SMM Base Metals Market Daily Review (2013-4-24)

SHANGHAI, Apr. 25 (SMM) –

 

SHFE 1308 copper contract started Wednesday RMB 50/mt higher at RMB 49,180/mt. After its opening, LME copper broke through USD 7,000/mt, and the Shanghai Composite Index advanced 1.5%, pushing the most active SHFE copper contract all the way up to RMB 51,090/mt. Later, SHFE copper for August delivery gave back some of its earlier gains and hovered at RMB 50,500/mt as longs closed positions. Finally, the most active SHFE copper contract finished at RMB 50,600/mt, a RMB 1,470/mt or 2.99% surge. Trading volumes of SHFE 1308 copper contract increased 16,602 lots, but positions decreased 58,258 lots. Total trading volumes were up 104,000 lots, while total positions contracted 51,236 lots. The turnover rate was as high as 274%, suggesting trading activity was fairly active. Longs and shorts were cautious at RMB 51,000/mt, and future price trend depends on the struggle between the two sides. 

 

Spot copper in Shanghai was quoted at a premium of RMB 150-250/mt over SHFE 1305 copper contract on Wednesday. Traded prices for standard-quality copper were between RMB 50,250-50,430/mt, and RMB 50,300-50,550/mt for high-quality copper. SHFE 1308 copper contract staged a big rally, leaving little room for arbitrage. Spot copper suppliers held back goods while holding offers firm. The most active SHFE copper contract rose nearly RMB 400/mt towards mid-day, and spot copper premium remained firm. Middlemen continued to watch from the sidelines, while downstream producers purchased to need. SHFE copper soar RMB 1,000/mt, and spot copper supply was tighter. Premiums narrowed slightly to RMB 130-230/mt, but traded prices rose to RMB 51,000-51,200/mt. Few transactions were made, and speculators also watched on the sidelines. 

 

SHFE 1306 aluminum contract started Wednesday slightly higher at RMB 14,575/mt. The most active SHFE aluminum contract edged down to RMB 14,540/mt in the morning due to light trading, but rebounded in the afternoon on short-covering after copper prices soared. Finally, SHFE aluminum for June delivery closed at an intraday high of RMB 14,590/mt, up RMB 55/mt or 0.38%. Positions contracted 3,760 lots to 60,268 lots. Shorts took profits before the upcoming Chinese May Day holiday, while longs seldom entered the market, capping gains of the most-traded SHFE aluminum contract, which is expected to continue to hover between RMB 14,500-14,600/mt in the near term.

 

Spot aluminum was traded at RMB 14,400-14,420/mt in Shanghai on Wednesday, a discount of RMB 90-110/mt over SHFE 1305 aluminum contract. Low-iron aluminum was traded around RMB 14,580/mt. Despite a strong rally in copper prices, SHFE 1306 aluminum contract had little upward momentum. Modest downstream restocking ahead of the Chinese May Day holiday helped spot aluminum hover at RMB 14,410/mt. Traders were impatient to sell, increasing oversupply pressure. Trading was muted at higher prices. In the afternoon, the most active SHFE aluminum contracted inched up, allowing spot aluminum suppliers to hike offers to RMB 14,430-14,440/mt. Middlemen refrained from purchasing as there were no low-priced goods.  

    

SHFE 1306 lead contract price gapped RMB 100/mt higher at RMB 13,820/mt on April 24 and moved between RMB 13,750-13,800/mt. In the afternoon, as profit-booking by shorts drove the A-shares to rebound and shored up market confidence, SHFE copper rose above RMB 50,000/mt. However, SHFE lead prices lacked impetus to increase and only hovered around RMB 13,800/mt before ending at RMB 13,810/mt, up RMB 120/mt from a day earlier and standing above the 5-day moving average. Traded volumes were up 52 lots to 152 lots, while positions increased 66 lots to 2,114 lots.

 

SHFE lead prices opened higher on Wednesday but lacked upward momentum, while spot lead prices moved up RMB 50-80/mt. Chihong Zn & Ge was quoted at RMB 13,730/mt, with spot discount of RMB 40/mt over the SHFE 1306 lead contract price. Nanfang and Jinli were offered at RMB 13,700/mt. Market players remained bearish despite the slight rebound, leaving trading unimproved.

 

SHFE 1307 zinc contracts prices opened at RMB 14,525/mt on Wednesday, dipping to RMB 14,440/mt in the morning trading, but then rallying to RMB 14,520/mt. In the afternoon, SHFE 1307 zinc contract prices soared along with the strengthening copper prices, breaking through the 10-day moving average, and touching a daily high of RMB 14,650/mt, but then inching down. Finally, SHFE 1307 zinc contract price closed at RMB 14,610/mt, up RMB 115/mt. Total positions decreased by 4,512 lots to 120,898 lots.

 

SHFE 1307 zinc contract prices fell temporarily after opening but then rebounded. Spot discounts of #0 zinc against SHFE 1307 zinc contract prices narrowed to RMB 30-50/mt, with traded prices between RMB 14,470-14,500/mt. #1 zinc prices were between RMB 14,440-14,450/mt. Smelters were mainly delivering goods for long-term contracts, holding back goods, and traders held prices firm, while downstream buyers stood on the sidelines, with overall transactions muted. As SHFE zinc prices climbed in the afternoon, spot discounts expanded, causing arbitrage traders to purchase goods, with #0 zinc prices inching up to RMB 14,520-14,530/mt.

In Shanghai tin market, non-leading brands were hardly seen on Wednesday and mainstream traded prices were between RMB 142,000-143,500/mt. Consumption was soft given high prices and ample inventories. In the afternoon, the rising LME tin raised traders’ selling interest, and some increased quotes to RMB 142,500-144,000/mt. However, trading remained quiet as downstream buyers showed no interest in purchasing at high prices.

In Shanghai, traders held prices firm in the morning trading. Despite LME nickel prices overnight closed the day with declines, Jinchuan Nickel prices rose to RMB 106,300-106,500/mt, while Russian nickel prices were between RMB 105,500-105,600/mt, with transactions muted. In the afternoon, LME nickel prices began to advance, and traders also raised their quotes, pushing up Jinchuan nickel prices to as high as RMB 107,200/mt, and Russian nickel prices to RMB 106,200/mt, causing transactions to decrease.