SHANGHAI, Jul. 16(SMM) –
SHFE 1210 copper contract, the most active one, started slightly higher by RMB 40/mt at RMB 55,150/mt last Friday. After the opening, the contract continued to hover narrowly around the daily moving average with a low at RMB 55,110/mt. Later, China announced its GDP for 2Q fell as market expected, but retail sales data for June was better than anticipated, sending the Shanghai Composite Index climbing to nearly 2,200. Coupled with some buying, SHFE copper prices moved higher but retreated rapidly to around RMB 55,400/mt after temporarily soaring through the 60-day moving average, as upside technical resistance came in. SHFE 1210 copper contract stabilized above the daily moving average in the afternoon and followed LME copper to rise to a high of RMB 55,790/mt at the tail of trading, expanding daily gains. Finally, the most active copper contract for October delivery ended RMB 660/mt or 1.2% up at RMB 55,770/mt, with trading volumes and positions falling by 8,154 lots and 2,762 lots, respectively. SHFE copper prices stood above their 60-day moving average after business was closed while waiting for guidance from LME copper.
China's GDP data and other economic data continued to fall and raised market speculation the government would ease monetary measures further. Cargo-holders in spot markets thus sold aggressively when SHFE copper prices inched higher, keeping market supply both diversified and sufficient. As a result, spot copper premiums narrowed and standard-quality imported copper even traded at discounts, while high-quality copper also reported discount quotes near the midday. Mainstream spot copper offers were between discounts of negative RMB 50/mt and premiums of positive RMB 50/mt in the morning. Traded prices for standard-quality copper were between RMB 55,600-55,660/mt, and RMB 55,650-55,750/mt for high-quality copper. Some traders continued to buy spot copper and sell copper futures contracts before SHFE 1207 copper contract was delivered, while most downstream producers stood on the sidelines owing to doubts over a continuous copper price rebound. Overall market transactions, though, improved marginally. In the afternoon, as SHFE copper prices extended rebounds, cargo-holders of high-quality copper offered premiums of positive RMB 0/mt and even slight discounts, while discounts for standard-quality copper widened. Mainstream spot copper offers were between discounts of negative RMB 80/mt and premiums of positive RMB 0/mt in the afternoon, while traded prices marched slightly higher to RMB 55,700 -55,800/mt, with market transactions restricted at the highs. SHFE copper stocks added by 5,691 mt to 16,028 mt last Friday, as copper supply increased sharply owing to the rising SHFE/LME copper price ratio and the approach of the delivery date for SHFE 1207 copper contract, and since downstream producers made limited purchases while traders largely contributed to market transactions.
The most active SHFE aluminum contract for October deliver started slightly lower at RMB 15,450/mt and closed up a slight RMB 20/mt or 0.13% at RMB 15,520/mt on Friday, as increasing monetary easing expectations following a drop in second-quarter GDP growth, which was in line with expectations, confronted with cautiousness. Positions added 454 lots to 109,604 lots. The contract's struggle at RMB 15,500/mt has fostered cautiousness among longs. It may move lower this week..
Spot aluminum traded at RMB 15,510-15,550/mt in Shanghai, with discounts of RMB 50-90/mt over current-month SHFE aluminum prices. Low-iron aluminum was sold at RMB 15,600-15,620/mt. SHFE aluminum prices failed to rebound much as increasing monetary easing expectations following a drop in second-quarter GDP growth met with sluggish demand. The selling interest was high as usual while buying stayed weak, dragging down spot aluminum prices to as low as RMB 15,510/mt. Only middlemen sought goods for delivery. Traded volumes were slightly up. Quotations from goods holders almost muted in afternoon, though middlemen were still looking after cheap goods for delivery. Deals concluded in the afternoon were quite limited and at RMB 15,530/mt.
SHFE lead prices opened slightly higher at RMB 14,930/mt Friday. In the morning, China's 2Q GDP growth was reported at 7.6%, within market expectations. SHFE lead prices moved up influenced by rising Shanghai Stock Exchange Composite Index and continued rising to RMB 14,940/mt in the afternoon to close at RMB 14,960/mt, up RMB 90/mt, standing above the 30-day moving average. Trading volumes were up 130 lots to 196 lots, and positions increased 108 lots to 2,312 lots.
Quotations for Chengyuan and Shuikoushan were mainly between RMB 15,040-15,050/mt, with spot premiums over the most active SHFE lead price at RMB 130-140/mt. Nanfang was quoted at around RMB 15,030/mt and Hanjiang was quoted at RMB 15,000/mt. Offers for brands from Gejiu region were around RMB 15,000/mt. Supply from smelters increased slightly and traders in short of goods were actively looking for suppliers. Downstream buying interest improved, leaving transactions better than the previous trading day.
Last Friday, SHFE 1210 zinc contract prices opened lower at RMB 14,660/mt, and fluctuated between RMB 14,650-14,680/mt in the morning session. As the Shanghai Composite Index rose significantly, SHFE 1210 zinc contract prices climbed to RMB 14,735/mt. The NBS released China's GDP during 2Q was lower than 8%, the first time in 12 quarters, causing speculations that China's central bank will push more stimulus policies. As a result, SHFE 1210 zinc contract prices inched up after opening in the afternoon, once touching RMB 14,795/mt, and finally closed at RMB 14,785/mt, up RMB 155/mt or 1.06%. Trading volumes increased by 3,002 lots to 90,866 lots, and total position decreased by 5,632 lots to 171,214 lots.
In domestic spot markets, discounts of #0 zinc were around RMB 70/mt, with traded prices around RMB 14,590/mt. As SHFE zinc prices rose slightly, discounts of #0 zinc expanded to RMB 90-100/mt, with traded prices between RMB 14,600-14,610/mt. Imported zinc was traded between RMB 14,570-14,580/mt, and #1 zinc was quoted between RMB 14,540-14,550/mt. Downstream buyers inquiries actively but purchased modestly due to high prices, with transactions to limited.
In Shanghai tin market, spot tin prices were between RMB 146,500-148,500/mt Friday, falling from the previous trading day due to the sharp decline of LME tin prices. However, buying interest was low and traders reflected limited sales. Smelters were still unwilling to move goods. In trading market, deals for Nanshan and Jinlong were done at RMB 146,500/mt, while Yunheng were traded around RMB 147,000/mt. Traded prices for Yunxi were between RMB 147,500-148,000/mt. Limited supply did not give strong support to prices, and many cargo holders were forced to lower prices for sales, but transactions remained weak.
Last Friday, mainstream prices of Jinchuan nickel were between RMB 118,200-118,400/mt in the morning session, while mainstream Russian nickel prices were between RMB 115,800-116,000/mt. Downstream buyers entered the market as spot prices hit a new low for the year, and traders also replenished stocks, causing transactions to improve.