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SMM Base Metals Daily Review (2013-7-26)
Jul 29,2013 11:37CST
price review forecast
SHFE 1311 copper contract opened RMB 180/mt higher at RMB 50,580/mt on Friday.

SHANGHAI, Jul. 29 (SMM) –

SHFE 1311 copper contract opened RMB 180/mt higher at RMB 50,580/mt on Friday as LME copper rose overnight on a falling US dollar. The most active contract hovered around RMB 50,500/mt in the morning session, but tumbled to RMB 49,880/mt in the afternoon as LME copper plunged at 2 p.m. SHFE copper for November delivery ended the day down RMB 360/m or 0.71% at RMB 50,040/mt. Trading volumes and positions increased by 63,400 lots and 13,682 lots, respectively. SHFE 1311 copper contract will meet resistance at the 6-day moving average and find support at the 30-day moving average ahead of next week’s Fed meeting.
Spot copper in Shanghai was quoted at a premium of RMB 50-280/mt over SHFE 1308 copper contract prices on Friday. Traded prices for standard-quality copper were between RMB 50,880-51,000/mt, and RMB 51,000-51,200/mt for high-quality copper. SHFE 1311 copper contract moved lower after a high opening, leaving spot copper suppliers in a hurry to sell for cash. Ample supply pushed spot premium down. Prices of Guixi brand copper, however, remained firm due to short supply. Holders of imported standard-quality copper also actively cut offers. Middlemen and downstream producers stayed out of the market, depressing overall trading. In the afternoon, premiums remained unimproved, and traded prices in spot markets fell to RMB 50,650-51,050/mt. SHFE copper inventories fell 5,862 mt to 161,564 mt last week.
SHFE 1310 aluminum contract opened slightly higher at RMB 14,400/mt last Friday, but immediately fell back to RMB 14,370/mt. The most active contract dipped further at the tail of the session due to falling copper prices, and closed at RMB 14,360/mt, down RMB 30/mt or 0.21%. Positions decreased by 382 lots to 64,538 lots, and trading volumes also shrank 2,220 lots to 2,584 lots. SHFE three-month aluminum contract is expected to continue to hover around at RMB 14,350/mt in the coming week. SHFE aluminum inventories decreased 11,916 mt to 365,742 mt.

Mainstream traded prices for spot aluminum in Shanghai were RMB 14,340-14,350/mt, RMB 10-30/mt lower than SHFE 1308 aluminum contract prices. Low-iron aluminum was traded around RMB 14,510/mt. Falling SHFE aluminum prices turned market players in spot market bearish. Cargo holders were anxious to sell as the end-of-month liquidity crunch bit in, but downstream producers showed little interest, sending the high-end traded price down to RMB 14,350/mt. In the afternoon, a few traders held offers at RMB 14,330/mt, but this failed to stoke buying interest. 

SHFE 1309 lead contract price opened at RMB 13,855/mt on Friday and hovered at the level in the morning trading session due to a lack of important reports. In the afternoon, as LME lead prices fell nearly USD 10/mt and some investors liquidated positions, SHFE lead prices dropped to RMB 13,840/mt and closed at RMB 13,845/mt, down RMB 20/mt from Thursday. Traded volumes fell 44 lots to 78 lots, while positions fell 16 lots to 2,532 lots. SHFE lead will be largely influenced by a series of risky events and show larger swings next week.
Cargo holders in China’s spot lead markets held prices firm on Friday as supply remained tight. Quotes for Chihong Zn & Ge were reported at RMB 13,810/mt, with traded prices at around RMB 13,800/mt, but transactions were limited. Warrants for Yubei Gold & Lead were offered at RMB 13,780/mt, flat at SHFE 1308 lead contract price. Mengzi and Hanjiang were quoted at RMB 13,750-13,760/mt. Trading volumes were lower than Thursday. 
SHFE 1310 zinc contract prices opened slight lower at RMB 14,650/mt, and then hovered around the 10-day moving average. LME zinc prices continued to weaken, which distressed market sentiment. As a large number of longs closed positions in the afternoon, SHFE zinc prices inched down, finding support at RMB 14,600/mt, and closing at RMB 14,605/mt, down RMB 60/mt or 0.41%. Trading volumes of SHFE 1310 zinc contract decreased by 7,968 lots, to 12,876 lots, and total positions decreased by 3,966 lots, to 115,566 lots. Total trading volumes of SHFE 1311 zinc contract decreased by 3,364 lots, to 36,182 lots, and total positions increased by 786 lots, to 104,162 lots. SHFE 1311 zinc contract became more actively traded.

#0 zinc prices were between RMB 14,740-14,770/mt, with spot premiums of RMB 90-120/mt against SHFE 1310 zinc contract prices. #1 zinc prices were between RMB 14,710-14,730/mt. As SHFE zinc prices edged up in the morning, spot premiums expanded. Smelters were actively moving goods, but spot supply tightness allowed cargo holders to hold prices firm. Traders stood on the sidelines due to month-end factor, purchasing at lower prices, and downstream buyers purchased modestly ahead of the weekend. Transactions did not improve. SHFE zinc prices fell in the afternoon, and #0 zinc prices were between RMB 14,730-14,740/mt, with spot premiums of RMB 120-130/mt against SHFE 1310 zinc contract prices.

Mainstream traded prices in Shanghai tin market fell to RMB 135,000-137,000/mt last Friday, with non-leading brands traded at RMB 135,000-135,500/mt. Resources from Yunnan Tin Group were sold at RMB 137,000/mt. Transactions were still limited. 

In Shanghai, Jinchuan nickel prices were around USD 99,600/mt, and Russian nickel prices were around RMB 98,400/mt. Downstream buyers lacked interest to purchase, with transactions mainly made among traders.

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