lots. Though shorts begin taking profits, longs have stayed on the sidelines, so the contract is expected to see relatively weak support at RMB 15,600/mt.
Spot aluminum traded at RMB 15,690-15,720/mt in Shanghai, at discounts of RMB 20-50/mt over the current-month SHFE aluminum price. Low-iron aluminum was sold at RMB 15,800-15,820/mt. The most active SHFE aluminum contract gapped higher following an overnight surge in LME aluminum prices, but its upward momentum turned out to be weak. Cold downstream response to higher aluminum prices dragged the mainstream trading band lower. Traders were quite open to talks for shipments while buying was extremely weak. Deals were quite limited as a result.
On Wednesday, SHFE 1210 lead contract price opened at around RMB 15,000/mt and fluctuated down to RMB 14,835/mt since investors were not interested in buying. In the afternoon, SHFE lead prices stopped falling influenced by domestic stocks and finally closed at RMB 14,950/mt, down RMB 20/mt from the previous trading day. Trading volumes were up 286 lots to 576 lots, and positions were up 64 lots to 1,946 lots.
Quotations in China’s spot lead markets were relatively resilient. Shuikoushan and Hanjiang were mainly quoted at RMB 15,000/mt, with spot premiums of RMB 40-50/mt over the most active SHFE lead price. Shenqian was quoted at RMB 14,930/mt. Later, SHFE lead prices fell RMB 70/mt. Cargo holders held prices firm with limited supply in the market, while downstream enterprises purchased as needed. In the afternoon, sellers’ reluctance to sell goods intensified with SHFE lead prices regained losses, quotations were rarely reported, leaving transactions modest.
On Wednesday, SHFE 1210 zinc contract prices opened at RMB 14,890/mt, and rose to RMB 14,915/mt, affected by the falling US dollar index, and fluctuated between RMB 14,850-14,890/mt. In the midday, SHFE 1210 zinc contract prices dipped to RMB 14,765/mt due to the falling Shanghai Composite Index. In the afternoon, SHFE 1210 zinc contract prices gained back some losses and fluctuated between RMB 14,810-14,840/mt as the US dollar index was weak, and finally closed at RMB 14,830/mt, up RMB 20/mt, or 0.14%. Trading volumes decreased by 36,402 lots to 128,814 lots, and total position decreased by 6,606 lots to 174,956 lots.
In domestic spot markets, discounts of #0 zinc against SHFE 1210 zinc contract prices were between RMB 120-130/mt, with traded prices between RMB 14,740-14,750/mt. Discounts of spot goods narrowed to RMB 90-100/mt as SHFE zinc prices fell, with traded prices down to RMB 14,690-14,700/mt. #1 zinc was quoted between RMB 14,620-14,700/mt. Downstream buyers purchased as needed, despite falling prices in the midday. High discounts allowed traders to buy in the morning session, but they turned cautious due to narrowing discounts, with transactions muted.
In Shanghai tin market, mainstream traded prices were between RMB 148,000-148,500/mt on Wednesday. LME tin prices rose sharply Wednesday, shoring up market sentiment, combined with limited supply of spot tin, spot tin prices picked up following continuous declines. Transactions for Yunheng and Yunxi were mainly concluded between RMB 148,000-148,500/mt. Selling interest at smelters in Jiangxi province remained low, leaving fewer availability for branded tin. Given the still weak demand and bearish mood in spot market, trading remained light. Many market players believed the increase will be temporary and only waited on the sidelines.
On Wednesday, Jinchuan Group raised nickel prices to RMB 124,000/mt, up RMB 3,000/mt. Mainstream prices of Jinchuan nickel were between RMB 124,000-124,200/mt in the morning session, while mainstream Russian nickel prices were between RMB 120,000-122,000/mt. quotes by traders rose in the morning session, but downstream buyers were cautious, keeping transactions muted. Mainstream prices of Jinchuan nickel fell to RMB 123,800-124,000/mt as LME nickel prices inched down. Transactions were extremely quiet as the market takes a wait-and-see attitude.