SMM Base Metals Market Daily Review (2013-4-3)

SHANGHAI, Apr. 7 (SMM) –

Copper
With LME copper hovering at high levels last night, SHFE 1307 copper contract opened RMB 200/mt higher at RMB 54,470/mt on Wednesday. After its opening, SHFE copper contracts followed LME copper up to RMB 54,800/mt as many shorts closed positions. At the tail of trading, the Shanghai Composite Index and LME copper both fell, causing SHFE copper to surrender all of the gains recorded during the day and to slide to RMB 53,930/mt. Finally, SHFE 1307 copper contract finished at RMB 54,060/mt, down RMB 210/mt or 0.39%. SHFE 1308 copper contract settled down RMB 280/mt or 0.52% at RMB 53,990/mt, with its highest and lowest at RMB 54,680/mt and 53,810/mt, respectively. Trading volumes of SHFE 1308 copper contracts increased 1,670 lots, with positions also up 21,284 lots. SHFE 1308 copper contracts became the most active one today. SHFE copper should repeatedly test support at RMB 54,000/mt following the three-day public holiday in China.
 
Spot copper premiums were RMB 150-230/mt in Shanghai on Wednesday. Traded prices for standard-quality copper were between RMB 54,680-54,900/mt, and RMB 54,730-54,980/mt for high-quality copper. The most active SHFE copper contract rose after a high opening, easing market bearishness. Cargo holders refrained from selling at lows out of growing optimism over future prices. Spot copper supplies decreased, with offers little changed from yesterday. Some middlemen entered the market as the price gap between standard-quality copper and high-quality copper narrowed. Downstream producers rebuilt stocks in small amounts, improving overall trading. Premiums for spot copper were quoted higher at RMB 170-250/mt, but traded prices fell to RMB 54,500-54,900/mt in the afternoon.

Aluminum
SHFE 1306 aluminum contract started the day at RMB 14,590/mt on April 3. The most active aluminum contract slipped to RMB 14,535/mt in early morning session, but later recovered some losses thanks to short-covering. SHFE aluminum for June delivery was mired in the afternoon, and finally settled down RMB 5/mt or 0.03% at RMB 14,565/mt. Positions shrank 634 lots to 90,392 lots. SHFE aluminum market was quiet on the last trading day before the three-day public holiday and the most-traded SHFE aluminum contract is expected to continue to test support at RMB 14,500/mt after the holiday.

Spot aluminum was mainly traded at RMB 14,410-14,430/mt in Shanghai on Wednesday, a discount of RMB 50-70/mt over SHFE 1304 aluminum contract prices. Low-iron aluminum was trade at RMB 14,580-14,600/mt. SHFE 1304 aluminum contract prices were mired, preventing spot aluminum from rising. However, moderate restocking before the Chinese Qingming holiday did help the low-end price stabilize. Most traders stood on the sidelines, but some remained eager to sell. Overall trading was light. In the afternoon, wait-and-see sentiment dominated the spot market, with sparse offers reported at RMB 14,420/mt.  

Lead
SHFE 1306 lead contract became the most active one on April 3, and gapped lower at RMB 14,365/mt due to the slumping LME lead prices overnight. Prices then moved between RMB 14,370-14,420/mt with resistance at the lower Bollinger band before closing at RMB 14,350/mt, down RMB 125/mt from a day earlier. Trading volumes fell 76 lots to 206 lots, and positions were up 148 lots to 2,018 lots.

Some traders in spot lead market closed on the last trading day before the Qingming Festival. Smelters were still not willing to move goods and middlemen held prices firm. Quotations for Chihong Zn & Ge, Nanfang, and Tongguan were around RMB 14,220/mt, with spot discounts of RMB 100/mt against the most active SHFE lead contract price. Downstream buyers were more reluctant to purchase to avoid risks, leaving transactions poorer than Tuesday.

Zinc
SHFE 1307 zinc contracts became the most actively traded contracts today, with prices opening at RMB 14,650/mt today since LME zinc prices overnight closed the day down, and generally fluctuated between RMB 14,610-14,660/mt. As the Shanghai Composite Index pulled down near the end of the trading, SHFE zinc prices dipped to an 8-month low of RMB 14,550/mt, and finally closed at RMB 14,555/mt, down RMB 175/mt or 1.19%. The SHFE/LME zinc price ratio expanded to 7.9, and created an opportunity for imports, so investors bought overseas goods and sold them at home. Trading volumes increased by 36,518 lots, to 89,488 lots, and total positions increased by 23,308 lots to 133,390 lots.

SHFE 1307 zinc contract prices opened low and then fluctuated. Discounts of #0 zinc against SHFE 1306 zinc contract prices were RMB 60-80/mt, with traded prices between RMB 14,480-14,510/mt. #1 zinc prices were between RMB 14,460-14,470/mt. Smelters were mostly holding back due to unprofitable prices, and traders stood on the sidelines due to mixed factors. Downstream buyers purchased modestly given low orders, so overall transactions did not improve.

Tin
Traded prices in China’s spot tin market were mainly between RMB 149,000-151,000/mt on April 3, with a few goods from Kaiyuan traded at RMB 149,000/mt. Yunxi and Yunheng were traded at RMB 150,000-151,000/mt, and Yunxiang was traded at RMB 149,500/mt. Prices held steady during the day, but transactions were limited.

Nickel
Last Wednesday, Jinchuan nickel was quoted between RMB 113,900-114,100/mt in the morning trading, and Russian nickel prices were between RMB 112,900-113,100/mt, with a wait-and-see attitude dominating the market, and transactions muted. But due to strengthening SHFE nickel prices and arbitrage opportunities, some traders were actively purchasing, pushing up Jinchuan nickel prices to RMB 114,200/mt, with Russian nickel prices up to RMB 112,800/mt.