SHANGHAI, Jan. 14 (SMM) –
With LME copper prices fluctuating at highs overnight, SHFE 1304 copper contract, the most active one, opened RMB 350/mt up at RMB 58,850/mt last Friday. The contract continued rising following the opening and climbed to RMB 58,980/mt. However, as the NBS reported higher-than-expected CPI data for December, Chinese stock markets fell rapidly by nearly 2%. LME copper prices thus suffered resistance at highs and caused SHFE copper prices to reverse earlier gains before testing a low at RMB 58,400/mt in the afternoon. SHFE 1304 copper contract ended RMB 60/mt or 0.1% lower at RMB 58,440/mt, with trading volumes up 3,926 lots but positions down 11,218 lots. Long investors mostly took profit-taking at highs, an indication of caution over a continuous price rebound. SMM believes that SHFE copper prices will test support at the 5-day moving average for the foreseeable future.
SHFE copper prices suffered resistance to move higher owing to high-than-expected Chinese inflationary data, so some hedged copper was locked out of spot markets. This resulted in limited spot copper supply, helping copper discounts narrow. Shanghai spot copper discounts were largely between negative RMB 20-100/mt in the morning business. Traded prices for standard-quality copper were between RMB 57,900-57,960/mt, and RMB 57,950-58,040/mt for high-quality copper. Cargo-holders became more willing to move goods at highs. Traders who had enough credit chose to buy, while downstream producers refrained from purchasing at prices above RMB 58,000/mt. Spot copper market activity was muted as a result. In the afternoon, with some hedged copper flowing out of markets and the price gap between SHFE 1301 and 1302 copper contract shrinking to less than RMB 200/mt, spot copper discounts were little changed from morning levels. But traded prices declined to RMB 57,700-57,920/mt, with market transactions still limited. SHFE copper stocks added by 2,638 mt to 209,096 mt last Friday.
LME aluminum prices advanced 2% overnight, but prices of SHFE 1303 aluminum contracts failed to follow suit. The most active SHFE aluminum contract, which opened slightly higher at RMB 15,295/mt on January 11, stagnated at RMB 15,300/mt in the early session and later trimmed gains. Finally, the March aluminum on the SHFE closed at an intraday low of RMB 15,250/mt, down RMB 5/mt or 0.03%. Positions were down 236 lots to 62,258 lots. China’s CPI rebounded significantly in December. Monetary policy will remain tight in the short term against growing inflationary pressure, souring market sentiment and sending aluminum prices down. The most-traded SHFE aluminum contract should fluctuate between RMB 15,200-15,300/mt in the near term. Latest SHFE aluminum inventories were down 1,272 mt to 445,664 mt.
Spot aluminum was mainly traded at RMB 15,040-15,060/mt in Shanghai last Friday, with discounts at RMB 0-20/mt. Low-iron aluminum was traded at RMB 15,110-15,130/mt. SHFE aluminum prices rose much slower than LME aluminum prices as the rebound of China’s December CPI dashed hopes of monetary policy easing in the near term. Limited downstream restocking curbed upward momentum of spot aluminum prices, with mainstream traded prices down to RMB 15,040/mt. Overall trading was thin. In the afternoon, SHFE 1303 aluminum contract prices were little changed. Most traders remained anxious to sell in spot market, but there were few buyers, bringing traded prices down to 15,020-15,040/mt.
The most active SHFE lead contract price started at RMB 15,225/mt on January 11 and moved between RMB 15,190-15,210/mt. In the afternoon, as the Shanghai Composite Index was down 1.78% due to the December’s CPI which staged at seven-month high, SHFE lead prices fell to RMB 15,140/mt before ending at RMB 15,190/mt. Trading volumes were up 36 lots to 172 lots, and positions up 4 lots to 2,202 lots.
Spot lead prices in China did not show significant increase. Chihong Zn & Ge was quoted at RMB 14,800/mt, with spot discounts of RMB 400/mt over the most active SHFE lead contract price. Quotations for Dongling and Mengzi were mainly at RMB 14,700/mt, and those for Hanjiang were around RMB 14,690/mt. Cargo holders moved goods actively and downstream buying interest also improved slightly. However, most buyers still purchased as needed.
LME zinc prices last Friday plunged at the end of trading. SHFE 1304 zinc contract prices opened higher at RMB 15,580/mt. China's December PPI was up -1.9%, while CPI was up 2.5%, in line with expectations, and failing to boost market sentiment. Besides, as both LME zinc prices and the Shanghai Composite dropped, SHFE 1304 zinc contract prices fell after touching RMB 15,605/mt in the morning trading, down to RMB 15,535/mt. In the afternoon, LME zinc prices and the Shanghai Composite extended losses, and combined with mounting short momentum, SHFE 1304 zinc contract prices plummeted further to RMB 15,465/mt, and finally closed at RMB 15,455/mt, down RMB 10/mt. Total position decreased by 2194 lots to 92,120 lots.
SHFE three-month zinc contract prices opened higher. Discounts of #0 zinc against SHFE three-month zinc contract prices expand to RMB 350-370/mt, with traded prices between RMB 15,210-15,230/mt. Spot discounts of #0 zinc then narrowed to RMB 330/mt due to falling SHFE zinc prices, and traded prices were down to RMB 15,200-15,210/mt. #1 zinc prices were RMB 15,170-15,180/mt. Smelters still lacked interest to move goods, but traders were actively selling goods, leading to ample goods supply. But downstream buyers were still cautious, keeping overall transactions muted.
In Shanghai tin market, quotations continued to rise on Friday, but traded prices fell slightly with supply for non-leading brands increasing. Mainstream traded prices were between RMB 159,000-161,000/mt. Yunxi and Yunheng were traded at RMB 160,500-161,000/mt, while Yunxiang and Nanshan were mainly traded at RMB 159,500-160,000/mt. Prices for leading brands edged down with Yunxi traded at lower prices.
During the morning trading hours in the Shanghai nickel spot market, mainstream traded prices of nickel from Jinchuan Group were in the RMB 123,600-123,800/mt range, and mainstream traded prices of nickel from Russia were in the RMB 122,600-122,800/mt range. As downstream producers already replenished stocks, market transactions were relatively quiet.