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SMM Base Metals Daily Review (2013-7-9)
Jul 10,2013 10:37CST
price review forecast
SHFE 1311 copper contract opened RMB 120/mt higher at RMB 48,860/mt on Tuesday as LME copper reversed losses overnight.

SHANGHAI, Jul. 10 (SMM) –

SHFE 1311 copper contract opened RMB 120/mt higher at RMB 48,860/mt on Tuesday as LME copper reversed losses overnight. China’s CPI rose more than expected in June. PPI, albeit continued decline, did fall at a slower pace, alleviating market pessimism. SHFE copper for November delivery briefly slid to RMB 48,650/mt after its opening, but then bounced back due to a wave of buying. In the afternoon, the most active SHFE copper contract jumped to RMB 49,260/mt, but retreated at the tail of the session. Finally, SHFE 1311 copper contract finished at RMB 48,910/mt, up RMB 170/mt or 0.35%. Trading volumes added 119,000 lots and positions were up 27,566 lots. SHFE copper prices are facing downward pressure as resistance at the 10-day moving average remained strong.

Spot copper in Shanghai was quoted at a premium of RMB 0-140/mt over SHFE 1307 copper contract prices on Tuesday. Traded prices for standard-quality copper were between RMB 49,680-49,920/mt, and RMB 49,760-50,080/mt for high-quality copper. SHFE copper staged a strong rally. The price spread among different brands of spot copper widened. High-quality copper still gained favor, allowing holders to hold offers at a premium of SHFE 1307 copper contract prices. Suppliers of standard-quality copper and hydro-copper were forced to cut offers, though. Middlemen evinced lower buying interest on their belief that prices will fall in the future. Downstream producers lost interest once copper prices neared RMB 50,000/mt. In the afternoon, spot copper was quoted at discounts of RMB 30/mt to premiums of RMB 120/mt, with price gap between imported standard-quality and high-quality copper expanding. Traded prices edged up to RMB 49,000-50,100/mt, both traders and downstream buyers limited purchases. 
SHFE 1310 aluminum contract opened slightly higher at RMB 14,260/mt on Tuesday. In the morning session, SHFE three-month aluminum contract was stagnant at its opening price as China’s rising June CPI kept investors cautious. In the afternoon, the most active SHFE aluminum contract advanced to RMB 14,300/mt due to the pullback in the US dollar index, but then surrendered earlier gains as shorts closed positions at highs. Finally, SHFE aluminum for October delivery ended the day up RMB 5/mt or 0.04% at RMB 14,225/mt. Trading volumes were off 1,618 lots to 17,730 lots, and positions also decreased 934 lots to 215,188 lots. SHFE 1310 aluminum contract is expected to move within a RMB 14,200-14,300/mt price band. 

Mainstream traded prices for spot aluminum in Shanghai were RMB 14,350-14,370/mt on Tuesday, 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 14,520/mt. The most active SHFE aluminum contract lacked upward momentum due to China’s growing CPI in June. Gains of spot aluminum prices were curbed by soft downstream demand. Traders were eager to sell at pries level with SHFE current-month aluminum contract, and middlemen went bargain hunting, leaving prices stagnant at RMB 14,360/mt. Prices in Hangzhou, however, were higher at RMB 14,400/mt due to tight supply. In the afternoon, the most active SHFE aluminum contract fell back after hitting high, preventing spot aluminum from rising. Some traders held offers at RMB 14,350-14,370/mt, but transactions were muted.

The most active SHFE 1309 lead contract price started RMB 55/mt higher at RMB 13,900/mt on Tuesday influenced by the 2% increase in LME lead overnight. In the morning trading session, China’s CPI for June was reported up 2.7% YoY, its highest in four months, while PPI was down 2.7%, basically within market expectation. Market confidence was depressed by the unbalance of economic structure, driving lead prices to fall RMB 30/mt. But SHFE lead prices then regained some losses due to buying support and stabilizing domestic stocks, to finally close at RMB 13,890/mt, up RMB 40/mt from a day earlier. Trading volumes for the most active contract dropped 130 lots to 106 lots, while positions increased 34 lots to 2,358 lots. SHFE lead should remain below the 5-day moving average. 

In China’s spot lead markets, Chihong Zn & Ge and Nanfang were offered at RMB 13,730-13,740/mt, with discount of RMB 160/mt against the most active SHFE lead contract, but transactions were rarely made at high prices. Quotes for Hanjiang were initially at RMB 13,690/mt but rose to RMB 13,700/mt along with SHFE lead. Mengzi was quoted at RMB 13,710/mt. Some downstream buyers purchased according to production needs, while smelters moved goods normally. Trading remained modest.

SHFE 1310 zinc contract prices opened RMB 65/mt higher at RMB 14,500/mt, and moved higher after opening. China's June CPI rose 2.7% YoY, while PPI fell by 2.7%, in line with market expectations. SHFE zinc prices generally fluctuated between RMB 14,515-14,535/mt, and inched up to RMB 14,535-14,555/mt, boosted by rising LME zinc prices and A-shares, and finally closing at RMB 14,530/mt, up RMB 95/mt, or 0.66%. Trading volumes increased by 8,772 lots, to 56,358 lots, and total positions decreased by 4,646 lots, to 155,806 lots.

#0 zinc prices were between RMB 14,600-14,630/mt, with spot premiums between RMB 80-100/mt against SHFE 1310 zinc contract prices. #1 zinc prices were between RMB 14,580-14,590/mt. SHFE 1310 zinc contract prices opened higher then fluctuated, and spot zinc prices rose, but smelters continued to hold onto their goods. Some traders were actively moving goods at higher prices, while downstream buying interest was low, with transactions muted. SHFE zinc prices edged up in the afternoon, and spot zinc prices also rose, with #0 zinc prices between RMB 14,630-14,640/mt, with spot premiums narrowing to RMB 80-90/mt against SHFE 1310 zinc contract prices.

In Shanghai tin market, mainstream traded prices were RMB 136,800-138,000/mt on Tuesday, with Yunxiang, Nanshan, Jinlong and Yinsheng traded at RMB 136,800-137,000/mt. Transactions for leading brands in Yunnan were done at RMB 136,800-137,000/mt, while a few goods with low lead content from Yunxi were quoted high at RMB 138,500/mt. Market was still dominated by bearish mood with transactions limited.

In Shanghai, Jinchuan nickel prices were between RMB 95,400-95,500/mt, and Russian nickel prices were between RMB 94,400-94,500/mt. Market confidence improved as LME nickel prices overnight rebounded and prior to China’s major economic data, with some downstream buyers replenishing stocks at lower prices, and causing transactions to improve. LME nickel prices continued to rise, while downstream optimism increased, causing trading volumes to increase further. Traders raised Jinchuan nickel prices to RMB 95,700-95,800/mt, and nickel prices rose to RMB 94,700-94,800/mt.

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