SHANGHAI, Oct. 23 (SMM)--
As LME copper prices fell below USD 8,000/mt last Friday, SHFE 1301 copper contract, the most active one, started RMB 890/mt down at RMB 57,820/mt Monday. The contract continued fluctuating weakly following the opening but moved gradually above the daily moving average, as a lot of shorts took profit-taking after prices retreated to RMB 57,500/mt, still with heavy pressure at RMB 57,900/mt and a high at RMB 57,940/mt. SHFE copper prices hovered narrowly around RMB 57,850/mt in the afternoon, with a fluctuating band of merely RMB 100/mt. SHFE 1301 copper contract ended RMB 820/mt or 1.4% lower at RMB 57,890/mt, with trading volumes and positions down 11,920 lots and 6,374 lots, respectively. Trading volumes and positions for SHFE 1302 copper contract added by 12,392 lots and 20,896 lots, respectively. Forward SHFE copper contracts suffered increasing selling pressures and SHFE copper prices will likely lose the support at RMB 57,500/mt in the near future.
As SHFE copper prices fell by nearly RMB 1,000/mt, hedged copper flew wildly into spot markets in the morning, significantly increasing market supply. Spot copper discounts were largely between negative RMB 20-150/mt in the morning business. Traded prices for standard-quality copper were between RMB 57,850-57,920/mt, and RMB 57,880-58,020/mt for high-quality copper. Cargo-holders became more willing to move goods and caused spot copper discounts to widen all the way. Downstream buying increased slightly at prices below RMB 58,000/mt, but overall purchases were cautious in the morning as bearish sentiment grew. In the afternoon, as SHFE copper prices continued fluctuating feebly, mainstream spot copper discounts were negative RMB 30-150/mt. Traded prices were virtually flat with morning levels, and market activity remained weak.
SMM conducted a survey with regard to copper price trend this week.
Based on the survey, 47% of market insiders are pessimistic over the outlook, expecting LME and SHFE copper will fall to USD 7,900/mt and RMB 57,000/mt, respectively. Major countries this week will announce the latest PMI figures, which are expected by markets to remain sluggish. This will further weigh on the financial market and drag copper prices down. Besides,
The remaining 53% of market insiders see copper prices fluctuating at current values, with LME copper expected at around USD 8,000/mt and SHFE copper around RMB 58,000/mt. As the
The SHFE 1212 aluminum contract opened lower at RMB 15,430/mt on Monday as LME aluminum prices plunged by 2% last Friday. Trading volumes were a mere 4,504 lots. The most active contract was resilient to declines compared with other base metals due to limited short selling, but met resistance at the 5-day moving average. Finally, the three-month contract shed RMB 60/mt or 0.39% to close at RMB 15,435/mt. Positions were up 144 lots to 57,470 lots. The most-traded contract fell back to levels seen early last week due to a lack of confidence and is expected to test support at RMB 15,400/mt in the short term.
Spot aluminum was mainly traded between RMB 15,280-15,310/mt in
SMM’s statistics reveal that spot aluminum traded prices averaged RMB 15,290/mt in
LME aluminum prices plunged by 2% last Friday, but remained above last week’s low of USD 1,946/mt, while SHFE 1212 aluminum contract prices stabilized above RMB 15,400/mt after the Chinese National Day holiday, both proving resilient to declines compared with other base metals. Short selling should be very limited despite the fact that LME and SHFE aluminum prices have little chance of rebounding. Neutral traders thus expect LME aluminum prices to move between USD 1,940-2,000/mt and the most active SHFE aluminum contract to fluctuate between RMB 15,400-15,480/mt and spot aluminum prices to struggle at RMB 15,300/mt in this coming week.
LME copper retreated below USD 8,000/mt, suggesting short selling is elevated. LME aluminum inventories exceeded 5 million mt and domestic aluminum stocks in trading markets also rose above 1 million
On Monday, the most active SHFE zinc price gapped lower at RMB 14,960/mt due to the slump in LME zinc prices, falling below the 60-day moving average. In the morning, SHFE zinc prices hovered at RMB 14,960-15,000/mt given the slackening Chinese stock markets. In the afternoon, Chinese stocks began rising, but declines in LME zinc prices weighed on the most active SHFE zinc contract, with prices finally closing at RMB 14,965/mt, down RMB 150/mt, with resistance at RMB 15,000/mt.
