SHFE copper prices dipped as low as RMB 48,000/mt last Monday due to the influenced of LME copper trends. However, Chinese A-shares stage a strong rally, rising by 3.5%, after Chinese Premier Li Keqiang stressed the use of bottom-line thinking in the promotion of economic reforms. On Thursday, shorts liquidated positions, driving SHFE copper up to RMB 51,000/mt and with all SHFE copper contracts rising by daily limits. Total trading volumes increased by 1.3 million lots last week, while positions fell by 35,000 lots and with market turnover remaining high. SHFE 1311 became the most actively traded contract. SMM expects copper prices to experience even more volatility this coming week.
In the spot market, premiums fell back after initially rising. Trader unwillingness to move goods early in the week helped support spot premiums, but sales were still depressed since large amounts of goods were locked in after SHFE copper prices advanced. Traders preferred to buy high-quality copper before the delivery date, while speculators bought spot and sold futures. Downstream producers entered the market when prices were below RMB 50,000/mt, and later exited when prices rose above RMB 50,000/mt. In general, deals last week were mainly made among traders.
SHFE 1310 aluminum contract prices hovered near RMB 14,200/mt early last week and rose on Thursday, but still failed to break through RMB 14,400/mt, with the biggest gain at a mere 1% during last week. Prices for the most active SHFE aluminum contracts are still downward pressure for the near future.
Traders were anxious to sell, but downstream producers showed low buying interest due to higher temperatures, leaving spot aluminum prices stagnant at RMB 14,320-14,370/mt early last week and with the low-end price hitting the lowest level in more than three years. Later in the week, spot aluminum prices followed rising SHFE aluminum prices, but only rose as high as RMB 14,400/mt. Trading was light.
In the coming week, LME aluminum prices will be soft at USD 1,800/mt, with prices for the most active SHFE aluminum contracts also struggling at RMB 14,300/mt. Spot aluminum prices will meet growing resistance at RMB 14,400/mt, with spot discounts of RMB 30/mt expected over SHFE 1308 aluminum contract prices once SHFE 1308 aluminum contracts become the new current-month contract.
The most active SHFE 1309 lead contract price also opened higher last Thursday near the 10-day moving average, after hovering between RMB 13,820-13,900/mt earlier in the week. SHFE lead prices will unlikely change significantly this week, but will instead move around RMB 13,850-14,000/mt.
Spot lead prices in China remained between RMB 13,650-13,730/mt for the first three days of last week, with discounts of RMB 150/mt against the most active SHFE lead contract prices. Spot prices later rose by RMB 30-50/mt, to RMB 13,690-13,760/mt, as futures prices moved higher. Lead smelters reported limited finished product inventories, but downstream consumers bought goods only as needed. With the approach of the delivery date, price gap between futures and spot prices should narrow to RMB 100/mt this week, with spot lead prices in
Prices for SHFE 1310 zinc, the most actively traded contract, halted declines and rebounded last week. The contract moved below the 10-day moving averages early last week, but disappointing CPI, PPI and trade data from
Spot tin prices in
Domestic nickel spot prices appeared resistant to price declines even after LME nickel prices fell, but still lacked upward momentum. Losses for imports narrowed last week, and market players say that large amounts of nickel from
In this coming week, LME nickel prices are expected to be between USD 13,200-14,000/mt.