SMM Base Metals Market Daily Review (2013-7-24)

SHANGHAI, Jul. 25 (SMM)--

Copper:
SHFE 1311 copper contract opened RMB 120/mt higher at RMB 50,560/mt on Wednesday. The most active contract climbed to RMB 50,670/mt after its opening, but slumped to RMB 50,150/mt in the afternoon due to disappointing HSBC's flash China manufacturing PMI for July, falling LME copper prices and plunging A-shares. SHFE copper for November delivery did reverse losses at the tail of the session as short sellers closed positions, and closed at RMB 50,530/mt, up RMB 90/mt or 0.18%. Trading volumes increased by 80,684 lots, but positions decreased by 11,212 lots. 
 
Spot copper in Shanghai was quoted at a premium of RMB 150-370/mt over SHFE 1308 copper contract prices on Wednesday. Traded prices for standard-quality copper were between RMB 50,850-51,000/mt, and RMB 51,050-51,250/mt for high-quality copper. HSBC flash China manufacturing PMI for July continued to drop, causing SHFE 1311 copper contract to fall back after a high opening. Middlemen began to sell goods at hand. Cargo holders cut spot premium. Downstream producers also refrained from buying against volatile copper prices. In the afternoon, premiums for spot copper were mainly at RMB 130-350/mt, but transactions were still limited, with traded prices at RMB 50,850-51,300/mt. Quotations vary from brand to brand, and this situation is expected to last through next week.
 
Aluminum:
SHFE 1310 aluminum contract opened slightly higher at RMB 14,415/mt on Wednesday. Disappointing HSBC's flash China manufacturing PMI for July dragged the most active contract down to RMB 14,360/mt. SHFE aluminum for October delivery recovered some earlier losses at the tail of the session before closing at RMB 14,380/mt, down RMB 20/mt or 0.14%. Positions decreased by 130 lots to 64,700 lots. Downbeat Chinese economic indicators have raised anticipation that the central government may roll out economic stimulus, driving investors to the sidelines. SHFE three-month aluminum contract will hover near RMB 14,350/mt.

Mainstream traded prices for spot aluminum in Shanghai were RMB 14,360-14,370/mt on Wednesday, RMB 10-20/mt lower than SHFE 1308 aluminum contract prices. Low-iron aluminum was traded around RMB 14,530/mt. Flash China's July manufacturing PMI continued to fall, sending SHFE aluminum down. Cargo holders rushed to sell as the end-of-month liquidity crunch bit in, but downstream producers and middlemen stayed out of the market, pulling spot aluminum prices down to RMB 14,360/mt. Prices in Hangzhou also slid below RMB 14,400/mt. In the afternoon, wait-and-see sentiment permeated the market, with quotations reported at RMB 14,360/mt.
 
Lead:
SHFE 1309 lead contract price started Wednesday at RMB 13,865/mt. As Shanghai Composite Index fell 0.5% after the HSBC China manufacturing PMI for July was reported at an 11-month low, base metal dropped, with the most active SHFE lead contract price falling RMB 20/mt. However, as domestic shares stabilized in the afternoon, SHFE lead returned to the opening level and finally ended down RMB 15/mt at RMB 13,845/mt. Trading volumes increased 44 lots to 128 lots, while positions rose 18 lots to 2,568 lots.
 
In China's spot markets, lead prices were RMB 10-20/mt lower than Tuesday. Goods of Chihong Zn & Ge were quoted at RMB 13,770/mt, with discounts of RMB 80/mt against the most active SHFE 1309 lead contract price. Prices for Mengzi and YT were offered at RMB 13,750/mt, while Hanjiang was quoted at RMB 13,740/mt. Downstream buyers continued to purchase to order, while smelters held prices firm, with transactions improving slightly. Investors exited the market in the afternoon with SHFE lead stabilizing.
 
Zinc:
SHFE 1310 zinc contract prices opened slight higher at RMB 14,655/mt. HSBC's July manufacturing PMI for China deteriorated, triggering market concerns, which pulled down SHFE zinc prices to RMB 14,590/mt. The Ministry of Industry and Information Technology news spokesman expressed China plans to push policies helping enterprises impetus, easing market apprehension. China's A-shares edged up at noon, which boosted SHFE zinc prices to close at RMB 14,640/mt, up RMB 5/mt or 0.03%. Trading volumes of SHFE 1310 zinc contract decreased by 1,442 lots, to 17,730 lots, and total positions decreased by 3,168 lots, to 122,334 lots. Total trading volumes increased by 4,498 lots, to 58,658 lots, and total positions decreased by 3,264 lots, to 305,572 lots.

#0 zinc prices were between RMB 14,690-14,730/mt, with spot premiums of RMB 90-110/mt against SHFE 1310 zinc contract prices. #1 zinc prices were around RMB 14,670/mt. Due to disappointing HSBC's July PMI for China, SHFE zinc prices opened high but moved lower, distressing smelter willingness to sell goods. Traders sold goods at higher prices initially as zinc prices fluctuated at high levels, as prices fell and since spot premiums expanded, arbitrage traders released goods. But most traders were cautious, and downstream buyers also took a wait-and-see attitude, leaving transactions quiet. SHFE zinc prices edged up in the afternoon, and #0 zinc prices were between RMB 14,720-14,740/mt, with spot premiums of RMB 90-100/mt against SHFE 1310 zinc contract prices.
 
Tin:
On July 24, spot tin prices in Shanghai continued to fall with lowest traded prices at RMB 135,500/mt. Most of goods in the market are from Nanshan, Kaiyuan, and Weitai. Mainstream traded prices were RMB 135,500-137,500/mt. A few goods from Yunnan Tin Group are quoted at RMB 138,000/mt, while quotes for other brands were at RMB 135,500-137,000/mt. Trading remained relatively quiet. 

Nickel:
In Shanghai, #1 nickel prices were between RMB 98,100-99,200/mt in the morning, and were still concentrated in the range due to the disappointing HSBC's July PMI for China. As LME nickel prices rose in the afternoon, traders began to hold onto their goods, with Jinchuan nickel prices around RMB 99,400/mt, and Russian nickel prices around RMB 98,200/mt. Transactions were more brisk in the afternoon despite mainly made among traders.