SHANGHAI, Jan. 17 (SMM) –
With LME copper prices losing USD 8,000/mt overnight, SHFE 1304 copper contract, the most active one, started RMB 140/mt down at RMB 57,890/mt Wednesday. The contract continued hovering narrowly following the opening and rose above RMB 58,000/mt amid position closings, but suffered resistance at RMB 58,150/mt due to severe struggle below long and short investors. In the afternoon, as Chinese A-share markets dived, SHFE copper prices slipped rapidly and touched a low of RMB 57,770/mt. Recouping some of declines, SHFE 1304 copper contract settled at RMB 57,940/mt, still down RMB 90/mt or 0.16%, with trading volumes and positions decreasing 31,474 lots and 11,270 lots, respectively. With great pressure at RMB 58,300/mt but strong support at RMB 57,800/mt, SHFE copper prices will fluctuate near current levels for the near future.
As SHFE copper prices rose after initially falling, spot copper discounts returned following deliveries for SHFE 1301 copper contracts. Shanghai spot copper discounts were between negative RMB 160-250/mt in the morning business. Traded prices for standard-quality copper were between RMB 57,450-57,500/mt, and RMB 57,500-57,550/mt for high-quality copper. However, cargo-holders became pessimistic over future copper prices and thus stepped up sale volumes, with high-quality copper dominating market supply. The supply of standard-quality copper was limited and helped cargo-holders insist on firm prices. Both traders and downstream producers stood on the sidelines, resulting in market oversupply. In the afternoon, with supply of copper, especially high-quality goods, decreasing, copper discounts narrowed marginally to negative RMB 160-230/mt, while traded prices dropped to RMB 57,380-57,470/mt.
SHFE 1303 aluminum contract prices opened at RMB 15,150/mt on January16. Prices of the most active SHFE aluminum contracts fell back to near RMB 15,150/mt after initially rising, with strong resistance at RMB 15,200/mt, but found strong support at RMB 15,130/mt. Most longs and shorts exited the market, causing positions to drop 2,532 lots to 61,522 lots. Finally, the March aluminum on the SHFE shed RMB 5/mt or 0.03% to close at RMB 15,155/mt. The Shanghai Composite Index was in correction and LME aluminum prices trended down, souring market sentiment. As a result, investors chose to stand on the sidelines prior to the release of 4Q GDP due Friday. The most-traded SHFE aluminum contract should be capped under RMB 15,200/mt in the near term.
Spot aluminum was mainly traded at RMB 14,950-14,980/mt in Shanghai on Wednesday, with discounts at RMB 100-120/mt. Low-iron aluminum was traded at RMB 15,080-15,090/mt. SHFE 1303 aluminum contract prices fell back after rising slightly, dampening market confidence. Spot discounts expanded above RMB 100/mt after SHFE 1302 aluminum contracts became the current-month contract. Some cargo holders were anxious to sell due to high inventories, but downstream producers refrained from buying at highs, curbing gains of spot aluminum prices, with the lowest traded price down to RMB 14,950/mt. Overall trading was down sharply. In the afternoon, prices of the most active SHFE aluminum contracts dropped further. Cargo holders were in a hurry to sell, lowering offers to RMB 14,940-14,950/mt. Downstream producers and middlemen rarely purchased since they were bearish towards future prices, leaving overall trading muted.
The SHFE 1303 lead contract price opened RMB 70/mt higher at RMB 15,205/mt on January 16. Although LME lead prices and SHFE copper rallied in the morning, SHFE lead prices remained weak between RMB 15,150-15,170/mt, and finally closed at RMB 15,170/mt, up RMB 40/mt. Trading volumes were down 146 lots to 124 lots, and positions fell 8 lots to 2,182 lots.
With SHFE lead prices stabilizing, cargo holders were optimistic to spot lead market and were unwilling to move goods at low prices, leaving quotations rare in the market on January 16. Chihong Zn & Ge was quoted at RMB 14,750-14,760/mt, with spot discounts of RMB 430/mt over the 1303 SHFE lead contract price. Quotations for Dongling and Hanjiang were mainly at RMB 14,660/mt. Downstream buyers mainly made inquiries with transactions limited.
LME zinc prices overnight stopped falling and rallied at the end of trading, but closed with declines. SHFE 1304 zinc contract prices opened at RMB 15,225/mt, inching up in the morning trading and touching RMB 15,300/mt. But with strong resistance at the 60-day moving average, SHFE 1304 zinc contract prices inched down. As the Shanghai Composite remained weak and since short momentum soared, SHFE 1304 zinc contract prices dipped to an intraday low of RMB 15,170/mt but found support at RMB 15,200/mt. Finally, SHFE 1304 zinc contract prices rebounded at the end of trading and closed at RMB 15,265/mt, down RMB 15/mt or 1.56%. Total position decreased by 7,548 lots to 103,290 lots.
SHFE three-month zinc contract prices edged up today. Discounts of #0 zinc against SHFE three-month zinc contract prices narrowed to RMB 220-240/mt, with traded prices rising from RMB 15,030/mt, to RMB 15,050/mt. SHFE zinc prices fluctuated narrowly at noon, and #0 zinc prices were RMB 15,040-15,050/mt, and #1 zinc prices were RMB 15,010/mt. Good supply was still tight, and some mainstream smelters were still holding goods. A limited number of traders purchased in the morning at lower prices, and downstream buyers also bought goods modestly. As pessimism mounted, a wait-and-see attitude permeated in the market, keeping transactions quiet.
In Shanghai tin market, mainstream traded prices were RMB 160,000-161,000/mt on January 16, with a few goods from Yunxiang traded at RMB 159,800/mt. LME tin prices met resistance, triggering wait-and-see sentiment in the market and leaving trading depressed. Tin prices were thus lowered. Some cargo holders stayed out of the market but were reluctant to lower prices. In the afternoon, spot tin prices remained stable but transactions remained quiet.
During the morning trading hours in the Shanghai nickel spot market, mainstream traded prices of nickel from Jinchuan Group were in the RMB 123,800-124,100/mt range, and mainstream traded prices of nickel from Russia were in the RMB 122,800-123,100/mt range. Transactions remained unimproved, and only goods offered at RMB 122,800-123,800/mt reported relatively brisk transaction. Deals were still largely done among traders rather than downstream producers.