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SMM Base Metals Daily Review (2013-6-19)
Jun 20,2013 10:10CST
price review forecast
SHFE 1310 copper contract started RMB 330/mt lower at RMB 50,910/mt on Wednesday as LME copper fell below USD 7,000/mt overnight.

SHANGHAI, Jun. 20 (SMM) –

SHFE 1310 copper contract started RMB 330/mt lower at RMB 50,910/mt on Wednesday as LME copper fell below USD 7,000/mt overnight. Sell-off trigged by falling LME copper and the slump in the Shanghai Composite Index dragged the most active SHFE copper contract down to RMB 50,580/mt. SHFE copper for October delivery recovered some of its earlier losses at the tail of the session as LME copper rallied, and finally closed RMB 290/mt or 0.57% lower at RMB 50,950/mt, with trading volumes down 101,000 lots and positions up 3,788 lots. Technical indicator remains bearish, and the struggle between longs and shorts will leaving the most active SHFE copper contract at RMB 51,000/mt.
Spot copper in Shanghai was offered at a premium of RMB 120-250/mt over SHFE 1307 copper contract prices on Wednesday. Traded prices for standard-quality copper were between RMB 51,400-51,450/mt, and RMB 51,500-51,600/mt for high-quality copper. SHFE 1310 copper contract extended losses. Supply of imported copper was ample due to rising SHFE/LME copper price ratio. As a result, holders of domestic copper were forced to cut premium. Middlemen largely held to the sidelines, while downstream producers purchased as needed. Premiums for spot copper, especially standard-quality copper, slipped in the afternoon to RMB 80-220/mt, with traded prices at RMB 51,300-51,650/mt. Some traders went arbitrage trading.
SHFE 1310 aluminum contract opened flat at RMB 14,550/mt on Wednesday. SHFE aluminum for October delivery was stagnant at RMB 14,520/mt due to uncertain economic outlook, moving within a RMB 14,505-14,550/mt range. Finally, SHFE 1310 aluminum contract closed down RMB 25/mt or 0.17% at RMB 14,525/mt. The US Federal Reserve will announce the results of its policy meeting. 

Mainstream traded prices for spot aluminum in Shanghai were RMB 14,640-14,660/mt on Wednesday, a discount of RMB 0-10/mt and premium of RMB 0-10/mt over SHFE 1307 aluminum contract prices. Low-iron aluminum was traded around RMB 14,800/mt. SHFE 1310 aluminum contract proved resilient today following sharp declines yesterday, but bearish sentiment in spot market remains. Traders were in a hurry to sell, but downstream producers expressed little interest, keeping traded prices stagnant at RMB 14,650/mt. Price gap in Shanghai, Wuxi and Hangzhou narrowed noticeably. In the afternoon, the most active SHFE aluminum contract was mired, triggering strong wait-and-see sentiment in spot market. Suppliers and buyers stayed out of the market.

SHFE 1307 lead contract price started below the 30-day moving average at RMB 13,930/mt on June 19, and moved around RMB 13,950/mt. In the afternoon, investors mainly stayed out of the market, leaving transactions limited, but prices were up RMB 30/mt to RMB 13,980/mt due to short covering, and ended the day at an intraday high of RMB 13,990/mt, up RMB 40/mt from a day earlier with resistance at RMB 14,000/mt still strong. Trading volumes of SHFE 1307 lead contract fell 2 lots to 138 lots, while positions also dropped 52 lots to 1,496 lots. Positions for SHFE 1309 lead contract are approaching the most active contract. Overall, SHFE lead prices may remain relatively firm given tightening supply.
Spot lead prices held steady from a day earlier. Chihong Zn & Ge was quoted at RMB 13,930/mt. Lead prices in Shanghai remained firm as supplies reduced and smelters raised quotes, with spot discounts over the most active SHFE lead contract narrowing from RMB 50/mt to RMB 20/mt. Mengzi was offered at RMB 13,900/mt, and Yunyue was traded at RMB 13,850/mt. Downstream consumption remained modest, and traders purchased in limited amounts at low prices, leaving transactions little changed from the previous trading day.

SHFE 1309 zinc contract prices opened at RMB 14,540/mt. The market remained cautious before the US Federal Reserve’s policy meeting is held. HSBC will release China’s June manufacturing PMI this Thursday, which is pessimistic given the sluggish manufacturing in China and regulations to the property market. Beside, the Shanghai Composite Index opened low and moved lower, dipping to 2115.79, a record low since mid-December last year, depressing market sentiment. In this context, SHFE zinc prices fluctuated between RMB 14,510-14,525/mt, and rallied in the afternoon, finally closing at RMB 14,530/mt, down RMB 10/mt or 0.07%.

Trading volumes of SHFE 1309 zinc contracts decreased by 10,160 lots, to 16,104 lots, and positions decreased by 2,506 lots to 116,608 lots. Trading volumes decreased by 16,916 lots, to 56,184 lots, and total positions increased by 4,166 lots to 309,618 lots.

SHFE zinc prices fluctuated at low levels today. #0 zinc prices were between RMB 14,620-14,640/mt, with spot premiums between RMB 100-120/mt against SHFE 1309 zinc contract prices. #1 zinc prices were between RMB 14,600-14,610/mt. Some smelters increased goods supply for long-term orders as the settlement date nears, and arbitrage traders were also moving goods actively as delivery date neared. Traders operated cautiously, and downstream buyers were pessimistic towards price trends and purchasing on an as-needed basis, leading to spot supply surplus and causing transactions to mute. SHFE zinc prices dipped before rallied, with #0 zinc prices between RMB 14,620-14,640/mt, and spot premiums between RMB 100-120/mt against SHFE 1309 zinc contract prices.

Mainstream traded prices in Shanghai tin market were RMB 139,500-141,500/mt on June 19, a few goods for Yunnan Tin Group were traded at RMB 142,000/mt. The weak tin prices and sluggish downstream consumption left trading unimproved. Most traders reported sparse transactions made at low prices.

In Shanghai, Jinchuan nickel prices were around RMB 100,200/mt in the morning session, and Russian nickel prices dropped below RMB 99,200/mt. Although LME nickel prices rebounded later the day, but spot prices were dragged down by sluggish downstream demand. Jinchuan nickel prices fell to RMB 100,000/mt, and Russian nickel prices also fell to RMB 99,000/mt. Domestic traders and downstream buyers were pessimistic due to slipping spot nickel prices, keeping transactions muted.

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