SMM Base Metals Market Daily Review (2013-5-15)

SHANGHAI, May 16 (SMM) –

 

Falling LME copper overnight caused SHFE 1309 copper contract to start RMB 300/mt lower at RMB 52,800/mt on Wednesday. After its opening, the most active SHFE copper contract hovered around the daily moving average, finding its high at RMB 52,850/mt. During the second trading session, SHFE copper for delivery in four months fell back on short selling, and tumbled further to RMB 51,930/mt in the afternoon after LME copper dropped below USD 7,200/mt. Finally, SHFE copper for September delivery shed RMB 1,110/mt or 2.09% to close at RMB 51,990/mt. Trading volumes decreased 48,960 lots, but positions increased 11,378 lots. SHFE 1309 copper contract is vulnerable at the 10-day moving average and further declines are expected as technical indicator is pointing downward. 

 

Spot copper in Shanghai was offered at a discount of RMB 0-20/mt and premium of RMB 0-80/mt over SHFE 1305 copper contract on Wednesday. Traded prices for standard-quality copper were between RMB 53,180-53,300/mt, and RMB 53,240-53,380/mt for high-quality copper. SHFE 1309 copper contract fell dramatically and the price gap between SHFE 1305 and 1306 copper contracts remained RMB 300/mt. Cargo holders were anxious to sell before delivery of SHFE 1305 copper contracts. More imported copper flowed into market as the SHFE/LME price ratio rose. Premium narrowed on abundant supply. The low-end price of some standard-quality copper was at small discount near mid-day. Middlemen held to the sidelines, and downstream producers also expressed little interest, keeping transactions muted. In the afternoon, price gap between SHFE 1305 and 1306 copper contracts expanded, and cargo holders tried to generate cash before the shift of most active SHFE copper contract. Spot copper was thus quoted at discounts of RMB 80-250/mt, and traded prices were down RMB 53,000-53,200/mt, but transactions were still sparse. 

SHFE 1308 aluminum contract started lower at RMB 14,575/mt on Wednesday. The most active aluminum contract failed to recover RMB 14,600/mt in early morning session, and later followed copper prices down. However, short-covering and dip-buying by longs helped the light metal resist losses. Finally, SHFE three-month aluminum contract closed at an intraday low of RMB 14,545/mt, down RMB 60/mt or 0.41%. Positions increased 2,208 lots to 64,768 lots. SHFE aluminum for August delivery should feel strong resistance at RMB 14,600/mt in the short term as bearish sentiment dominates.

 

Spot aluminum was traded at RMB 14,520-14,530/mt in Shanghai, a discount of RMB 0-10/mt over SHFE 1305 aluminum contract. Low-iron aluminum was traded around RMB 14,680/mt. Aluminum prices remained resilient, but market sentiment turned bearish. Traders rushed to sell, but downstream producers and middlemen showed low interest, sending traded prices down to RMB 14,520/mt. In the afternoon, SHFE 1305 aluminum contract held stable, but a more than 2% decline in copper prices turned market even more bearish. Some traders cut offers to RMB 14,510/mt, but trading was muted. 

 

SHFE 1306 lead contract price still hovered in a narrow bank after opening at RMB 13,750/mt. SHFE lead prices were free from influence of either edging up Shanghai Composite Index and falling base metals at home and abroad, and finally closed at RMB 13,770/mt, down RMB 20/mt from a day earlier. Trading volumes increased 228 lots to 270 lots, and positions were down 72 lots to 2,196 lots.

 

SHFE lead edged down on May 15 and goods available to spot lead markets increased with the approach of delivery date. In Shanghai, warrants for goods of Yuguang Gold & Lead were offered at RMB 13,740/mt, with premiums of RMB 70/mt against SHFE 1305 lead contract price. Warrants for Yubei Gold & Lead and Tongguan Nonferrous were offered at RMB 13,700-13,720/mt, with premiums of RMB 30/mt over the SHFE current month lead contract. Shuangyan was quoted at RMB 13,700/mt. Downstream buyers purchased at low prices, and smelters still mainly fulfilled long-term contracts. Transactions improved from the previous trading day.

 

SHFE 1308 zinc contracts prices opened low at RMB 14,455/mt as LME zinc prices overnight closed the day with declines, fluctuating between RMB 14,470-14,485/mt after opening. Dragged down by LME zinc prices, SHFE 1308 zinc contracts prices inched down, dipping to RMB 14,360/mt, and closing at RMB 14,370/mt, down RMB 165/mt or 1.14%. Trading volumes decreased by 13,302 lots, to 43,812 lots, and total positions increased by 1,420 lots to 151,966 lots. As the US dollar index continues to climb, LME zinc prices plummeted, which will continue to drag down SHFE zinc prices.

 

SHFE 1308 zinc contract prices opened low and then fluctuated weakly. Spot premiums of #0 zinc against SHFE 1308 zinc contract prices were RMB 10-30/mt, with traded prices between RMB 14,480-14,510/mt. #1 zinc prices were between RMB 14,450-14,470/mt. Smelters continued to hold back goods, and traders were actively moving goods but unwilling to purchase due to pessimism and expanding spot premiums, keeping overall transactions muted. SHFE zinc prices continued to fall in the afternoon, and spot premiums of #0 zinc against SHFE 1308 zinc contract prices were between RMB 10-40/mt, with traded prices between RMB 14,450-14,460/mt.

 

As LME tin prices fell back down, spot tin prices in Shanghai fell to RMB 146,500-147,000/mt on Wednesday. Prices for some branded goods dropped to RMB 146,500/mt, with trading muted. Transactions were even quieter in the afternoon, with low-end prices slipping to RMB 160,000/mt. However, inquiries were still sparse despite the lower prices.

Jinchuan lowered nickel prices by RMB 1,500/mt, to RMB 106,500/mt. In Shanghai, Jinchuan nickel prices were between RMB 106,900-107,000/mt, while Russian nickel prices were between RMB 105,900-106,000/mt. Spot transactions were muted due to continuously falling LME nickel prices.