SMM Base Metals Market Daily Review (2013-10-16)

SHANGHAI, Oct. 17 (SMM)--

Copper:
Copper for delivery in January on the Shanghai Futures Exchange (SHFE), opened RMB 20/mt higher at RMB 52,200/mt on Wednesday. The contract then fell back after hitting a high of RMB 52,470/mt given a 2.2% decline in the Shanghai Composite Index, and stayed below the daily moving average in the afternoon session. Finally, SHFE 1401 copper contract closed the day out at RMB 52,220/mt, up RMB 40/mt or 0.08%. Trading volumes and positions increased by 98,194 lots and 4,054 lots, respectively. Support at the daily moving average is to be tested repeatedly.
 
Spot copper in Shanghai was quoted at a contango of RMB 0-20/mt and a backwardation of RMB 0-140/mt over SHFE 1311 copper contract in the morning. Traded prices were RMB 52,350-52,500/mt for standard-quality copper, and RMB 52,430-52,580/mt for high-quality copper. Cargo holders raised offers now that SHFE 1311 copper contracts have shifted to the new current-month contracts, but higher prices deterred buyers from buying. Low buying interest and ample supply compelled suppliers to cut offers, with standard-quality copper quoted at a contango near mid-day. Traders went bargain hunting, while downstream producers purchased only as needed. In the afternoon, spot copper was offered between a contango of RMB 0-20/mt and a backwardation of RMB 0-100/mt, with traded prices down slightly to RMB 52,300-52,450/mt. Spot market remained under oversupply pressure.
      
Aluminum:
Falling SHFE 1311 aluminum contracts and LME aluminum caused SHFE 1312 aluminum contract, the most active one, to slide to an intraday low of RMB 14,295/mt after opening at RMB 14,350/mt on Wednesday. The light metal crept higher in the afternoon session, but still ended lower at RMB 14,315/mt, down for three days in a row. Trading volumes of December aluminum on the SHFE shrank 1,522 lots to 4,166 lots, and positions also contracted 722 lots to 65,554 lots. Trading volumes and positions of SHFE 1401 aluminum contracts were 6,762 lots and 57,128 lots, respectively. As such, SHFE aluminum for January delivery may shift to the most active contract soon.
SHFE 1311 aluminum contracts, the new current-month contracts, dipped to RMB 14,365/mt before noon on Wednesday. Mainstream traded prices for spot aluminum in Shanghai dropped RMB 60-90/mt to RMB 14,430-14,440/mt, a premium of RMB 50-70/mt over SHFE 1311 aluminum contracts. Prices were RMB 14,410-14,420/mt in Wuxi, and RMB 14,420-14,440/mt in Hangzhou. Downstream producers were little interested in purchasing, depressing overall trading. In the afternoon, SHFE 1311 aluminum contract climbed by RMB 15/mt to RMB 14,445/mt, but spot aluminum prices remained little changed, with thin trading reported.
 
Zinc:
SHFE 1401 zinc contract prices opened low at RMB 14,960/mt, and then hovered around the 5-day moving average, but dipping to a daily low of RMB 14,865/mt, though finding support at the 10-day moving average later the day. Finally, SHFE 1401 zinc contract prices closed at RMB 14,935/mt, down RMB 40/mt or 0.27%. Trading volumes decreased by 2,260 lots, to 47,596 lots, and total positions decreased by 6,144 lots, to 139,420 lots. The Shanghai Composite Index tumbled 1.81%, depressing market optimism and keeping investors cautious.
#0 zinc prices were between RMB 15,030-15,090/mt, with spot premiums of RMB 110-160/mt against SHFE 1401 zinc contract prices. #1 zinc prices were around RMB 15,000/mt, and spot premiums of Belgium #0 zinc were around RMB 30/mt against SHFE 1401 zinc contract prices. SHFE 1401 zinc contract prices weakened, but cargo holders were holding prices firm, pushing up spot premiums by RMB 10/mt. Smelters did not have high inventory pressure and were unwilling to sell goods in large amounts. Downstream buying interest decreased as spot prices remained above RMB 15,000/mt, leaving trading muted. Yuguang and Shuangyan branded #0 zinc prices were around RMB 15,080/mt, and other zinc ingot was traded between RMB 15,030-15,060/mt.

Lead:
The most active SHFE lead contract price rose to RMB 14,285/mt after opening at RMB 14,220/mt on Wednesday, but was dragged down to RMB 14,250/mt in morning trading session by falls in LME lead and the Shanghai Composite Index. The SHFE lead for December delivery dropped further to RMB 14,190/mt in the afternoon before closing at RMB 14,220/mt, up RMB 5/mt from Tuesday. Traded volumes added 616 lots to 1,202 lots, and positions were up 260 lots to 9,280 lots. Selling pressure increased.
 
Spot lead prices in Shanghai remained little changed from the previous trading day. Prices for Jinsha, Chengyuan, and Shuikoushan were between RMB 14,110-14,120/mt, with a contango of RMB 130/mt against the most active SHFE lead contract price. Humon was traded at RMB 14,050/mt. Supply for branded lead increased, but low-priced goods available in the market were limited. Buying interest remained weak, leaving poor transactions.
  
Tin:
In Shanghai tin market, spot prices kept falling Wednesday due to the retreat in LME tin. Mainstream traded prices were between RMB 148,800-152,000/mt in the morning. Prices for resources of Yunnan Tin Group held up high, while other brands were between RMB 148,800-150,000/mt. In the afternoon, the sagging trade sent quotations to a low of RMB 148,500/mt, but most cargo holders said no transactions were done.

Nickel:
In Shanghai, SMM prices were between RMB 97,000-98,000/mt. As LME nickel prices dropped in the afternoon, spot prices were between RMB 96,800-97,800/mt, with transactions mainly made among traders. Downstream buying interest was low, keeping transactions muted.