SHANGHAI, Feb. 4 (SMM)--
With LME copper giving up gains overnight, the most active SHFE 1305 copper contract opened slightly RMB 90/mt down at RMB 59,480/mt last Friday. China's official PMI came in softer than anticipated, but HSBC China manufacturing PMI rose to a fresh 2-year high. In this context, SHFE copper prices slipped following the opening and tested a low at RMB 59,310/mt. But in the afternoon, with the Shanghai Composite Index rebounding by 1.5% to 2,400, SHFE copper prices pared some of declines and touched an intraday high of RMB 59,680/mt after stabilizing above the daily moving average. SHFE 1305 copper contract settled RMB 100/mt or 0.17% higher at RMB 58,660/mt, with trading volumes down 22,420 lots but positions up 2,360 lots. Long investors became cautious towards keeping up with rising prices while markets awaited the US non-farm payrolls report. Once LME copper prices break upside pressures, SHFE copper prices will challenge new highs.
As China's official PMI came in softer than expected, SHFE copper prices fell slightly, which helped copper discounts shrank marginally to negative RMB 130-250/mt in the morning business. Traded prices for standard-quality copper were between RMB 58,520-58,600/mt, and RMB 58,620-58,700/mt for high-quality copper. Cargo-holders continued moving goods, while downstream producers stepped up purchases following copper price drops. Market transactions thus improved but were still limited in the morning. In the afternoon, SHFE copper prices rebounded, but most spot copper cargo-holders opted to leave markets, leading copper supply to decrease. Spot copper discount quotes, though, remained basically unchanged from morning levels, but traded prices surged to RMB 58,650-58,750/mt. However, market activity remained muted in the afternoon. SHFE copper stocks dropped 8029 mt to 197,091 mt last Friday, reflecting that fact that downstream producers replenished stocks at lows ahead of the Chinese New Year holiday.
SHFE 1304 aluminum contract prices opened at RMB 15,235/mt on February 1. The most active aluminum contract found its low at RMB 15,175/mt shortly after its opening as the unexpected fall in China's January manufacturing PMI triggered short selling. In the afternoon, surging Shanghai Composite Index gave a boost to the most-traded aluminum contract, which finally closed at RMB 15,200/mt, down RMB 45/mt or 0.30% higher. Positions were down 508 lots to 51,558 lots. Investors exited the market to avoid risks, curbing upward momentum of SHFE aluminum prices. Trading activities should remain muted before Chinese New Year. The most active SHFE aluminum contracts should struggle at RMB 15,200/mt in the short term. Latest SHFE aluminum inventories decreased 6,555 mt to 424,677 mt.
Spot aluminum was mainly traded at RMB 14,910-14,920/mt in Shanghai on Friday, with discounts at RMB 80-90/mt. Low-iron aluminum was traded at RMB 15,000-15,010/mt. China's manufacturing PMI dropped unexpectedly in January, rekindling market worries. SHFE 1304 aluminum contract prices fell as a result, sending spot aluminum prices down to RMB 14,900/mt. Demand remained tepid, while some traders remained aggressive in destocking. Middlemen purchased modestly at lower prices. In the afternoon, SHFE current-month aluminum contracts were stagnant. Sparse offers were seen firm at RMB 14,920/mt in spot aluminum markets. Overall trading was subdued.
On Friday, the 1304 SHFE lead contract price fell after opening lower at RMB 15,500/mt due to the worse-than-expected China official manufacturing PMI for January. Prices dropped to RMB 15,420-15,450/mt at midday but rallied later as the Shanghai Composite Index rose above 2,400 to finally close at RMB 15,505/mt. Trading volumes fell 142 lots to 162 lots, while positions were up 34 lots to 2,306 lots.
SHFE lead prices fell after opening lower, driving spot lead prices in China to edge down. Chihong Zn & Ge and Chengyuan were quoted at RMB 14,950-14,960/mt, but traded prices were between RMB 14,930-14,940/mt. Spot discounts over the 1304 SHFE lead contract price was RMB 500/mt. Quotation for Mengzi was RMB 14,860/mt, while those for Dongling and Hanjiang were mainly around RMB 14,830/mt. Some downstream enterprises will start holiday on February 2, and thus purchased goods modestly when spot prices fell.
LME zinc prices overnight closed with declines. SHFE 1305 zinc contract prices opened flat at RMB 16,080/mt, and then fluctuated around RMB 16,050/mt. Due to mixed major economic data from China, SHFE 1305 zinc contract prices dipped to an intraday low of RMB 15,940/mt. As the Shanghai Composite soared to 2,421.15, SHFE 1305 zinc contract prices were boosted and struggled at RMB 16,060/mt in the afternoon, and closed at RMB 16,045/mt, down RMB 35/mt, or down 0.22%. Trading volumes of SHFE 1305 zinc contract decreased by 38,480 lots, to 153,840 lots, and total position increased by 7,674 lots to 177,604 lots.
SHFE three-month zinc contract prices inched down after opening flat today. Discounts of #0 zinc against SHFE 1305 zinc contract prices were between RMB 400-430/mt, with traded prices between RMB 15,580-15,610/mt. #1 zinc prices were RMB 15,530-15,550/mt. Smelters were not hurried to sell goods due to sufficient cash flows early in the month, while downstream buying interest was low, keeping transactions muted.
In Shanghai tin market, spot prices were mainly between RMB 159,500-161,000/mt on Friday. Goods holders held prices firm and quotations for Yunxi and Chengfeng were adjusted upward, driving up spot prices. Trading was quieter with the Chinese New Year holiday approaching, leaving little buying support for tin prices. Spot tin prices in China should remain strong this week but transactions will be sparse with enterprises closing for holiday.
On Friday, mainstream traded prices for Jinchuan nickel were RMB 128,900-129,100/mt in the Shanghai nickel market, and RMB 127,500-127,800/mt for Russian nickel. Some traders entered the market for arbitrage trading in domestic electronic markets after LME nickel market gained overnight, helping improve market transactions. Downstream demand remained sluggish. In the afternoon, no trading was reported, a sign of strong holiday sentiment.
s manufacturing PMI dropped unexpectedly in January, rekindling market worries. SHFE 1304 aluminum contract prices fell as a result, sending spot aluminum prices down to RMB 14,900/mt. Demand remained tepid, while some traders remained aggressive in destocking. Middlemen purchased modestly at lower prices. In the afternoon, SHFE current-month aluminum contracts were stagnant. Sparse offers were seen firm at RMB 14,920/mt in spot aluminum markets. Overall trading was subdued.