SHANGHAI, Oct. 25 (SMM)--
On Wednesday, SHFE 1301 copper contract prices opened RMB 310/mt lower at RMB 57,260/mt. After opening, some shorts closed positions with profit-taking, so SHFE copper prices surged but then fell to fluctuate around the moving averages during the day, with the low end of RMB 57,110/mt. At the end of trading, SHFE copper prices rose to RMB 57,580/mt, and finally SHFE three-month zinc contract prices closed at RMB 57,500/mt, down RMB 70/mt or 0.12%. Trading volumes of SHFE three-month zinc contract decreased by 14,910 lots, and total position decreased by 14,270 lots. Trading volumes of SHFE 1302 zinc contract increased by 32,034 lots, and total position increased by 14,238 lots. Domestic copper prices resisted declines compared to LME copper prices. Purchases at lower prices increased, and copper price volatility should improve.
In domestic spot markets, SHFE copper prices extended declines, with traders continuing to generate cash. The SHFE/LME copper price ratio improved, allowing copper imports to grow and copper supply to increase. Spot discounts fell along with futures prices, with discounts between USD 100- 220/mt. Traded prices of standard-quality copper were between RMB 57,120-57,250/mt, and traded prices for high-quality copper were between RMB 57,200-57,380/mt. Traders were cautious due to continuously falling prices, and downstream buyers purchased on an as-needed basis, with pessimism prevailing in the market. SHFE copper prices remained fluctuating at the same levels in the afternoon, and rose at the end of trading. Quotes for standard-quality remained the levels in the morning, but discounts of high-quality copper expanded, with the low end of the price range of RMB 140/mt. Traded prices were close to the morning trading, and some downstream buyers entered the market, with transactions improving.
The SHFE 1212 aluminum contract opened at RMB 15,395/mt on Wednesday. The most active contract hovered around RMB 15,400/mt, with trading volume less than 3,000 lots due to thin trading activity. Finally, the three-month contract gained RMB 5/mt to close at RMB 15,400/mt. Positions were down 568 lots to 56,512 lots. SHFE aluminum prices bucked the trend by edging up among base metals. Investors seldom entered the market due to sluggish consumption. SHFE aluminum prices will extend losses for days to come and the most-traded contract will have little chance of reaching RMB 15,400/mt.
Spot aluminum was mainly traded between RMB 15,260-15,280/mt in Shanghai on Wednesday, with discounts between RMB 70-90/mt. Low-iron aluminum was traded between RMB 15,330-15,340/mt. The most active SHFE aluminum contract bucked the trend by edging up, but bearish sentiment remained strong in spot market. Cargo holders were aggressively moving goods at lower prices due to tight cash flows at the month's end, but buying interest from downstream producers and middlemen was limited, leaving trading light. In the afternoon, the SHFE 1212 aluminum contract held steady. Some cargo holders in spot aluminum market were eager to move goods, with quotations slightly down to RMB 15,240-15,270/mt. Trading was limited as buyers finished purchases in the morning.
SHFE lead started at RMB 15,450/mt before dropping to RMB 15,340-15,360/mt on October 24 as LME lead prices slumped overnight. SHFE lead prices fell to RMB 15,300/mt at midday due to increased selling pressures and finally ended the day at RMB 15,330/mt, up RMB 25/mt. Trading volumes were down 50 lots to 176 lots, and positions fell 42 lots to 1,190 lots.
In China's spot lead market, most investors were reluctant to buy goods with bearish outlook, while cargo holders lowered prices to promote sales due to month end financial pressures. Well-known brands, including Chihong Zn & Ge, Yuguang, and Chengyuan, were quoted at RMB 15,200-15,300/mt, with spot discounts over the SHFE 1212 lead contract price at RMB 150/mt. Dongling and Hanjiang were offered at RMB 15,120-15,150/mt. Quotations for Shenqian and Baiyin fell to a low of RMB 15,100/mt. Trading was lighter.
On Wednesday, SHFE 1301 zinc contract prices opened lower at RMB 14,800/mt. In the morning trading, HSBC's October PMI for China hit a three-month high, so SHFE 1301 zinc contract prices surged to RMB 14,880/mt but then plummeted to fluctuate around RMB 14,850/mt. In the midday, the Shanghai Composite Index entered downward track as shorts entered the market. As a result, SHFE 1301 zinc contract prices plunged to RMB 14,800/mt, but then rallied and touched an intraday high of RMB 14,890/mt, and finally closed at RMB 14,880/mt, up RMB 20/mt.
In domestic spot markets, discounts of #0 zinc against SHFE three-month zinc contract prices were between RMB 100-130/mt in the morning trading. Although SHFE three-month zinc contract prices continued to fluctuate at low levels, discounts remained around RMB 120/mt, with traded prices of #0 zinc between RMB 14,720-14,760/mt, but transactions were rarely made at the high end of the price range. #1 zinc prices were between RMB 14,720-14,730/mt, with supply tight. Smelters continued to hold onto their goods, but goods supply was still ample due to arbitrage opportunities. Downstream buyers mainly remained cautious.
Spot tin prices in Shanghai continued to fall and came to RMB 148,000-151,000/mt on October 24, with trading still thin. LME tin prices pared declines and rallied later. Although transactions in spot tin did not show noticeable improvements, more inquiries were reported in the afternoon. Yunxi was traded at RMB 150,000-151,000/mt, while Jinlong, Yunxiang, and Nanshan were traded at RMB 148,000-148,500/mt.
Jinchuan Group cut ex-works nickel prices by RMB 4,000/mt to RMB 119,000/mt. The price cut by Jinchuan Group greatly dampened market players' confidence. Downstream inquires were muted, traders also ceased arbitrage trading. In this context, transactions were quiet muted in the market.