SMM Base Metals Market Daily Review (2013-10-10)

Copper for delivery in January on the Shanghai Futures Exchange (SHFE), gapped RMB 520/mt lower at RMB 51,350/mt on Thursday, weighted down by falling LME copper. The contract fluctuated in a narrow range between RMB 51,300-51,500/mt for most of the session, with day’s high and low of RMB 51,260/mt and RMB 51,540/mt, respectively. Selling pressure at highs prevented the SHFE copper from rising. Finally, SHFE 1401 copper contract price finished RMB 460/mt or 0.89% lower at RMB 51,410/mt. Trading volumes plummeted by 108,000 lots, while positions soared by 17,498 lots. The SHFE copper for January delivery is expected to test support at the 60-day moving average. 

 

Spot copper in Shanghai was quoted at a contango of RMB 0-80/mt and a backwardation of RMB 0-100/mt over SHFE 1310 copper contract on Thursday. Traded prices were RMB 51,820-51,880/mt for standard-quality copper, and RMB 51,930-52,050/mt for high-quality copper. Spot copper suppliers held offers flat with previous two days. As the SHFE/LME copper price ratio rose further, favorable for copper imports, holders of imported standard-quality copper cut offers. Prices for hydro-copper increased due to limited supply, allowing its price gap with standard-quality copper to narrow. Downstream producers built up stocks in small amounts, leaving transactions unimproved. In the afternoon, quotes for spot copper remained little changed, but traded prices dropped marginally to RMB 51,800-52,000/mt. Deals were rarely reported, as traders also stayed on the sidelines.

 

December aluminum on the Shanghai Futures Exchange (SHFE), the most active one, opened at RMB 14,360/mt on Thursday. The contract nudged up to RMB 14,395/mt before immediately falling back below the daily moving average, with a session low of RMB 14,335/mt. The light metal rose slightly at the tail of the trading on buying at lows before closing the day at RMB 14,360/mt. Trading volumes dropped 1,606 lots to 5,698 lots, and positions also contracted 424 lots to 69,446 lots.

 

Spot aluminum in Shanghai was at a backwardation of RMB 0-10/mt over SHFE 1310 aluminum contract. Mainstream traded prices in Shanghai were RMB 14,590-14,600/mt, RMB 14,590-14,610/mt in Wuxi, and RMB 14,600-14,610/mt in Hangzhou. Purchases by traders were limited, while downstream producers opted not to enter the market until SHFE 1310 aluminum contracts are delivered. In the afternoon, consumption remained sluggish and some cut offers to RMB 14,580/mt.    

 

The most active SHFE lead contract price started lower at RMB 14,050/mt Thursday under the influence of falling LME lead overnight, and moved up to RMB 14,080-14,110/mt in the morning trading session. The price rose to RMB 14,125/mt at midday and hit a high of RMB 14,160/mt due to stronger buying support at the tail of trading before ending the day at RMB 14,145/mt, up RMB 50/mt. Trading volumes increased by 216 lots to 636 lots, while positions were up 116 lots to 8,520 lots. The approach of delivery date and falling backwardation for spot lead prompted some cargo holders to switch to the most active SHFE lead contract, with the contract staging the biggest gain among all contracts. 

 

Spot market was feeble, and goods of Jinsha were traded at RMB 14,050-14,060/mt, with a contango of RMB 50/mt against the most active SHFE lead contract price. Chengyuan was quoted at a backwardation of RMB 50/mt over SHFE 1310 lead contract price, but deals were seldom made. Hanjiang and Mengzi were traded at RMB 14,010/mt, while traded price for Humon was RMB 13,970/mt. Smelters reported rising finished goods stocks following the Chinese National Day holiday. Most smelters increased supplies as they felt the need to generate cash so as to stockpile raw materials. Downstream buyers continued to stay on the sidelines, leaving transactions muted.

 

SHFE 1401 zinc contract prices opened at RMB 14,750/mt, and then edge up to RMB 14790/mt. Boosted by rising LME zinc prices, SHFE zinc prices extended their gains and broke through the 5, 10, 20 and 60-day moving average, and closing at RMB 14,845/mt, up RMB 60/mt. Trading volumes increased by 4,964 lots, to 36,180 lots, and total positions increased by 13,002 lots, to 128,000 lots.

 

#0 zinc prices were between RMB 14,930-14,960/mt, with spot premiums of RMB 150-170/mt against SHFE 1401 zinc contract prices. #1 zinc prices were between RMB 14,890-14,910/mt, with supply tight. Imported #0 zinc prices were between RMB 14,860-14,870/mt. SHFE zinc prices leveled out, and spot zinc transportation recovered as heavy rains in Jiangsu, Zhejiang and Shanghai ended, with some downstream buyers purchasing on an as-needed basis. Cargo holders moved goods reasonably, with transactions improving.

 

Spot tin prices in Shanghai fell to RMB 150,700-154,000/mt on Thursday, as supply of cheap resources increased. Trading remained light. Some tin smelters cut quotations, but most of them still refused to lower offers, limiting the downward room for spot tin.

 

In Shanghai, Jinchuan nickel lowered nickel prices by RMB 1,200/mt, to RMB 97,300/mt. SMM #1 nickel prices were RMB 96,200-97,300/mt. As prices inched down in the afternoon, traders lowered prices, with Jinchuan nickel prices between RMB 97,000-97,100/mt was brisk, and Russian nickel prices between RMB 96,100-96,200/mt.