SHANGHAI, Jun. 21 (SMM) –
SHFE 1310 copper contract started RMB 560/mt lower at RMB 50,210/mt on Thursday as LME copper fell below USD 6,900/mt. HSBC’s flash China manufacturing PMI for June fell far short of forecasts, sending A-shares down 2.8% to below 2,100 points. Shorts dominated the market, weighing the most active SHFE copper contract down below RMB 49,620/mt in the afternoon session. Finally, SHFE copper for October delivery ended the day down RMB 1,050/mt or 2.07% at RMB 49,720/mt, with trading volumes up 47,466 lots and positions up 37,374 lots. The most active SHFE copper contract may drop further to RMB 49,000/mt.
Spot copper in Shanghai was offered at a premium of RMB 120-250/mt over SHFE 1307 copper contract prices on Thursday. Traded prices for standard-quality copper were between RMB 50,650-50,730/mt, and RMB 50,730-50,950/mt for high-quality copper. SHFE 1310 copper contract retreated from RMB 50,000/mt, causing markets to panic. Cargo holders rushed to sell as a result, but downstream producers purchased to orders out of growing pessimism, leaving supply in excess of demand. Spot copper supply remained ample in the afternoon, but downstream increased purchases, especially for standard-quality copper, premiums remained between RMB 100-250/mt, with traded prices at RMB 50,400-50,700/mt.
LME aluminum fell into negative territory for a ninth straight day, causing SHFE 1310 aluminum contract to open lower at RMB 14,460/mt on Thursday. HSBC’s flash China manufacturing PMI for June contracted to 48.3, a nine-month low. This sent A-shares and SHFE copper down, which in turn dragged SHFE aluminum for October delivery down below RMB 14,400/mt in the afternoon session. Finally, SHFE 1310 aluminum contract closed down 1.10% at RMB 14,360/mt. Trading volumes increased 2,038 lots to 16,400 lots, and positions surged 5,486 lots to 60,652 lots. The most active SHFE aluminum contract should be vulnerable at RMB 14,300/mt.
Mainstream traded prices for spot aluminum in Shanghai were RMB 14,540-14,560/mt on Thursday, 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 14,710/mt. US Federal Reserve Chairman Bernanke stated the Fed will scale back QE3 later this year and HSBC’s flash China manufacturing PMI for June hit a 9-month low, sending SHFE 1310 aluminum contract down RMB 100/mt. In response, spot aluminum traders were anxious to liquidate inventories, but downstream producers bought only as needed and middlemen were wary of purchasing. This drove mainstream traded prices down to RMB 14,550/mt. In the afternoon, the most active SHFE aluminum contract fell further, turning spot market even quieter.
SHFE 1309 lead contract, the most active one, opened Thursday RMB 70/mt lower at RMB 14,080/mt as the Fed proposed the schedule for scaling back the QE which dragged down LME lead prices. However, SHFE lead was relatively resilient compared with other metals. HSBC announced China’s preliminary manufacturing PMI fell to a nine-month low of 48.3 in June at 10:00 a.m., driving the most active contract price lower. In the afternoon, LME lead continued the downtrend with US dollar rising, combined with the Shanghai Composite Index falling over 2% below 2,100, SHFE 1309 lead contract price dropped further to end at RMB 13,995/mt, a decline of RMB 165/mt or 1.17%, with settlement price at RMB 14,065/mt. Trading volumes for the contract for September delivery increased 342 lots to 502 lots, and positions increased 120 lots to 1,582 lots. The Shanghai/LME lead price ratio was 6.88.
On Thursday, the worse-than-expected HSBC China PMI added to market concerns over the economic outlook, and spot lead prices continued to fall. Prices for Chihong Zn & Ge were offered around RMB 13,870/mt, with discount of RMB 40/mt against the most active SHFE lead contract price, and Nanfang was quoted at RMB 13,840-13,850/mt. Mengzi was offered at RMB 13,830/mt. Downstream buyers were bearish to lead price and not willing to purchase, and traders also bought goods cautiously. Large smelters still mainly fulfill long-term contracts, while SMEs increased supplies due to tight cash flows, with supply for branded lead limited. Spot lead price fell RMB 20/mt in the afternoon, but inquiries were sparse and trading remained weak.
SHFE 1310 zinc contracts became the most actively traded contracts today, opening RMB 60/mt lower at RMB 14,480/mt as LME zinc prices opened low and moved lower. HSBC’s June PMI for China deteriorated, triggering concerns over China’s demand for zinc. SHFE 1310 zinc contract prices pulled down to RMB 14,450/mt. The Shanghai Composite Index dipped to 2,082.82, a new low since last December, with daily losses of 2.77%. LME zinc prices lost USD 1,850/mt, weighing down SHFE zinc prices. As large numbers of shorts rushed to the market, SHFE zinc prices once dipped to RMB 14,355/mt, hitting a record low from mid-April, and finally closing at RMB 14,380/mt, down RMB 160/mt, or 1.1%. Trading volumes of SHFE 1309 zinc contracts increased by 37,686 lots, to 68,656 lots, and positions increased by 17,384 lots to 124,756 lots.
#0 zinc prices were between RMB 14,530-14,570/mt, with spot premiums between RMB 110-130/mt against SHFE 1310 zinc contract prices. #1 zinc prices were between RMB 14,510-14,520/mt. SHFE zinc prices opened low and moved lower, and HSBC’s June PMI for China fell further, distressing market sentiment. Cargo holders were actively moving goods, while smelters and traders also sold goods aggressively to generate cash, causing spot supply to increase. But downstream buyers were cautious due to pessimism and the lack of orders, causing supply surplus to exacerbate, pushing down spot zinc prices. #0 zinc prices were between RMB 14,550-14,570/mt during the first trading session, but dropped to RMB 14,530-14,550/mt in the second trading session, with transactions muted.
Spot tin prices in Shanghai continued to fall on Thursday with market depressed and LME tin prices slipping. Mainstream traded prices were mainly between RMB 139,000-140,500/mt, and low-priced goods increased. The decline in LME lead prices added to bearishness in the market, driving cargo holders to sell off, but downstream buyers were not interested in purchasing.
In Shanghai, spot Jinchuan nickel prices were around RMB 99,200/mt in the morning session, and fell to RMB 98,700/mt along with LME nickel prices, and Russian nickel prices were between RMB 98,200-98,500/mt in the morning session, but dropped to RMB 97,700-97,800/mt in the afternoon. Although spot prices continued to fall during the day, downstream buying interest was low, keeping transactions muted.