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SMM Base Metals Daily Review (2013-6-14)
Jun 17,2013 12:40CST
price review forecast
SHFE 1310 copper contract started Friday RMB 170/mt lower at RMB 51,500/mt due to the decline in LME copper Thursday.

SHANGHAI, Jun. 17 (SMM) –

SHFE 1310 copper contract started Friday RMB 170/mt lower at RMB 51,500/mt due to the decline in LME copper Thursday. After its opening, the most active SHFE copper contract was pushed up to RMB 51,720/mt by position liquidation before sinking to RMB 51,250/mt. In the afternoon session, SHFE copper for October delivery gained traction from the rally of the Shanghai Composite Index to hover around the daily moving average, and finally closed the session at RMB 51,450/mt, down RMB 220/mt or 0.43%. Trading volumes were off 101,000 lots, and positions added 8,970 lots. Investors largely sold at high and bought at low. The most active SHFE copper contract is vulnerable to losses in the near future.
Spot copper in Shanghai was offered at a discount of RMB 0-130/mt and a premium of RMB 0-50/mt over SHFE 1306 copper contract prices on Friday. Traded prices for standard-quality copper were between RMB 52,300-52,380/mt, and RMB 52,400-52,500/mt for high-quality copper. SHFE 1310 copper contract prices extended losses. The price gap between SHFE 1306 and SHFE 1307 copper contracts expanded to RMB 400/mt due to approaching delivery of SHFE 1306 copper contracts. The massive inflows of imported copper forced cargo holders to cut offers. Goods were sold at discount near mid-day break. Middlemen entered the market for arbitrage, while downstream producers purchased to need. Cargo holders continued to sell goods for cash flows with spot copper quoted at discounts of RMB 20-160/mt. Traded prices remained little changed from the morning trading session. SHFE copper inventories increased 1,938 mt last week, leaving copper market in surplus.

SHFE 1309 aluminum contract pointed to a slightly lower opening at RMB 14,700/mt last Friday, with its high-end price at mere RMB 14,725/mt. Shorts dominated the market, with trading volumes less than 10,000 lots. The most active SHFE aluminum contract was moving below RMB 14,700/mt for most time of the afternoon session, and finally closed down RMB 55/mt or 0.37% at RMB 14,670/mt. SHFE aluminum for September delivery will seek support at RMB 14,600/mt, with little upward momentum, but downside space should also be limited. SHFE aluminum inventories decreased 3,406 mt to 422,999 mt.

Spot aluminum was traded at RMB 14,780-14,800/mt in Shanghai, RMB 20-40/mt higher than SHFE 1306 aluminum contract prices. Low-iron aluminum was traded around RMB 14,920/mt. Downstream restocking helped aluminum prices resist declines. SHFE aluminum retreated from RMB 14,800/mt, but cargo holders still held quotes firm. Mainstream traded prices were close to RMB 14,800/mt in Shanghai, and RMB 14,800/mt in Wuxi and Hangzhou due to supply shortfall. Overall trading picked up from the previous day. In the afternoon, SHFE 1306 aluminum contract prices narrowed losses, but buying interest in spot market was low. Some traders held offers at RMB 14,790/mt, but trading was subdued.

LME lead shed nearly 1.5% last night, but SHFE 1306 lead contact was more resilient, which started only RMB 30/mt lower at RMB 13,805/mt on Friday. The most active SHFE lead contract was mired at its opening price for most time of the session, but did inch up RMB 20/mt one hour before the end of the session. Finally, SHFE lead for June delivery ended the day down RMB 30/mt at RMB 13,820/mt, with the settlement price slightly lower at RMB 13,806/mt. Trading volumes were off 18 lots to 46 lots, and positions also contracted 32 lots to 1,782 lots. Investors booked profits by closing positions before the weekend. With spot lead demand remaining anemic and with the Fed’s stance on monetary policy still unclear, SHFE 1306 lead contract should continue to be capped under the 30-day moving average prior to the Fed’s policy meeting due early next week.
SHFE lead prices were RMB 35/mt lower than yesterday on Friday, while spot lead prices were little unchanged due to anemic trading activity ahead of upcoming weekend. Traded prices for Chihong Zn & Ge and Tongguan were RMB 13,900/mt, RMB 100/mt higher than SHFE 1306 lead contract prices, with traded prices RMB 10/mt lower than quotations. Mengzi was traded at RMB 13,880/mt. Prices for warehouse warrants of Yubei were offered at RMB 13,860/mt, a discount of RMB 40/mt over SHFE 1307 lead contract prices. Transactions were muted in the afternoon.

SHFE 1309 zinc contract prices opened RMB 65/mt lower at RMB 14,515/mt, as LME zinc prices overnight plummeted by 1.22%. As large numbers of shorts rushed to the market, SHFE 1309 zinc contract prices once dipped to RMB 14,480/mt. During the second session, SHFE zinc prices rebounded above moving averages, and then struggled around RMB 14,520/mt, and finally closing at RMB 14,525/mt, down RMB 55/mt or 0.38%. Trading volumes of SHFE 1309 zinc contracts decreased by 18,776 lots, to 43,296 lots, and positions increased by 4,364 lots to 121,444 lots. Trading volumes decreased by 31,074 lots, to 102,874 lots, and total positions increased by 11,798 lots to 304,562 lots.

SHFE zinc prices opened lower today and later fluctuated narrowly. Spot premiums of #0 zinc expanded to RMB 100-130/mt against SHFE 1309 zinc contract prices, with traded prices between RMB 14,620-14,660/mt. #1 zinc prices were around RMB 14,600/mt. Traded prices in Guangdong were close to SHFE zinc prices, but spot premiums in Shanghai exceeded RMB 100/mt due to supply tightness. Traders stood on the sidelines due to the lack of arbitrage opportunity, and downstream buying interest was low, keeping transactions quiet.

In Shanghai tin market, mainstream traded prices held steady at RMB 140,500-142,000/mt last Friday, with trading slightly improving. As downstream buyers mostly finished replenishments ahead of the Chinese Dragon Boat Festival, consumption remained relatively soft, combined with low prices, market was dominated by wait-and-see sentiment.

In Shanghai, Jinchuan nickel prices were between RMB 101,500-101,700/mt in the morning session. A wait and see attitude permeated in the market as spot prices dropped close to RMB 100,000/mt, while downstream buyers were also cautious.

latest SHFE copper prices

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