SMM Base Metals Daily Review (2013-8-6)

Copper

SHFE 1311 copper contract opened RMB 50/mt lower at RMB 50,080/mt on Tuesday. The most active contract fluctuated in a RMB 49,900-50,200/mt price band in the morning session, with the low-end price at RMB 49,880/mt. In the afternoon session, SHFE copper for November delivery hit an intraday high of RMB 50,220/mt before closing at RMB 50,180/mt, up RMB 50/mt or 0.1%. Trading volumes and positions were off 57,976 lots and 8,998 lots, respectively. 

 

Spot copper in Shanghai was quoted at a premium of RMB 80-350/mt over SHFE 1308 copper contract prices on Tuesday. Traded prices were RMB 50,700-50,820/mt for standard-quality copper, and RMB 50,900-51,100/mt for high-quality copper. Spot copper supply was plentiful, but middlemen and downstream producers were little interested in buying, forcing cargo holders to cut spot premium. The stabilizing SHFE copper in the afternoon prompted many sellers to move goods at high prices, with spot premiums narrowing to RMB 80-300/mt. Premiums for high-quality copper were around RMB 280/mt. Traded prices edged higher to RMB 50,750-51,050/mt. Spot premiums may fall further with the delivery date approaching. 

 

SHFE 1310 aluminum contract opened at RMB 14,245/mt on Tuesday. The most active contract slid to RMB 14,210/mt before bouncing back to RMB 14,240/mt. However, SHFE aluminum for October delivery still fell in the afternoon as shorts closed positions, and finally closed at RMB 14,235/mt, down RMB 20/mt or 0.14%. Trading volumes contracted 1,034 lots to 2,410 lots, and positions also decreased 448 lots to 59,002 lots. SHFE aluminum inventories were down 2,197 mt to 91,057 mt. SHFE aluminum will remain within tight price ranges as investors are cautious ahead of the release of China’s July CPI and PPI.

 

Traded prices for A00 aluminum ingot in Shanghai were RMB 14,240-14,250/mt. Low-iron aluminum was traded at RMB 14,280-14,300/mt. Cargo holders held prices flat at or slightly below SHFE current-month aluminum contract prices, but downstream producers showed no intention of buying. In the afternoon, spot market turned even quieter, with quotations reported at RMB 14,240-14,250/mt. 

 

On August 6, SHFE lead prices remained firm despite a pullback in LME lead prices, gaining 1.8% since last Wednesday. The most active SHFE lead contract price started Tuesday at RMB 13,910/mt and moved up to RMB 13,945/mt. However, prices then fell slightly due to a lack of upward momentum. In the afternoon, SHFE 1309 lead contract price stayed around RMB 13,930/mt before finally ending at RMB 13,940/mt, up RMB 20/mt. Traded volumes dropped 122 lots to 200 lots, while positions increased 56 lots to 2,178 lots. Total volume of SHFE lead warrants hovered at 100,000 mt recently, combined with tight supplies in spot market, domestic spot lead prices found evident support, and are expected to remain strong this week.

 

The resilient SHFE lead prices on Tuesday fueled bullish mood in lead market, with smelters more reluctant to sell goods. Most traders also purchased goods and refrained from selling. Downstream buyers purchased according to production needs, but supplies in spot market were tight. Traded prices for Chihong Zn & Ge were reportedly at RMB 13,880/mt, with discount of RMB 50/mt against the most active SHFE lead contract price. Hanjiang’s resources were quoted at RMB 13,830-13,840/mt. In the afternoon, lead market saw tighter supplies with more sellers shying away from selling.

 

SHFE 1311 zinc contract prices opened at RMB 14,590/mt and hovering around the 10 and 30-day moving average in the morning. China's A-shares rebounded to 2,050, boosting market sentiment, which pushed up SHFE zinc prices to RMB 14,600/mt, finally closing at RMB 14,595/mt, up RMB 5/mt or 0.03%. Trading volumes decreased by 11,530 lots, to 21,328 lots, and total positions decreased by 1,442 lots, to 134,000 lots.

 

#0 zinc prices were between RMB 14,730-14,760/mt, with spot premiums of RMB 150-180/mt against SHFE 1311 zinc contract prices. #1 zinc prices were around RMB 14,700/mt. SHFE zinc prices underwent corrections, and some smelters were unwilling to sell goods, traders lacked arbitrage opportunities, and downstream buyers purchased as needed, leaving transactions quiet. Discounts in Guangdong narrowed to RMB 180/mt against Shanghai as cargo holders hold onto goods. SHFE zinc prices edged up in the afternoon, and #0 zinc prices were between RMB 14,730-14,760/mt, with spot premiums narrowing to RMB 150-160/mt against SHFE 1311 zinc contract prices.

 

Mainstream traded prices for spot tin in Shanghai were mainly at RMB 140,000-141,000/mt on Tuesday, with trading muted. Some brands in Jiangxi were traded at RMB 140,000/mt. Smelters refused to sell at lower prices, leaving supplies limited. Downstream buying interest faded, with most purchasers watch on the sideline, awaiting clearer direction for LME tin prices.

 

In Shanghai, the market lacked guidance from economic news, and transactions were still muted and mainly made among traders. Jinchuan nickel prices were between RMB 98,300-98,500/mt, and Russian nickel prices were between RMB 97,200-97,300/mt. As LME nickel prices rose slightly in the morning, traders raised Jinchuan nickel prices to RMB 98,500/mt, and hiked Russian nickel prices to RMB 97,300/mt.