SMM Base Metals Market Daily Review (2013-6-13)

SHANGHAI, Jun. 14 (SMM)--
Copper:
SHFE 1310 copper contract started Thursday RMB 110/mt lower at RMB 51,520/mt as LME copper tumbled during the three-day holiday in China. The most active SHFE copper contract sank to RMB 51,350/mt as the Shanghai Composite Index dived 3.5%, with resistance at RMB 51,960/mt. SHFE copper for October delivery moved within RMB 51,600-51,900/mt in the morning session before retreating to the daily moving average in the afternoon. Finally, SHFE 1310 copper contract ended the day at RMB 51,510/mt, down RMB 1,420/mt or 2.68%. Trading volumes and positions increased 122,000 lots and 54,658 lots, respectively. The most active SHFE copper contract is expected to slide further.
Spot copper in Shanghai was offered at a premium of RMB 10-150/mt over SHFE 1306 copper contract prices on Thursday. Traded prices for standard-quality copper were between RMB 52,500-52,550/mt, and RMB 52,550-52,700/mt for high-quality copper. SHFE 1310 copper contract prices plummeted by close to 2%, creating opportunities for arbitrage. More imported copper flowed into the market due to the appreciable rebound in the SHFE/LME copper price ratio. This kept spot copper in abundant supply, sending premium all the way down. Middlemen held to a wait-and-see stance as the price gap between SHFE 1306 and SHFE 1307 copper contracts was RMB 200/mt. Downstream producers went bargain hunting following the three-day break. Imported standard-quality copper gained favor due to sharp slump in prices. In the afternoon, the price spread between SHFE 1306 and SHFE 1307 copper contracts expanded to RMB 300/mt. Spot copper supply was stable, but premium continued to fall. Mainstream quotations were reported at a premium of RMB 0-100/mt over SHFE 1306 copper contract prices, but traded prices were RMB 52,430-52,500/mt. The price gap between high-quality copper and standard-quality copper narrowed further. Some transactions were done at low prices.
 
Aluminum:
LME aluminum opened lower at USD 1,864.8/mt on Thursday due to worries over global economic prospects. Against this backdrop, SHFE 1309 aluminum contract also opened 1.7% lower at RMB 14,680/mt on the first trading day following the holiday. The most active SHFE aluminum contract, however, did climb to RMB 14,700/mt shortly after its opening thanks to short-covering and dip-buying by longs. SHFE aluminum for September delivery recouped only some of earlier losses as bearish sentiment is permeating, and later dropped as shorts closed positions. Finally, SHFE 1309 aluminum contract closed at RMB 14,705/mt, down RMB 235/mt or 1.57%. Positions were up 2,462 lots to 41,748 lots. Aluminum smelters cutting production and limited arrivals during the holiday helped aluminum prices in China resist declines compared with LME aluminum. SHFE aluminum for September delivery will repeatedly tests support at RMB 14,700/mt.
Spot aluminum was traded at RMB 14,820-14,830/mt in Shanghai on Thursday, a premium of RMB 20-30/mt over SHFE 1306 aluminum contract prices. Low-iron aluminum was traded around RMB 14,940/mt. SHFE 1309 aluminum contract opened lower on the first trading day following the three-day break in China, dragged down by falling LME aluminum during the holiday, while SHFE 1306 aluminum contract also slipped to stagnate at RMB 14,800/mt. Traders in east China held offers firm as limited shipments arrived over the holiday and as some aluminum smelters announced plans to cut production. Meanwhile, some downstream producers replenished stocks and delivery of SHFE current-month aluminum contacts is drawing near, keeping spot aluminum at a premium of over RMB 20/mt over SHFE 1306 aluminum contract prices. Trading was brisk at lower prices. Aluminum prices should remain resilient to declines tomorrow due to positive market fundamentals. In the afternoon, SHFE 1309 aluminum contract prices edged down, driving some traders to cut offers to RMB 14,810-14,820/mt. The lower price, however, failed to stoke buying interest.
 
