SHANGHAI, Jul. 30 (SMM) –
As LME copper prices pared declines overnight, SHFE 1211 copper contract, the most active one, started slightly RMB 300/mt up at RMB 54,390/mt last Friday. After the opening, a weak US dollar helped LME copper return above USD 7,500/mt, and caused SHFE copper prices to move higher after a high open amid position closings by shorts. However, the Shanghai Composite Index hit a new three-year low and gave a heavy pressure to SHFE copper prices which climbed slower than LME copper, touching an intraday high at RMB 54,800/mt in the afternoon. SHFE 1211 copper contract ended the day RMB 680/mt or 1.26% higher at RMB 54,770/mt, with trading volumes adding by 7,154 lots but positions decreasing by 9,804 lots. Total trading volumes and positions fell by 8,942 lots and 15,908 lots, respectively. Shorts left markets, but longs were wary of keeping up with rising prices.
SHFE copper prices trended higher after starting up, so hedged copper was restricted, causing spot copper supply to decrease. Spot copper premium quotes thus held firm between positive RMB 80-150/mt in Shanghai in the morning business. Traded prices for standard-quality copper were between RMB 54,820-54,980/mt, and RMB 54,850-55,050/mt for high-quality copper, which, however, were largely resisted by market buyers. Some traders chose to buy spot copper and sell copper futures contracts, while downstream producers continued to buy as needed, keeping overall market transactions limited in the morning. In the afternoon, as SHFE copper prices continued to climb, spot copper premium quotes narrowed slightly, mainly between positive RMB 120-150/mt. Price quotations for standard-quality copper in the afternoon remained little changed with the morning levels in the face of limited supply, and narrowed its price gap with high-quality copper. Traded prices in the afternoon stood completely above RMB 55,000/mt, but market activity remained sluggish. SHFE copper stocks were reported to decreased by 4,463 mt last Friday, an indication downstream producers opted to replenish stocks when copper prices slumped, which can provide support for copper prices.
The most active SHFE 1211 aluminum contract opened slightly higher at RMB 15,370/mt on July 27. Later, short-covering helped the contract rise above the 5-day moving average to RMB 15,455/mt. The contract, however, failed to break through the 10-day moving average. Finally, SHFE three-month aluminum prices closed at RMB 15,330/mt, up RMB 120/mt or 0.78%. Positions were down 1,394 lots to 95,436 lots. The ECB president pledged overnight to keep the euro zone together, which helped boost the market confidence and forced the shorts to take profits. SHFE aluminum market advanced after a high open, but any gains were limited, as markets were looking for direction from more macro news. The most active contract should continue to test support at RMB 15,400/mt on Monday. Most traders delivered goods for cash as spot aluminum consumption was persistently weak and spot discounts stayed high. The latest SHFE aluminum inventories surged 12,212 mt to 325,297 mt in the week ending July 27.
Mainstream traded prices for spot aluminum were at RMB 15,450-15,480/mt in Shanghai on July 27, with discounts at RMB 20-50/mt and low-iron aluminum traded at RMB 15,540-15,550/mt. SHFE aluminum extended gains, with SHFE current-month contract testing resistance at RMB 15,500/mt. Most traders held quotations firm at RMB 15,460/mt despite the small amount of low-priced imported aluminum. Some traders held back on selling as the month ends. Some downstream producers replenished inventories before the weekend, picking up overall trading from the previous trading day. In the afternoon, sellers and buyers generally stayed out of the market, with limited quotations heard at RMB 15,460-15,470/mt. Wait-and-see sentiment was strong and overall trading was extremely quiet.
SHFE lead prices rose after opening higher at RMB 14,835/mt July 27. SHFE lead fluctuated up and gained strong buying support at RMB 14,950/mt, regaining the losses since early this week, with prices finally closing at RMB 15,000/mt, up RMB 210/mt. Trading volumes were down 10 lots to 194 lots, while positions fell 50 lots to 2,742 lots.
In China, spot lead prices were returned above RMB 15,000/mt. Nanfang, Chengyuan and Shuikoushan were quoted between RMB 15,000-15,020/mt, with spot premiums over the most active SHFE lead price at RMB 100/mt. Quotations for Hanjiang and Mengzi were RMB 14,980/mt and RMB 14,960/mt, respectively. Cargo holders were actively moving goods, and downstream replenishments improved slightly ahead of the weekend.
Last Friday, SHFE 1211 zinc contract prices opened higher at RMB 14,520/mt, and fluctuated around the moving average briefly. As the US dollar index plunged at noon, SHFE 1211 zinc contract prices were pushed up to RMB 14,600/mt, and moved steadily between RMB 14,600-14,650/mt in the afternoon, and finally closed at RMB 14,635/mt, up RMB 175/mt or 1.21%.
In domestic spot markets, spot prices rose along with SHFE zinc prices. As domestic smelters continued to hold goods, domestic prices were firm, especially mainstream brands including Shuangyan and Yuguang were quoted close to SHFE three-month zinc contract prices. Other brands were quoted RMB 20-30/mt below SHFE three-month zinc contract prices. #0 zinc was mainly traded between RMB 14,550-14,580/mt, and #1 zinc was quoted between RMB 14,500-14,530/mt, while imported zinc prices leveled with #1 zinc prices. Downstream buyers turned cautious as zinc prices rebounded, and due to cash flow problems at the end of the month. Some smelters released goods due to the need to generate cash.
In Shanghai tin market, spot tin prices were mainly between RMB 143,000-144,500/mt last Friday, with trading still quiet. Goods were mainly supplied by Yunxi, Yunheng and Jinlong. LME tin prices touched a high of USD 18,000/mt in the afternoon session, boosting several traders to raise quotations marginally. However, mainstream traded prices were little changed, and transactions did not improve. Deals for Yunxi and Yunheng were mainly between RMB 143,000-143,500/mt while Jinlong was traded primarily at RMB 142,000/mt.
Last Friday, mainstream prices of Jinchuan nickel were between RMB 116,200-116,500/mt in the morning session, while mainstream Russian nickel prices were between RMB 114,300-114, 2500/mt. Transactions of Russian nickel were brisk in the morning, despite weak downstream demand. LME nickel prices once touched USD 16000/mt in the afternoon, pushing up spot quotes. Mainstream prices of Jinchuan nickel were between RMB 116,600-116,800/mt, while quotes for Russian nickel were raised to RMB 114,700-114,800/mt. But transactions were muted.