SHANGHAI, Jul. 12 (SMM)--
As LME copper prices came under pressure overnight, SHFE 1210 copper contract, the most active one, started RMB 330/mt down at RMB 54,970/mt Wednesday. After the opening, the contract climbed to the 10-day moving average of RMB 55,370/mt amid buying by some longs. However, LME copper prices were pushed down from earlier highs near the midday and caused the contract to experience a wave of small dives, down below the RMB 55,000/mt point. SHFE copper prices stopped falling and began lurching around RMB 55,000/mt in the afternoon. Finally, the most active copper contract for October delivery ended RMB 150/mt or 0.27% down at RMB 55,150/mt, with trading volumes increasing by 19,366 lots but positions decreasing by 4,694 lots. SHFE copper prices won temporary support at the 20-day moving average but the 5 and 10-day moving average saw adhesion at around RMB 55,400/mt amid growing resistance. Hence, SMM believes SHFE copper prices will remain within the same pricing range in the foreseeable future.
As SHFE copper prices lurched weakly in the morning, the SHFE/LME copper price ratio continued to improve and helped spot copper supply remain sufficient. In this context, spot copper premiums stabilized and market activity for high-quality copper became more active. Spot copper offers were generally between premiums of positive RMB 20-100/mt in Shanghai in the morning business. Traded prices for standard-quality copper were between RMB 55,500-55,560/mt, and RMB 55,550-55,630/mt for high-quality copper. Near the midday, SHFE copper prices dropped rapidly by RMB 200/mt, so spot copper premiums rose. Downstream producers continued to source to need, and market transactions were thus largely contributed by traders. As SHFE copper prices continued to drift lower in the afternoon, spot copper premium quotes increased further to positive RMB 30-120/mt, while traded prices edged down to RMB 55,400-55,550/mt with some downstream producers continuing to buy as needed.
The most active SHFE aluminum contract for October delivery started slightly lower at RMB 15,500/mt and hit a high of only RMB 15,545/mt following a narrow struggle centering the 10-day moving average. Losses expanded in the afternoon as the contract fell back to an even lower RMB 15,460/mt. The closing price was RMB 15,505/mt, down RMB 75/mt or 0.48%. Positions dropped a slight 100 lots to 109,960 lots. Transacted contracts fell below 18,000 lots as trading turns quiet. The contract should struggle near RMB 15,500/mt for the near term due to cautious trading.
Spot aluminum prices were RMB 15,530-15,560/mt in Shanghai, at discounts of RMB 50-80/mt over the current-month SHFE aluminum contract. Low-iron aluminum sold at RMB 15,620-15,640/mt. Spot discounts failed to narrow despite nearing of the delivery date, due to soft SHFE aluminum prices, weak demand and pressure from cheaper imported aluminum ingots which sold at as low as RMB 15,500-15,520/mt. Bearishness was strong among both sellers and buyers, with extremely light trading despite price cuts. Spot aluminum trading was even quieter in the afternoon, with only sparse quotations at RMB 15,520-15,530/mt seen. Deals were rarely concluded lacking purchases.
As LME lead prices edged down overnight, SHFE lead prices opened RMB 60/mt lower at RMB 14,815/mt Wednesday. At midday, metals started falling but SHFE lead prices showed certain resilience. Market remained cautious before release of China's 2Q GDP on Friday, with SHFE lead prices moving within the RMB 14,820-14,860/mt range and closing at RMB 14,870/mt, with resistance at the 5-day moving average. Trading volumes were down 8 lots to 96 lots, and positions were up 26 lots to 2,176 lots.
Spot lead prices were still firm. Quotations for Shuikoushan and Nanfang were mainly at RMB 15,030/mt, with spot premiums over the most active SHFE lead price narrowing to RMB 70/mt. Mengzi and Hanjiang were mainly quoted at RMB 14,950/mt. Quotations for Shenqian were around RMB 14,930/mt, while offers for brands from Gejiu region were mainly at RMB 14,890/mt. Smelters reported normal sales and traders still held prices firm. Downstream consumption remained soft.
On Wednesday, SHFE 1210 zinc contract prices opened lower at RMB 14,645/mt, and inched up after opening, but fluctuated between RMB 14,640-14,660/mt later in the day. The US dollar index rose at noon, pushing down SHFE zinc prices to fall below the moving average. In the afternoon, climbing LME zinc prices boosted SHFE zinc prices slightly, and SHFE zinc prices fluctuated below the moving average. At the end of trading, SHFE 1210 zinc prices gained back some losses and finally closed at RMB 14,655/mt, down RMB 70/mt or 0.48%. Trading volumes decreased by 5,458 lots to 83,734 lots, and total position increased by 2,202 lots to 173,020 lots.
In domestic spot markets, discounts of #0 zinc were around RMB 80-90/mt, with traded prices between RMB 14,570-14,590/mt. Due to quiet transactions, discounts of #0 zinc expanded to RMB 100/mt. #1 zinc was traded between RMB 14,470-14,500/mt. Transactions were made actively near the end of the morning session due to lower prices, but purchases from downstream buyers were still sluggish, with transactions muted.
In Shanghai tin market, spot tin prices were mainly between RMB 147,500-149,000/mt, transactions were mostly traded at lower prices with market remaining weak. Smelters limited sales, giving certain support to tin prices. However, as demand remained sluggish, tin prices still followed a downtrend. Yunheng and Nanshan were mainly traded at RMB 147,500/mt, while transactions for Yunxi were mainly concluded between RMB 148,000-148,500/mt. Smelters still held quotations firm. Given the depressed market and a lack of upward momentum, tin prices will unlikely improve in short term.
On Wednesday, mainstream prices of Jinchuan nickel were between RMB 120,200-120,500/mt in the morning session, while mainstream Russian nickel prices were between RMB 117,500-117,800/mt. LME nickel prices have been testing the USD16,000/mt level for two consecutive days, and downstream buying interest was low, and traders only replenished stocks modestly at lower prices, leaving transactions extremely quiet.