Lead:
SHFE 1306 lead prices, the most actively traded contract, was off RMB 180/mt off from settlement price last Friday to RMB 13,825/mt at 10:10 am on Thursday, plagued by falling LME lead prices during the Chinese Dragon Boat Festival. LME lead prices surrendered all the gains made since early June during the holiday period, causing SHFE lead prices to slid below RMB 14,000/mt after the holiday. Wide fluctuations in the LME lead market and an over 3% drop in China's stock market added to market caution, leaving poor trading, with SHFE lead prices fluctuating around RMB 13,810/mt. In the afternoon trading, SHFE lead prices were up RMB 30/mt due to buying support, and finally closed at RMB 13,850/mt, down RMB 195/mt or 1.39%, and closing prices were RMB 13,839/mt, slightly lower than settlement prices. Overall positions were little changed. Trading volumes of SHFE 1306 lead contract were up 8 lots to 64 lots, and positions were down 4 lots to 1,814 lots. Transactions of all SHFE lead contracts were up 296 lots to 700 lots, and positions were off 84 lots to 6,134 lots. Economic growth concerns and no demand improvement are continuing to weigh down the lead market, and SHFE lead prices are expected to head for corrections.
 
Compared with SHFE lead prices, spot lead prices were proven to resistant declines. Cargo-holders were more unwilling to sell goods, while downstream producers were wary of the purchasing. Limited quotes were heard in the market, and market transactions were also anemic. Chihong Zn & Ge was quoted at RMB 13,900/mt, RMB 90/mt higher than SHFE 1306 lead contract, RMB 13,890-13,900/mt for Yubei, RMB 40/mt lower than SHFE 1306 lead, and RMB 13,880/mt for Hanjiang. In the afternoon business, trading remained quiet. Trading is expected to be low on Friday. 
 
Zinc:
SHFE 1309 zinc contract prices opened RMB 290/mt lower at RMB 14,540/mt, and advanced as some bargain hunters entered the market. But the Shanghai Composite Index plunged 2.83%, falling below 2200, hitting a record low since mid-December last year, depressing market sentiment. In this context, SHFE 1309 zinc contract prices encountered resistance at the 20-day moving average, touching RMB 14,650/mt before fluctuating between RMB 14,570-14,605/mt, and finally closing at RMB 14,570/mt, down RMB 260/mt or 1.75%.
Trading volumes of SHFE 1309 zinc contracts increased by 20,890 lots, to 62,072 lots, and positions decreased by 2,370 lots to 117,080 lots. Trading volumes increased by 59,264 lots, to 133,946 lots, and total positions increased by 5,804 lots to 292,764 lots.
SHFE zinc prices opened lower today and later fluctuated narrowly. Spot premiums of #0 zinc expanded to RMB 20/mt against SHFE 1309 zinc contract prices, with traded prices between RMB 14,660-14,700/mt. #1 zinc prices were between RMB 146,30-14,640/mt. Cargo holders were holding back goods and holding prices firm as zinc prices plunged, pushing up spot premiums. Some arbitrage traders released spot goods, while downstream buyers purchased modestly, keeping transactions quiet. In the afternoon, SHFE zinc prices were weighed down below moving averages, but spot prices remained firm, with spot premiums of #0 zinc against SHFE 1309 zinc contract prices between RMB 70-110/mt, and with traded prices between RMB 14,650-14,700/mt.

Tin:
The Shanghai tin market dropped on Thursday after resuming trading since LME tin market kept falling during the Chinese Dragon Boat Festival. Mainstream traded prices were in the RMB 140,700-142,000/mt range. Yunxi was traded in the RMB 142,000-142,500/mt range, and prices for Yunshan and Yunheng were between RMB 141,500-142,500/mt. Prices for Yinsheng and Yunxiang were RMB 141,500/mt, and RMB 140,500-141,000/mt for Jinlong, Nanshan and Kaiyuan. Overall trading was quiet.

Nickel:
In Shanghai, Jinchuan nickel prices fell to RMB 102,500-102,700/mt in the morning session, while Russian nickel prices were between RMB 101,500-101,700/mt. As LME nickel prices rebounded briefly in the afternoon, Jinchuan nickel prices climbed to RMB 102,800/mt, with Russian nickel prices around RMB 101,800/mt. Downstream buyers replenished goods at lower prices upon the reopening of the market, with transactions muted.