SMM Base Metals Market Daily Review (2013-4-19)

SHANGHAI, Apr. 22 (SMM) –

Copper
LME copper revered losses overnight, helping SHFE 1308 copper contract open RMB 260/mt higher at RMB 50,790/mt on Friday. The most active SHFE copper contract retreated to RMB 49,750/mt near mid-day as LME copper dropped below USD 6,900/mt. In the afternoon, the Shanghai Composite Index soared 2.3% and LME copper stopped falling, helping push SHFE copper for August delivery up to RMB 51,200/mt. Finally, SHFE 1308 copper contract ended the day up RMB 160/mt or 0.34% at RMB 50,690/mt. Trading volumes and positions increased 813,000 lots and 13,566 lots, respectively. The most active SHFE copper contract should be vulnerable at RMB 50,000/mt in the near term.

Premiums for spot copper kept falling as cargo holders cut prices for salsa and as the RMB and the SHFE/LME copper price ratio recovered which led to ample spot copper supplies. Spot copper in Shanghai was quoted at a premium of RMB 130-270/mt over SHFE 1305 copper contract on Friday. Traded prices for standard-quality copper were between RMB 50,550-51,100/mt, and RMB 50,600-51,300/mt for high-quality copper. SHFE 1308 copper contract opened higher, alleviating panic sentiment and allowing cargo holders to hold offers at premium. Later, SHFE copper dropped, causing cargo holders to sell for cash by lowering premium. Supply of imported copper increased as the RMB appreciated to 6.1718 against the US dollar and as the SHFE/LME copper price ratio rose. Ample spot copper supplies pushed premium all the way down. Some middlemen bought spot copper while selling off SHFE copper in the morning. The most active SHFE copper contract tumbled below RMB 50,000/mt towards mid-day, rekindling panic sentiment. Downstream producers refused to enter the market, leaving overall trading muted. In the afternoon, quotations varied largely, with premiums at RMB 20-200/mt, and traded prices at RMB 50,850-51,400/mt. Transactions were limited. SHFE copper inventories fell 4,627 lots to 223,663 lots as of last Friday as some downstream buyers started purchasing when prices slumped.

Aluminum
SHFE 1306 aluminum contract opened higher at RMB 14,575/mt last Friday, but pared some gains in the morning session. In the afternoon, market sentiment improved as SHFE copper stopped falling. The most active SHFE aluminum contract rose to test resistance at RMB 14,600/mt on short-covering. Finally, SHFE aluminum for June delivery closed at RMB 14,595/mt, up RMB 145/mt or 1.00%. Positions decreased 1,596 lots to 68,448 lots. The most-traded SHFE aluminum contract should move within RMB 14,500-14,600/mt this week.

Spot aluminum was traded at RMB 14,400-14,420/mt in Shanghai, a discount of RMB 80-110/mt over SHFE 1305 aluminum contract. Low-iron aluminum was traded around RMB 14,580/mt. SHFE 1306 aluminum contract moved lower after a high opening. Traders were eager to sell, but downstream producers and middlemen expressed little interest, leaving mainstream traded prices stagnant at RMB 14,400/mt. In the afternoon, traders held back goods and hiked offers to RMB 14,430-14,440/mt. Downstream producers made no purchases, while a small number of middlemen went bargain hunting. 

Lead
SHFE 1306 lead contract price gapped higher on Friday at RMB 13,785/mt with resistance at the 5-day moving average. Although financial stocks pushed the Shanghai Composite Index to rise as much as 2%, profit-taking ahead of the weekend and depressed investor confidence left SHFE lead vacillating between RMB 13,800-13,900/mt, with prices finally ending at RMB 13,865/mt, up RMB 255/mt or 1.87% from a day earlier. Trading volumes were up 16 lots to 212 lots, while positions were down 42 lots to 2,122 lots.

Spot lead markets China’s were more brisk than the previous trading day and downstream buyers replenished stocks at lows. Chihong Zn & Ge was quoted at RMB 13,860/mt, with spot discounts of RMB 50/mt against the most active SHFE lead contract price. Shuangyan was quoted at RMB 13,650/mt, while Tongguan was offered at RMB 13,680/mt, with premiums of RMB 50/mt over the SHFE 1305 lead contract price. Spot trading showed limited improvement as some downstream buyers purchased directly from smelters.

Zinc
As LME zinc prices overnight rallied after bottoming out, SHFE 1307 zinc contracts prices opened high at RMB 14,410/mt last Friday, and then fluctuated between RMB 14,370-14,390/mt. As bargain hunters entered the market, SHFE zinc prices were pushed up, but met resistance at RMB 14,500/mt. The Shanghai Composite Index soared and closed the day up 2.14%, pushing up SHFE zinc prices to touch RMB 14,600/mt, with prices closing at RMB 14,575/mt, up RMB 325/mt or 2.28%. Trading volumes decreased by 106,000 lots, to 110,000 lots, and total positions decreased by 13,148 lots to132,000 lots.

SHFE 1307 zinc contract prices opened high and moved higher. Spot discounts of #0 zinc against SHFE 1307 zinc contract prices were between RMB 60-80/mt, with traded prices initially around RMB 14,320/mt, and then inching up to RMB 14,390-14,420/mt. Transactions of #1 zinc were rarely made, with prices between RMB 14,370-14,400/mt. Due to falling prices and since today is the last trading day of the week, some downstream buyers and arbitrage traders purchased at lower prices earlier in the day. But since SHFE copper prices plunged and closed with declines of 1.39%, the market turned cautious. Overall transactions barely improved from the previous day.

Tin
Spot tin prices in Shanghai stabilized at RMB 140,500-142,000/mt Friday, and trading remained modest although a few downstream buyers started replenishing stocks due to lower prices. In the afternoon, quotations were raised as low-priced goods reduced with traded prices at RMB 141,000-142,000/mt. High-end prices still failed to broke through RMB 142,000/mt.

Nickel
Jinchuan Nickel lowered nickel prices by RMB 7,500/mt, to RMB 106,000/mt last Friday. In Shanghai, Jinchuan nickel prices were quoted around RMB 107,000/mt, while Russian nickel prices were around RMB 106,000/mt, with market players actively replenishing stocks and transactions brisk. Traders began to hold prices firm later in the day, with Jinchuan nickel prices up to RMB 107,500-107,700/mt, and Russian nickel prices rising to RMB 106,500-106,700/mt, but trading volumes decreased. Jinchuan nickel costs decreased after Jinchuan Nickel lowered prices, but traders were unwilling to cut prices and holding back goods, keeping transactions muted.