SHANGHAI, Dec. 5 (SMM) –

Copper
With LME copper hovering at current values overnight, SHFE 1303 copper contract, the most active one, opened RMB 30/mt down at RMB 57,530/mt Tuesday. Longs left markets following the opening, while selling pressures for forward SHFE copper contracts grew. Coupled with the fact that the Shanghai Composite Index continued to hit recent low levels, SHFE copper prices trended gradually down after the opening and came under pressure at the daily moving average before testing RMB 57,180/mt in the afternoon. SHFE copper 1303 copper contract closed RMB 280/mt or 0.49% lower at RMB 57,280/mt, with trading volumes and positions decreasing by 19,332 lots and 5,062 lots, respectively. Total trading volumes for SHFE 1304 copper contract added by 1,782 lots, and positions increased by 10,262 lots. With increasing selling pressures for forward copper contracts, SHFE copper prices are gradually suffering resistance at the 60-day moving average and will test this price level repeatedly in the immediate future.

As SHFE copper prices met resistance to rebound, spot copper discounts narrowed to negative RMB 100-160/mt in Shanghai in the morning. Traded prices for standard-quality copper were between RMB 56,950-56,980/mt, and RMB 56,980-57,050/mt for high-quality copper. Cargo-holders withheld goods at the lows and caused spot copper supply to decrease. Domestic copper cargo-holders still held prices firm. Downstream producers slightly increased purchase volumes when copper prices fell, but market deals were mostly contributed by traders, with bullish sentiment dominating markets. In the afternoon, with SHFE copper prices fluctuating at current levels, copper discounts were virtually unchanged from morning levels. But high-quality copper supply fell further, and market activity also came into a standstill.

Aluminum
The SHFE 1301 aluminum contract prices dropped after opening at RMB 15,380/mt on December 4 as the longs took profits at higher prices. The most active contract prices expanded losses and lost support near the 30-day moving average after 11 a.m. due to short selling. Finally, the three-month contract closed at an intraday low of RMB 15,300/mt, down RMB 85/mt or 0.55%. Positions decreased by 24 lots to 48,772 lots. The contract for January delivery is expected to find weak support at RMB 15,300/mt in the near term since the plunging Shanghai Composite Index will trigger selling pressure.

Spot aluminum was mainly traded at RMB 15,150-15,170/mt in Shanghai on Tuesday, with discounts between RMB 60-100/mt. Low-iron aluminum was traded at RMB 15,200-15,220/mt. Downstream producers purchased on an as-needed basis, while middlemen were actively seeking low-priced deliverable branded aluminum ingot, helping spot aluminum prices stay firm at RMB 15,150/mt. Spot discounts expanded to RMB 100/mt and the most active SHFE aluminum contract lacked upward momentum, triggering short selling in SHFE aluminum market and causing SHFE aluminum prices to expand losses. Spot aluminum prices, however, were resilient. Overall trading turned thinner as discounts narrowed. In the afternoon, the most active aluminum contract on the SHFE fell further, but spot aluminum prices remained resilient. Wait-and-see sentiment was strong and sparse deals were done at RMB 15,140-15,160/mt.

Lead
The 1301 SHFE lead contract price opened lower at RMB 15,245/mt on Tuesday with resistance at the 10-day moving average and followed a weak trend in the morning trading session. Although domestic A-shares stabilized, the US ISM manufacturing index was reported down overnight unexpectedly, driving down LME lead prices. As such, SHFE lead prices moved around RMB 15,185/mt in the afternoon and finally closed at RMB 15,130/mt, down RMB 140/mt, a new low since October 23. Trading volumes were 320 lots, up 92 lots, and positions dropped 30 lots to 2,250 lots.

Sluggish demand in China's spot lead market drove spot lead prices to fall. Chihong Zn & Ge was quoted at RMB 14,780/mt, with spot discounts of RMB 460/mt over the 1301 SHFE lead contract price. Quotations for Nanfang and Tongguan were around RMB 14,750/mt, while quotations for Mengzi and Shenqian were RMB 14,720/mt. Lead prices kept falling and cargo holders sold goods at low prices, but bearish mood among downstream enterprises intensified, leaving trading unimproved. In the afternoon, prices for Chihong Zn & Ge dropped to RMB 14,720/mt, while quotations for other brands were few, with transactions still quiet.

Zinc
The most active SHFE zinc contract price touched a high of RMB 15,450/mt after opening at RMB 15,410/mt Tuesday as LME zinc prices followed a weak trend overnight. However, the falling LME zinc prices and weak domestic stock markets weighed down SHFE zinc prices. Later, domestic A-shares rebounded but LME zinc prices kept falling, driving SHFE zinc to a low of RMB 15,240/mt, with prices ending at RMB 15,290/mt, down RMB 175/mt. Trading volumes were down 15,106 lots to 89,028 lots, and positions were down 3,600 lots to 61,118 lots.

SHFE three-month zinc contract prices drifted lower after a low opening on December 4. Discounts of #0 zinc over the most active SHFE zinc contract prices were RMB 260-280/mt, with traded prices at RMB 15,090-15,120/mt. Later, the SHFE 1302 zinc contract dropped further, while #0 zinc was relatively resilient, with spot discounts narrowing to RMB 240-260/mt and traded prices at RMB 15,070-15,080/mt. Mainstream traded prices of #1 zinc were RMB 15,040-15,050/mt. Instead of holding back goods, smelters showed some intention of moving goods. Narrowed spot discounts triggered arbitrage buying from traders, while downstream producers still stood on the sidelines, with little interest in buying.

Tin
On December 4, mainstream traded prices in spot tin market in Shanghai were between RMB 149,000-150,500/mt. Transactions for Yunxi and Yunheng were concluded at RMB 150,000-150,500/mt, while traded prices for Yunxiang and Jinlong were at RMB 149,500-150,000/mt. Weitai was traded at RMB 149,000-149,300/mt. Trading sentiment quietened as downstream buyers replenished stocks last weekend and this Monday. That, combined with the lack of momentum for prices to rise, retriggered wait-and-see sentiment.

Nickel
During the morning trading hours in the Shanghai nickel spot market, mainstream traded prices of nickel from Jinchuan Group were between RMB 123,700-124,000/mt, and mainstream traded prices of nickel from Russia were between RMB 122,700-123,000/mt. Wait-and-see sentiment was strong, and transactions were quiet. During the afternoon trading hours, prices of nickel from Jinchuan Group fell to RMB 123,600/mt and Russian nickel prices fell to RMB 122,600/mt. Due to emerge of arbitrage opportunity, transactions between traders improved.