SHFE 1311 copper contract started RMB 50/mt lower at RMB 49,900/mt on Tuesday. The most active contract sank to RMB 49,720/mt in the morning session, but then advanced above the daily moving average due to dip-buying. SHFE copper for November delivery rose further to an intraday high of RMB 50,280/mt at the tail of the session due to position liquidation before closing at RMB 50,250/mt, up RMB 300/mt or 0.6%. Trading volumes contracted 110,000 lots, but positions added 3,842 lots. SHFE 1311 copper contract has found support at RMB 49,700/mt, but resistance at the 30-day moving average remains strong.

 

Spot copper in Shanghai was offered at a premium of RMB 100-230/mt over SHFE 1308 copper contract prices on Tuesday. Traded prices for standard-quality copper were between RMB 50,420-50,620/mt, and RMB 50,500-50,780/mt for high-quality copper. Cargo holders hiked spot premium now that SHFE 1308 copper contracts have become the new current-month contract. Speculators were hunting for lower-priced high-quality copper early in the morning. Downstream producers shied away from higher prices after copper prices rose by almost RMB 300/mt in the second trading session. Speculators will continue to contribute most to trading since July is an off-season for copper consumption. Cargo holders were more reluctant to sell at low prices in the afternoon as SHFE copper further strengthened, and premiums for spot copper were between RMB 80-200/mt. Traded prices in spot markets rose to RMB 50,600-50,800/mt. Some speculators continued to purchase, but most downstream consumers only waited on the sidelines. 

 

SHFE 1310 aluminum contract opened lower at RMB 14,315/mt on Tuesday. The most active contract sank to RMB 14,270/mt in the morning session, but then rebounded due to short-covering. Finally, SHFE three-month aluminum contract lost RMB 15/mt or 0.10% to close at RMB 14,340/mt, down for a fourth straight trading day. Positions fell 9,150 lots to 188,268 lots, and trading volumes also contracted 4,712 lots to 17,932 lots. SHFE aluminum for October delivery is expected to test support at RMB 14,300/mt for the near term.

 

Mainstream traded prices for spot aluminum in Shanghai were RMB 14,290-14,310/mt, RMB 20-30/mt lower than SHFE 1308 aluminum contract prices. Low-iron aluminum was traded around RMB 14,450/mt. SHFE 1308 aluminum contract, the new current-month contract, drifted lower after a low opening, dragging spot aluminum below RMB 14,290/mt, a new low for the year. Later, SHFE 1310 aluminum contract rebounded, stoking buying interest among downstream producers and middlemen. This allowed traders to hold prices firm at RMB 14,300/mt or above. In the afternoon, wait-and-see sentiment permeated the market, with few deals completed.   

 

On Tuesday, SHFE lead did not open until two minutes before the closing of morning trading hours. The most active SHFE lead contract price started at RMB 13,880/mt with resistance at the 5-day moving average. In the afternoon, trading volumes was quite limited, weighing on lead prices, with price hitting an intraday low of RMB 13,875/mt before finally closing at RMB 13,890/mt. Trading volumes fell 54 lots to 12 lots, positions remained unchanged at 2,500 lots. Sources from SHFE told SMM that SHFE is planning to adjust the amount of contract from 25 mt/lot to 5mt/lot, but the timing of the adjustment will be subject to approval of the China Securities Regulatory Commission. SMM will watch closely on further developments.

 

Spot lead prices in China remained little changed. Limited supplies caused Chihong Zn & Ge to hold quotes high at RMB 13,780/mt. Tongguan was quoted at RMB 13,760/mt, and Mengzi and Hanjiang were offered RMB 13,700-13,710/mt. Hengbang’s goods were quoted at RMB 13,640-13,650/mt, but transactions were rarely made. Investors were cautious before the testimony of Ben Bernanke, with smelters supplying normally and smelters purchasing as needed. 

 

LME zinc prices overnight closed the day with declines, and SHFE 1310 zinc contract prices opened slightly lower at RMB 14,680/mt. SHFE zinc prices surged before falling back to RMB 14,660/mt as a large number of shorts entered the market, but edged up during the second session due to rising LME zinc prices and A-shares, moving between RMB 14,670-14,690/mt. Due to news that related high-speed railway investment document was submitted and is expected to be approved soon, SHFE zinc prices were pushed up to RMB 14730/mt, and finally closed at RMB 14725/mt, up RMB 30/mt, up 0.2%. Trading volumes decreased by 5,484 lots, to 27,710 lots, and total positions decreased by 2,268 lots, to 148,788 lots.

 

#0 zinc prices were between RMB 14,730-14,770/mt, with spot premiums of RMB 70-100/mt against SHFE 1310 zinc contract prices. #1 zinc prices were between RMB 14,710-14,720/mt, with imported #0 zinc prices firm around RMB 14,750/mt. Smelters continued to sell goods, and spot premiums expanded, with some arbitragers releasing goods. More downstream enterprises conducted maintenance, with demand for zinc shrinking, and leaving transactions muted. SHFE zinc prices edged up in the afternoon, and #0 zinc prices were between RMB 14,750-14,770/mt, with spot premiums of RMB 70-80/mt against SHFE 1310 zinc contract prices.

Shanghai spot tin markets remained stable Tuesday, with mainstream traded prices at RMB 137,000-138,000/mt in the morning trading session. Some goods from Nanshan were traded at RMB 136,800/mt. In the afternoon, a few goods were quoted lower at RMB 136,500/mt, but inquiries were still sparse, and traded prices edged lower to RMB 136,800-138,000/mt. Low tin prices and high input costs, combined with stricter environmental protection crackdown in some regions caused smelters to cut production, and the limited supplies helped limit decline in prices. However, as consumption remained sluggish, spot prices may fall further if LME tin stays weak.

 

In Shanghai, Jinchuan nickel prices were between RMB 96,100-96,300/mt, and Russian nickel prices were between RMB 95,100-95,300/mt. Jinchuan nickel lowered nickel prices further by RMB 1,000/mt, to RMB 96,500/mt. Downstream buying interest was low, but arbitragers were active due to arbitrage opportunities. Transactions of South African nickel and Russian nickel were more brisk than Jinchuan nickel, with South African nickel prices RMB 400/mt below Russian nickel. After Jinchuan nickel adjusted prices, some traders began to hold onto their goods as spot prices in Shanghai were lower than ex-works prices.