SHANGHAI, Nov. 22 (SMM) --

Copper

LME copper price trend remained unclear overnight, but SHFE 1302 copper contract, the most active one, opened slightly RMB 30/mt up at RMB 56,440/mt Wednesday. The US dollar advanced all the way during the day and caused LME copper prices to drop below USD 7,700/mt. In this context, the contract marched down after touching RMB 56,470/mt, losing RMB 56,000/mt near the middy before testing a low at RMB 55,820/mt. But SHFE copper prices stopped falling at the 10-day moving average and returned to levels around RMB 56,000/mt. SHFE 1302 copper contract settled RMB 510/mt or 0.9% lower at RMB 55,900/mt, with trading volumes and positions up 2,656 lots and 3,098 lots, respectively. Total trading volumes on the SHFE added by 29,504 lots, and total positions increased by 16,014 lots. The most active copper contract began to shift. With increasing short selling, SHFE copper prices slipped to last week’s trading range.

SHFE copper prices retreated, but spot copper cargo-holders were eager to move goods for cash and quoted prices very early in the morning. However, they became unwilling to sell at the lows after SHFE copper prices experienced two continuous rounds of drops, helping copper premiums increase gradually. Mainstream spot copper offers were discounts of negative RMB 60/mt and premiums of positive RMB 60/mt in Shanghai in the morning business. Traded prices for standard-quality copper were between RMB 55,880-56,080/mt, and RMB 55,940-56,220/mt for high-quality copper. Buying interest in markets weakened following copper price declines, and high-quality copper market activity became muted after its premiums were raised to around positive RMB 50/mt. Downstream producers stuck to the sidelines, so overall spot copper market activity was lackluster. In the afternoon, as SHFE copper prices continued weakness, spot copper market activity became more muted, causing copper premiums to fall. Only the Guixi brand was quoted at premiums of positive RMB 20/mt, and mainstream spot copper offers were discounts of negative RMB 70/mt and premiums of positive RMB 20/mt. Traded prices were RMB 55,800-56,000/mt in the afternoon while cargo-holders relaxed price quotations.

Aluminum

The SHFE 1301 aluminum contract retreated below RMB 15,300/mt after a low opening at RMB 15,305/mt on November 21 as longs and shorts exited the market after profit-taking due to a lack of confidence. Finally, the three-month contract shed RMB 65/mt or 0.42% to close at RMB 15,280/mt. Little chances of the State Reserve Bureau conducting another round of aluminum ingot purchase for the rest of the year triggered a sell-off of forward-month contracts, causing SHFE aluminum prices to extend losses for four straight months. The contract for January delivery should fall further to RMB 15,200/mt in the short term.

Spot aluminum was mainly traded between RMB 15,140-15,170/mt in Shanghai on Wednesday, with discounts between RMB 60-80/mt. Low-iron aluminum was traded between RMB 15,210-15,240/mt. The SHFE 1301 aluminum contract dropped, while the current-month contract tested support at RMB 15,200/mt, triggering bearish sentiment in spot aluminum markets. Cargo holders were eager to move goods by lowering prices, but middlemen and downstream processors evinced little buying interest, sending mainstream traded prices down to RMB 15,150/mt. In the afternoon, the most active SHFE aluminum contract fell further. Some cargo holders rushed to move goods by lowering offers in order to generate cash, but purchases by downstream producers and middlemen were quite limited. Sparse deals were done at RMB 15,130-15,140/mt. Bearish sentiment dominated the market.

Lead

The SHFE 1301 lead contract price opened at RMB 15,270/mt Wednesday with trading light in the morning. Later, as report came that the eurozone finance ministers failed to reach agreement on Greek debt issue at the meeting, risky currencies and metals dropped quickly. SHFE 1301 lead contract fell to RMB 15,190/mt in the afternoon and finally closed at RMB 15,250/mt, down RMB 60/mt. Trading volumes were down 102 lots to 124 lots, and positions dropped 44 lots to 2,464 lots.

Cargo holders in China’s spot lead markets were forced to lower prices due to weak demand. Chihong Zn & Ge was initially quoted at RMB 14,880/mt, but traded prices were lower at RMB 14,850-14,860/mt, with spot discounts of RMB 380/mt over the 1301 SHFE lead contract price. Mengzi and Shenqian were mainly quoted at RMB 14,780-14,790/mt, and Hengchang was offered at RMB 14,760/mt. Buying interest was low with lead prices falling, leaving trading light.

Zinc

Fed Chairman Bernanke overnight warned the impact of the US fiscal cliff and did not indicate to expand the scale of easing measures, which depressed market sentiment. In this context, SHFE 1302 zinc contract, the most active SHFE zinc contract, opened at RMB 14,970/mt on Wednesday, but marched lower after temporarily increasing to RMB 15,030/mt, with the lowest point touching RMB 14,915/mt. In the afternoon, the Shanghai Composite Index moved up, but LME zinc prices continued dropping. Hence, SHFE zinc prices failed to pare daily declines but were restricted below the daily moving average, basically fluctuating around RMB 14,950/mt. SHFE three-month zinc contract ended at RMB 14,950/mt, a loss of RMB 100/mt. 

In domestic spot markets, SHFE zinc prices trended down after starting down, but spot zinc prices proved more resistant to declines. Discounts of #0 zinc against SHFE 1302 zinc contract were RMB 190-210/mt, down from the previous day, with traded prices between RMB 14,760-14,770/mt. In the afternoon, as SHFE zinc prices fell further, traded prices for #0 zinc dipped to RMB 14,740-14,750/mt, while those for #1 zinc were RMB 14,710-14,730/mt. Zinc discounts shrank gradually in recent days, and as hedged zinc flew into markets, cargo-holders sold aggressively but can see few buyers. Downstream producers merely bought at the lows amid wait-and-see sentiment, so market transactions were not seen to improve from the prior day. 
 
Tin

Mainstream traded prices in Shanghai tin market were lowered to RMB 147,500-148,500/mt Wednesday as a pullback in LME tin prices depressed the market and as the persistent sluggish demand further weighed down prices. Some well-known brands were quoted at RMB 148,500/mt, but transactions were sparse. Yunxi and Yunheng were traded between RMB 148,000-148,500/mt, while Yunxiang, Nanshan and Jinlong were traded at RMB 147,500-147,800/mt.

Nickel

In the Shanghai nickel spot market, mainstream prices of nickel from Jinchuan Group were in the RMB 117,800-118,200/mt range, and mainstream offers of nickel from Russia were between RMB 116,800-117,100/mt.Transactions were cautious as LME nickel prices fell after opening and since no arbitrage opportunities emerged between spot market and electronic exchange.