In spot zinc market, #0 zinc prices were at RMB 14,810-14,840/mt, with discounts over the most active SHFE zinc contract price at RMB 120-150/mt. #1 zinc prices was firm at RMB 14,800/mt due to limited supply. Smelters were unwilling to move goods, but arbitrage trading was reported. Downstream buyers were still on the sidelines with low buying interest, leaving transactions limited.
Zinc prices generally fluctuated at low levels last week. As the EU summit did not result in positive news last week, the market was depressed. LME zinc prices failed to stand at the USD 1,900/mt and fell below all the moving averages, leading to pessimism of markets.
About 80% of market players believe zinc prices should lost support this week. SHFE three-month zinc contract prices should fall further to RMB 14,800/mt. HSBC’s PMI for major countries will be released on Wednesday, which is expected negative. Besides, the EU summit did not result in positive news, while European debt crisis remained unresolved, causing market concerns to increase. On the other hand, LME inventories continued to surge last week, with supply surplus in global zinc market growing. As a result, LME zinc prices fell to USD 1,870/mt.
The remaining 20% believes SHFE three-month zinc contract prices should struggle around the 15,000 mt/yr level. The market was expecting additional stimulus policies as both
Capital available in the market was sufficient as
SHFE lead prices opened RMB 100/mt lower at RMB 15,540/mt on Monday. Most investors were pessimistic and were unwilling to enter the market. SHFE lead prices hovered at RMB 15,500-15,550/mt and briefly touched a low of RMB 15,465/mt, a new high since early September. Prices finally closed at RMB 15,520/mt, down RMB 80/mt. Trading volumes fell 12 lots to 80 lots, and positions were up 14 lots to 1,200 lots.
SHFE lead prices gapped lower on October 22, while spot lead prices in
With regard to lead price trends this coming week, most industry insiders were pessimistic. 73% of investors contacted by SMM believe spot lead prices may fall to RMB 15,200-15,300/mt this week, with the SHFE 1212 lead contract price expected to move around the 60-day moving average and LME lead prices between the 5- and 60-day moving averages. Given the weakening demand, downstream enterprises expect lead prices will fall further, combined with limited orders, most buyers will still purchase as needed. Smelters will be forced to move goods due to tight cash flows by month’s end, and domestic lead inventories tend to rise slightly. Besides,
27% investors expect LME lead will be relatively resilient and move around USD 2,100/mt, while SHFE lead prices should be between RMB 15,500-15,750/mt, and spot lead prices between RMB 15,300-15,550/mt, with spot discounts of RMB 200/mt over the most active SHFE lead contract price. These market players believe SHFE lead prices may rebound after falling continuously by 3.6% following the National Day holiday. Technical indicators also show a sign of turning around. Besides, LME lead prices decreased again and presented a decline of 8,000 mt last week. In
Based on result of an SMM survey on market sentiment, 50% market players believe that LME nickel prices will stabilize in the RMB 16,700-17,200/mt range in the coming week. Market focus will shift to the US Fed interest rate meeting result. Although market expects that interest rate will remain unchanged, the meeting will signal the Fed’s attitude towards QE3, which will affect base metal price movement. In addition, the US GDP data for Q3 will also affect market movement. It is expected that GDP for Q3 will be better than a quarter earlier. If the projection is true, QE3 will be restricted. Players believe that LME nickel prices will remain stable amid cautious sentiment before GDP and interest rate result from the
30% market players are pessimistic and believe that LME nickel prices will fall below USD 16,500/mt and will finally close at USD 16,000-16,500/mt in the coming week. Spanish’s
The remaining 20% market players believe that LME nickel prices will rise above USD 17,500/mt in the following week, with reasons below. First, technically speaking, LME nickel prices will receive strong support at USD 16,600/mt, and shorts will exit market after profit-taking and longs will enter market once LME nickel prices fall below this level, which will in turn push up LME nickel prices higher. According to data from