SMM Base Metals Market Daily Review (2013-4-23)

SHANGHAI, Apr. 24 (SMM) –

Copper
With LME copper being mired overnight, SHFE 1308 copper contract opened RMB 230/mt lower at RMB 49,500/mt on Tuesday. After its opening, worse-than-expected HSBC’s China PMI sent the Shanghai Composite Index plunging 2.5%, weighing down the most active SHFE copper contract. However, more investors bought SHFE forward-month copper contracts, helping SHFE copper for August delivery move within RMB 49,000-49,500/mt in the morning session, with its high-end price at RMB 50,730/mt. In the afternoon, panic selling and the retreat of LME copper from USD 6,800/mt drove SHFE copper for delivery in four months down to RMB 48,460/mt. Finally, the most active SHFE copper contract closed down RMB 650/mt or 1.31% at RMB 49,080/mt. Trading volumes and positions of SHFE 1308 copper contract increased 158,000 lots and 12,062 lots, respectively. Total trading volumes and positions were also up 306,000 lots and 34,426 lots.

Spot copper in Shanghai was quoted at a premium of RMB 130-250/mt over SHFE 1305 copper contract on Tuesday. Traded prices for standard-quality copper were between RMB 49,950-50,250/mt, and RMB 50,050-50,350/mt for high-quality copper. HSBC’s China PMI for April fell far short of expectations, causing SHFE 1308 copper contract to extend losses. The most active SHFE copper contract fell again towards mid-day, aggravating market pessimism. Spot copper premium narrowed and no massive dip-buying was reported even after copper prices retreated from RMB 50,000/mt. In the afternoon, cargo holders were eager to sell goods with SHFE falling further, leaving spot premiums at RMB 150-230/mt. Some traders conducted arbitrage, and traded prices were below RMB 50,000/mt. Downstream buyer rarely entered the market.

Aluminum
SHFE 1306 aluminum contract started Tuesday at RMB 14,525/mt. The most active SHFE aluminum contract moved in tight ranges during the day as shorts and longs exited the market, and finally closed at RMB 14,540/mt, a slight RMB 5/mt or 0.03% gain. Positions contracted 2,722 lots to 64,028 lots. China’s falling manufacturing PMI triggered bearishness, sending stock markets and SHFE copper plunging. Investors paid little attention to SHFE aluminum as price gap among SHFE aluminum contracts was small. SHFE aluminum for June delivery is expected to find strong support at RMB 14,500/mt in the near term.

Spot aluminum was traded at RMB 14,400-14,420/mt in Shanghai on Tuesday, a discount of RMB 90-110/mt over SHFE 1305 aluminum contract. Low-iron aluminum was traded around RMB 14,580/mt. HSBC’s preliminary China PMI for April fell sharply, but SHFE 1306 aluminum contract remained resilient, helping spot aluminum stay firm at RMB 14,400/mt for three straight days. However, downstream buying interest was low. Only middlemen purchased limited amounted at low prices. In the afternoon, the most active SHFE aluminum contract edged up, independent of plunging SHFE copper. This allowed cargo holders to hold offers unchanged at RMB 14,400-14,420/mt, but transactions were limited.    

Lead
SHFE 1306 lead contract price started slightly higher at RMB 13,745/mt on Tuesday. However, as the HSBC China flash PMI was reported at 50.5 in March, lower than expectation and previous level, market concerns over China’s economy was intensified. In response, base metals fell generally and the Shanghai Composite Index slumped over 2%. SHFE 1306 lead contract price fell to RMB 13,650-13,700/mt before closing at RMB 13,690/mt. Traded volumes were down 326 lots to 100 lots, and positions were up 12 lots to 2,048 lots.

SHFE lead prices were again dragged down by the worse-than-expected China HSBC PMI on Tuesday, and spot lead price also fell below RMB 13,700/mt. Cargo holders were more reluctant to move goods, with quotations rarely reported. Chihong Zn & Ge and Nanfang were quoted at RMB 13,640-13,650/mt, with spot discounts of RMB 30-40/mt against the most active SHFE lead contract price. Warrants for Yubei were offered at RMB 13,620/mt, with premiums of RMB 20/mt over the HSFE 1305 lead contract price. Inquiries downstream were also limited, with only a few transactions done between traders.

Zinc
SHFE 1307 zinc contracts prices opened at RMB 14,540/mt on Tuesday, touching RMB 14,615/mt following LME zinc prices, but then falling back to RMB 145,20/mt. HSBC’s April PMI for China was only 50.5, showing the path to recovery of China’s manufacturing is still marked with twist and turns. With growing investor concerns, the Shanghai Composite Index plummeted and closed with declines of 2.57%, dragging down SHFE 1307 zinc contract prices to USD 14,415/mt, but gaining back some previous losses, and finally closing at RMB 14,515/mt, down RMB 30/mt. Total positions decreased by 2,564 lots to 125,410 lots.

SHFE 1307 zinc contract prices soared briefly but then inched down. Spot discounts of #0 zinc against SHFE 1307 zinc contract prices narrowed from RMB 70-90/mt, to RMB 50-60/mt, with traded prices between RMB 14,460-14,490/mt. #1 zinc prices were between RMB 14,430-14,440/mt, with supply remaining tight. Smelters were still holding back goods, while downstream buyers began to replenish stocks modestly, with overall transactions muted. SHFE zinc prices stopped falling in the afternoon, and #0 zinc prices edged down to RMB 14,440-14,450/mt, but the market did not improve.

Tin
Mainstream traded prices in Shanghai spot tin markets were between RMB 141,500-142,500/mt on Tuesday, and trading for low-priced goods were enlivened. However, quotations for these goods were raised to RMB 142,000-143,000/mt with supply tightening. Thus, transactions turned light again as downstream buyers were reluctant to purchase at higher prices.

Nickel
In Shanghai, Jinchuan Nickel prices were once at low as RMB 106,000/mt in the morning session, while Russian nickel prices were around RMB 105,100/mt, with transactions brisk. In the afternoon, Jinchuan nickel prices rose to RMB 106,200/mt, and Russian nickel prices also inched up to RMB 105,200/mt, but transactions remained active.