SMM Base Metals Market Daily Review (2013-10-11)

SHANGHAI, Oct. 12 (SMM) –

Copper for delivery in January on the Shanghai Futures Exchange (SHFE), opened RMB 190/mt higher at RMB 51,600/mt on Friday, shored up by LME copper reversing losses overnight. This was followed by failed attempts to break through RMB 51,890/mt, with the most active SHFE copper contract price falling back to RMB 51,500/mt towards mid-day due to selloff at highs and investors taking profits. In the afternoon trading session, the Shanghai Composite Index rebounded by 1.7%, driving the red metal up, but resistance at the daily moving average remained strong. Finally, SHFE 1401 copper contract ended the day RMB 240/mt or 0.47% higher at RMB 51,650/mt. Trading volumes grew by 6,786 lots, but positions dropped by 678 lots. SHFE copper for January delivery showed a tendency to trend up. 

 

Spot copper in Shanghai was quoted at a contango of RMB 0-50/mt and a backwardation of RMB 0-100/mt over SHFE 1310 copper contract on Friday. Traded prices were RMB 52,000-52,200/mt for standard-quality copper, and RMB 52,100-52,350/mt for high-quality copper. Although goods on the market still consisted primarily of imported standard-quality copper, contango of standard-quality copper narrowed some. Cargo holders became anxious to sell after SHFE copper prices fell back near noon, preventing backwardation from rising. Traders favored high-quality copper, and some downstream producers also entered the market, improving trading slightly. In the afternoon, both quotes and traded prices for spot copper remained little changed. SHFE copper stocks increased by 10,461 mt to 161,585 mt during the week past. A large amount of imports arrived at ports, but buying interest downstream and goods delivery were negatively affected by the typhoon.

December aluminum on the Shanghai Futures Exchange (SHFE), the most active one, rose all the way up to a one-month high of RMB 14,480/mt after opening at RMB 14,370/mt on Friday. Gains were driven by rising LME aluminum and SHFE 1310 aluminum contracts. The light metal stayed above the daily moving average throughput the session before closing the day at RMB 14,465/mt, adding RMB 95/mt or 0.73%. Trading volumes increased 3,714 lots to 9,412 lots, but positions shrank 1,396 lots to 68,050 lots.

 

Mainstream traded prices for spot aluminum in Shanghai were RMB 14,610-14,630/mt on Friday, RMB 14,620-14,640/mt in Wuxi, and RMB 14,630-14,640/mt in Hangzhou. Downstream producers stayed out of the market as the price gap between SHFE 1310 and 1311 aluminum contracts expanded to RMB 120/mt and as delivery of SHFE current-month aluminum contracts is approaching. In the afternoon, suppliers held offers at RMB 14,630/mt, but trading was subdued.     

 

SHFE lead prices, boosted by the report on a rise of US debt limit for six weeks, rallied to RMB 14,180/mt after starting at RMB 14,140/mt Friday. Despite a slight decline to RMB 14,130/mt later in the day, the most active SHFE lead contract price regained the losses to close out the week at RMB 14,145/mt helped by increasing dip-buying. The prices stood above the 5-day moving average and tended to test resistance at the 20-day moving average. Traded volumes for the most active SHFE lead contracts increased by 596 lots to 1,232 lots, and positions grew 272 lots to 8,792 lots. The growth in trading and positions, as well as stronger buying support indicated rising bullish mood in the market. 

 

In Shanghai spot lead market, goods of Chihong Zn & Ge and Nanfang were quoted at RMB 14,060-14,070/mt on October 11, with contango of RMB 80-90/mt against the most active SHFE lead contract price. Shuikoushan was offered flat with SHFE 1311 lead contract price, while Chengyuan was quoted at a premium of RMB 40/mt over SHFE 1310 lead contract price. Prices for Qinyuan and Hanjiang were RMB 14,020/mt, and Humon was traded at RMB 13,990/mt. Cargo holders moved goods aggressively, driving up supplies in spot markets, but downstream purchases did not increase along with higher prices, leaving trading poor. In the afternoon, consumption improved but traded prices fell RMB 10-20/mt from morning session

 

Market optimism increased as an agreement on the debt ceiling issue is expected to be reached, pushing up Asian stocks and zinc prices to close with gains for four consecutive days. SHFE 1401 zinc contract prices opened at RMB 14,865/mt, and then edge up to RMB 14,930-14,950/mt. At noon, SHFE zinc prices fell briefly, but found strong support at the 30-day moving average, gaining back some losses and hovering around moving averages in the afternoon, and closing at RMB 14,945/mt, up RMB 100/mt. Trading volumes increased by 37,974 lots, to 74,154 lots, and total positions increased by 16,652 lots, to 145,000 lots.

 

#0 zinc prices were between RMB 15,050-15,080/mt, with spot premiums of RMB 100-130/mt against SHFE 1401 zinc contract prices. As SHFE inched down, #0 zinc prices fell to RMB 15,030-15,060/mt, with #1 zinc supply increasing, and prices between RMB 14,970-15,000/mt. Imported #0 zinc prices were between RMB 14,980-15,030/mt. SHFE zinc prices opened high and moved higher, and spot zinc prices rose by RMB 100/mt. Cargo holders moved goods at higher prices, while downstream buying interest was undermined, leaving transactions muted. 

 

Shanghai spot tin market remained stable on October 11, with mainstream traded prices between RMB 150,700-153,500/mt. Supply of low-priced goods were ample, while resources of Yunnan Tin Group were limited. The weak demand left quiet trading. As LME tin prices continued to consolidate, most market players in spot tin market were waiting for further guide from LME tin. Major tin smelters held quotations high, helping bolster spot prices.   

 

In Shanghai, SMM #1 nickel prices were RMB 96,500-97,500/mt, with the price spread between Jinchuan and Russian nickel around RMB 1,000/mt. Traders quoted within SMM price range. Sales for long-term contracts of Jinchuan nickel were brisk, and transactions were actively made among traders at lower prices, but muted at highs.