SHANGHAI, Apr. 1 (SMM) –
LME copper tumbled overnight due to position liquidation, causing SHFE 1307 copper contract to open RMB 610/mt lower at RMB 54,900/mt on Friday. After its opening, the most active SHFE copper contract jumped to an intraday high of RMB 55,650/mt thanks to a wave of buying. SHFE copper for July delivery hovered near RMB 55,200/mt due to strong resistance at the 5-day and 10-day moving averages in the morning. In the afternoon, the most-traded SHFE copper contract fell below RMB 55,000/mt to an intraday low of RMB 54,720/mt. Finally, SHFE 1307 copper contract ended the day down RMB 680/mt or 1.23% at RMB 54,830/mt. Trading volumes increased 4,510 lots, while positions were also up 8,204 lots. Further price declines are expected.
Spot copper discounts were RMB 0-20/mt and premiums RMB 0-60/mt in Shanghai on Friday. Traded prices for standard-quality copper were between RMB 55,250-55,310/mt, and RMB 55,280-55,380/mt for high-quality copper. With LME market being closed today, the most active SHFE copper contract moved within tight ranges after opening lower. Cargo holders who suffered tight liquidity were anxious to sell, keeping premiums in check. Some middlemen entered the market due to imminent delivery of long-term contracts. High-quality copper was preferred by middlemen. Downstream producers, on the other hand, watched from the sidelines. SHFE copper prices fell again in the afternoon, leaving cargo holders reluctant to sell goods. Premiums were quoted higher at RMB 20-100/mt given limited supply, but traded prices slipped to RMB 55,100-55,200/mt. A few downstream buyers purchased in limited amounts. SHFE copper inventories were up 8,318 mt to 247,591 mt as of Friday due to the depressed buying interest and the large amount of imported copper.
SHFE 1306 aluminum contract started the day lower at RMB 14,600/mt last Friday. The contract sank to a low of RMB 14,550/mt, but later recovered some losses and stayed above RMB 14,600/mt thanks to short-covering. Finally, the most active aluminum contract finished RMB 35/mt or 0.24% lower at RMB 14,610/mt. Positions decreased 1,194 lots to 93,398 lots. Without guidance from LME aluminum, the low-end SHFE aluminum dropped further. Trading activity should remain depressing this week, so SHFE aluminum for June delivery is expected to struggle at RMB 14,600/mt.
Spot aluminum was mainly traded at RMB 14,440-14,480/mt in Shanghai last Friday, a discount of RMB 40-80/mt over SHFE 1304 aluminum contract prices. Low-iron aluminum was trade around RMB 14,640/mt. SHFE 1306 aluminum contract prices rose after a low opening, but spot aluminum in east China fell below RMB 14,500/mt. A small number of traders in Shanghai lowered offers to RMB 14,440/mt in order to generate cash, widening price spread between goods of different brands. Downstream producers and middlemen evinced little buying interest against tight cash flows on the last trading day of the quarter, leaving overall trading light. In the afternoon, the upside space of SHFE 1304 aluminum contract prices was limited. Sparse quotations were reported at RMB 14,450-14,460/mt, but inquiries were rarely heard due to tight liquidity.
SHFE 1305 lead contract price gapped lower at RMB 14,380/mt on Friday due to falling LME lead prices overnight and rose to move around RMB 14,400/mt, testing daily moving average, to finally close at RMB 14,350/mt, down RMB 80/mt from the previous trading day. Traded volumes were up 130 lots to 378 lots, and positions increased 54 lots to 1,956 lots.
SHFE 1305 lead contract price opened lower on Friday and followed a weak trend, dragging down spot lead prices in China. Chihong Zn & Ge was quoted at RMB 14,350/mt, with spot discounts of RMB 50/mt over the most active SHFE lead contract price. Nanfang and Tongguan were quoted at RMB 14,330/mt and RMB 14,300/mt, respectively. Prices for Yuguang were around RMB 14,300/mt, level with the SHFE 1304 lead contract price. Downstream buyers purchased in limited amount, while cargo holders were reluctant to move goods. Most investors left the market in the afternoon, leaving trading quiet.
LME zinc prices overnight closed down USD 21.8/mt. SHFE 1306 zinc contract prices opened slightly low at RMB 14,685/mt today. As large numbers of shorts closed positions, SHFE zinc prices were pushed up to RMB 14,835/mt, and then fluctuated between RMB 14,790-14,810/mt. SHFE market lacked directions from the LME market due to its closure. The Shanghai Composite index plunged, and pushed down SHFE zinc prices to RMB 14,770/mt, and with prices finally closing at RMB 14,755/mt, down RMB 85/mt or 0.57%. Trading volumes decreased by 10,458 lots, to 24,982 lots, and total positions decreased by 4,512 lots to 118,794 lots. Trading volumes of SHFE 1307 zinc contracts increased by 1,428 lots, to 42,100 lots, and total positions increased by 2,278 lots, to 96,986 lots.
SHFE 1306 zinc contract prices opened low but then rallied rapidly, fluctuating in a narrow range today. Discounts of #0 zinc against SHFE 1306 zinc contract prices were RMB 90-110/mt, with traded prices between RMB 14,680-14,710/mt. #1 zinc prices were RMB 14,650-14,660/mt. Smelters sold goods actively at the end of both the month and the quarter, but market players remained cautious due to cash flow problems. Investors also stood on the sidelines due to the closure of LME market, and downstream buying interest was low due to pessimism, keeping overall transactions muted.
Traded prices in Shanghai spot tin market held steady last Friday at RMB 150,500-152,500/mt, as LME which closed for the Easter holiday failed to give any guide to domestic tin prices. Demand in spot tin market remained weak, posing downward pressure on tin prices. Spot prices are expected to remain stable Monday with LME remaining closed.
Jinchuan Group cut ex-works nickel prices by RMB 1,000/mt, to RMB 117,000/mt last Friday. Some traders believed that nickel prices hit bottom, so they increased dip-buying, boosting transactions.