SHANGHAI, Jul. 23 (SMM) –
As LME copper extended gains overnight, SHFE 1211 copper contract started RMB 200/mt up at RMB 56,290/mt last Friday. After the opening, the contract tried to climb to RMB 56,430/mt but was restricted around RMB 56,250/mt as new shorts exerted selling pressures. In the afternoon though, as LME copper retreated rapidly on an increasing US dollar, the contract dropped and finally reversed earlier increases. SHFE copper prices drifted lower to RMB 55,950/mt after losing RMB 56,000/mt, and suffered a great resistance at the RMB 56,000/mt mark with an intraday low touching RMB 55,850/mt. Finally, SHFE 1211 copper contract ended the day RMB 180/mt or 0.32% down at RMB 55,910/mt, with trading volumes and positions adding by 61,922 lots and 14,968 lots, respectively. Longs and shorts still held divergent views at RMB 56,000/mt, and investors still continued to sell at the highs but go bargain hunting at the lows. Therefore, SHFE copper prices will test support repeatedly at the 5-day moving average for the immediate future.
SHFE copper prices extended rebounds, so some hedged copper was locked, reducing spot copper supply. As the SHFE/LME copper price ratio continued to fall, imported copper cargo-holders insisted on firm premiums. Mainstream spot copper offers were between premiums of positive RMB 20-120/mt in the morning business. Traded prices for standard-quality copper were between RMB 56,180-56,300/mt, and RMB 56,250-56,380/mt for high-quality copper. Traders were hesitant to sell on increasing optimism copper prices would rise next week, while downstream producers stepped up purchases at the lows. But overall market activity remained cautious. In the afternoon, SHFE copper prices reversed earlier gains and helped cargo-holders of hedged copper move goods for cash amid relatively high premiums. Spot copper supply thus increased in the afternoon and restricted further upside room in copper premiums which held virtually with the morning levels. Traded prices, though, dropped to RMB 56,050-56,200/mt in the afternoon, enticing a small number of downstream producers to make purchases.
The most active SHFE aluminum contract for October delivery started higher at RMB 15,650/mt and closed up a slight RMB 15/mt or 0.10% at RMB 15,590/mt on Friday, after trimming gains due to profit-taking by longs. Positions dropped 3,260 lots to 101,980 lots. As investors moved aside before the weekend, both stocks and futures shed their gains. Light trading had helped SHFE aluminum retain slight gains. The contract should struggle narrowly near RMB 15,600/mt for the near term lacking a clear direction. Latest SHFE aluminum stocks added 8,372 mt to 313,085 mt. Most goods holder chose to deliver to the warehouses in the face of weak consumption, leading to a considerable increase in SHFE aluminum stocks.
Spot aluminum traded at RMB 15,530-15,560/mt in Shanghai, with discounts of RMB 40-70/mt over current-month SHFE aluminum prices. Low-iron aluminum sold at RMB 15,610-15,620/mt. SHFE aluminum trimmed gains after a higher opening, weakening spot aluminum’s ability to track gains. The current-month contract struggled near RMB 15,600/mt. The selling interest was high but buying weak, either from middlemen or downstream, expanding spot discounts to RMB 70/mt. Popular brands still enjoyed higher prices. Weakness was still seen in Hangzhou, with prices as low as RMB 15,520/mt being reported. The current-month SHFE aluminum contract continued to slide in the afternoon. The selling interest cooled considerably before the weekend. Quotations, though sparse, held firm at RMB 15,560-15,570/mt. Middlemen sought cheap goods in vain as a result. Deals were hardly heard for the afternoon.
SHFE lead prices opened at RMB 15,050/mt July 20 and remained stable at the opening price in the morning. Later, SHFE lead fell to RMB 14,920/mt along with other metals but gained support at the 10-day moving average to stabilize at RMB 14,980/mt in the afternoon, with prices closing at RMB 14,995/mt. Trading volumes were up 126 lots to 372 lots, while positions fell 36 lots to 2,522 lots.
In China’s spot market, Nanfang and Shuikoushan were mainly quoted at RMB 15,120/mt, and Yubei was quoted between RMB 15,100-15,110/mt, with spot premiums of RMB 60/mt over the SHFE 1209 lead contract price. Quotations for Shenqian were around RMB 15,070/mt. Smelters and traders reported normal sales but downstream buyers were still sidelined, leaving limited transactions done. Supply decreased again close to midday on account of falling SHFE lead prices. In the afternoon, Nanfang cut quotations by RMB 20/mt, and Yubei was quoted at RMB 15,070/mt, and offers from Shenqian remained unchanged.
Last Friday, SHFE 1211 zinc contract became the most actively traded, with prices falling below the moving averages after opening. At noon, Premier Wen announced five requirements concerning major work of enhancing land management. As a result, SHFE 1211 zinc contract prices dipped below the 20-day moving average, and fluctuated between RMB 14,720-14,740/mt, and finally closed at RMB 14,715/mt, down RMB 140/mt or 0.94%. Trading volumes increased by 35,196 lots to 92,206 lots, and total position increased by 13,974 lots to 137,476 lots.
In domestic spot markets, discounts of #0 zinc were around RMB 100/mt in the morning session, with traded prices between RMB 14,700-14,720/mt. As SHFE zinc prices plummeted, discounts of #0 zinc narrowed to RMB 80-90/mt, with traded prices between RMB 14,670-14,690/mt. #0 zinc was quoted as low as RMB 14,660/mt at noon as SHFE zinc prices plunged, but transactions were limited. Imported zinc was traded around RMB 14,640/mt, and #1 zinc was quoted between RMB 14,620-14,630/mt. The market took a wait-and-see attitude in the morning session as SHFE zinc prices were high, but traders and downstream buyers purchased actively as zinc prices plunged later in the day, causing transactions to improve.
In Shanghai tin market, spot tin prices were between RMB 146,500-148,000/mt July 20, and trading remained thin. LME tin prices rose to close up USD 350/mt Thursday night, but domestic spot tin market was not boosted, and downstream purchases did not improve ahead of the weekend. Yunxi was traded between RMB 147,000-147,500/mt, and deals for Nanshan and Jinlong were done between RMB 146,300-146,500/mt. Some imported tin ingots were quoted at RMB 146,000/mt. LME tin prices have not stabilized yet, and wait-and-see sentiment still dominated the market last week.
Last Friday, mainstream prices of Jinchuan nickel were between RMB 118,600-118,800/mt in the morning session, while mainstream Russian nickel prices were between RMB 116,500-116,700/mt. Transactions of Jinchuan nickel were brisk in the morning, while Russian nickel was unpopular. Traders raised quotes for Jinchuan nickel to RMB 118,800-119,000/mt in the afternoon, and Russian nickel prices leveled with the morning session.