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SMM Base Metals Daily Review (2013-7-10)
Jul 11,2013 10:25CST
price review forecast
SHFE 1311 copper contract started RMB 320/mt higher at RMB 48,680/mt on Wednesday.

SHANGHAI, Jul. 11 (SMM) –

SHFE 1311 copper contract started RMB 320/mt higher at RMB 48,680/mt on Wednesday. The most active SHFE copper contract tumbled to RMB 48,000/mt as China’s falling foreign trade triggered aggressive selloff. In the afternoon, China’s A-shares bounced back to 2,000 points, pushing SHFE copper for November delivery above the daily moving average. SHFE 1311 copper contract rose further at the tail of the session as shorts scaled back positions before finishing at RMB 48,630/mt, down RMB 370/mt or 0.76%. Trading volumes added 179,000 lots and positions were up 29,634 lots. SHFE copper will meet great resistance as bearish sentiment dominates.

Spot copper in Shanghai was quoted at a premium of RMB 40-220/mt over SHFE 1307 copper contract prices on Wednesday. Traded prices for standard-quality copper were between RMB 49,120-49,400/mt, and RMB 49,220-49,550/mt for high-quality copper. SHFE copper moved lower after a low opening. Spot copper suppliers refrained from selling at lows. Prices of high-quality copper rose due to falling supply. Middlemen still preferred high-quality copper. Downstream producers became more interested in buying when prices fell to 49,000/mt, but were still cautious about future prices. In the afternoon, premiums for spot copper narrowed to RMB 20-180/mt, but traded prices held firm at RMB 49,150-49,550/mt.
SHFE 1310 aluminum contract fell to RMB 14,200/mt after opening lower at RMB 14,230/mt on Wednesday. In the afternoon, shorts took profits after the US Federal Reserve released the minutes of June policy meeting, helping SHFE three-month aluminum contract recoup earlier losses. Finally, SHFE aluminum for October delivery ended the day flat with yesterday at RMB 14,260/mt. Trading volumes were off 294 lots to 17,436 lots, and positions increased 1,118 lots to 216,306 lots. Persistently weak SHFE aluminum kept investors puzzled about future price trends. Weak demand in China means aluminum prices will more likely fall rather than rise. 

Mainstream traded prices for spot aluminum in Shanghai were RMB 14,320-14,340/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 14,490/mt. The most active SHFE aluminum contract edged down, souring market sentiment. Traders rushed to sell for cash, but downstream producers and middlemen held to the sidelines, sending prices down to RMB 14,320/mt, the lowest in more than three years. Prices are expected to fall further given the slowdown in the Chinese economy and severe overcapacity in aluminum industry. In the afternoon, trading was thin, with traded prices at RMB 14,320-14,330/mt.  

On July 10, SHFE lead market did not start until 11: 00 as investors refused to enter the market given hovering prices. As China’s foreign trade data for June were reported weak, market players have been increasingly concerned about China’s foreign trade, leaving the most active SHFE lead contract starting RMB 60/mt lower at RMB 13,830/mt. In the afternoon, the Shanghai Composite Index reserved losses to stand above 2,000, up over 2%, while SHFE copper also stabilized. As a result, SHFE 1309 lead contract price moved up to end the day at RMB 13,850/mt, down RMB 40/mt from a day earlier. Trading volumes were 172 lots, up 66 lots, and positions increased 50 lots to 2,408 lots. SHFE lead price hit a new 2013 low of RMB 13,815/mt but regained the losses soon supported by a wave of buying. Given support at RMB 13,820/mt and resistance at the 5-day moving average, SHFE lead will stay within a narrow moving range in the near term.
Quotes in China’s spot lead market remained firm. Chihong Zn & Ge was mainly quoted at RMB 13,750/mt, with discounts against the most active SHFE lead contract price narrowing to RMB 80/mt. Nanfang was offered RMB 30/mt lower at RMB 13,720/mt. Prices for Tongguan remained stable at RMB 13,720/mt, while warrants for Shuikoushan were offered at RMB 13,700/mt, RMB 40/mt higher that SHFE 1307 lead contract price. Hanjiang and Hengbang were quoted at RMB 13,660/mt. Downstream consumption remained depressed. Smelters cut output due to tight raw material supply, leaving spot goods tradable in the market reduced. Spot lead prices remained little changed in the afternoon despite a RMB 20/mt increase in futures market. 

HFE 1310 zinc contract prices opened lower at RMB 14,515/mt. China’s June data was disappointing, but SHFE zinc prices were rarely affected and generally fluctuated between RMB 14,475-14,500/mt. A-shares rose in the afternoon to 2,000, boosting market sentiment and inducing a large number of longs to enter the market, pushing up SHFE zinc prices to touch RMB 14,585/mt, and finally closing at RMB 14,560/mt, up RMB 25/mt, or 0.17%. Trading volumes decreased by 6,132 lots, to 50,226 lots, and total positions increased by 286 lots, to 156,092 lots.

#0 zinc prices were between RMB 14,570-14,600/mt, with spot premiums between RMB 90-100/mt against SHFE 1310 zinc contract prices. #1 zinc prices were between RMB 14,550-14,560/mt. Both supply and demand was weak, with transactions limited. SHFE 1310 zinc contract prices opened low then fluctuated. Smelters were unwilling to sell goods, and traders stood on the sidelines, while downstream buyers purchasing as needed, keeping transactions muted. SHFE zinc prices rebounded slightly in the afternoon, and spot zinc prices also edged up, with #0 zinc prices were between RMB 14,620-14,640/mt, with spot premiums between RMB 80-90/mt against SHFE 1310 zinc contract prices.

Mainstream traded prices in Shanghai spot tin market fell to RMB 136,500-137,500/mt Wednesday, with Yunxiang, Nanshan, Jinlong and Yinsheng traded at RMB 136,500/mt. Traded prices for leading brands from Yunnan province slipped to RMB 137,000/mt, and quotes for Yunxi were between RMB 137,200-137,500/mt, but transactions were rare, while goods quoted at RMB 137,500/mt received no inquiries. Trading remained weak with market dominated by bearishness and downstream consumption remaining depressed.

In Shanghai, Jinchuan nickel prices were between RMB 95,000-95,200/mt, and Russian nickel prices were between RMB 94,000-94,200/mt. LME nickel prices weakened before rising, and China’s domestic prices inched down, with Jinchuan nickel prices down to RMB 94,900/mt, and Russian nickel prices falling to RMB 93,900/mt. But Jinchuan nickel prices rallied to RMB 95,000-95,200/mt later in the day, and Russian nickel prices rose to RMB 94,000-94,200/mt. LME nickel prices lacked momentum to rise, and downstream buyers were cautious, while traders also stood on the sidelines, keeping transactions muted.

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