SMM Base Metals Daily Review (2013-10-24)

SHANGHAI, Oct. 25 (SMM) – 

Copper
The most active copper contract on the Shanghai Futures Exchange (SHFE) started RMB 490/mt lower at RMB 51,780/mt on Thursday, weighed down by falling LME copper overnight. The red metal was pushed higher by better-than-expected HSBC’s flash China manufacturing PMI, but still met resistance at RMB 51,870/mt. In the afternoon session, SHFE 1401 copper contract followed LME copper below the daily moving average to an intraday low of RMB 51,430/mt, dragged down by falling Shanghai Composite Index. SHFE copper for January delivery recovered some losses at the tail of the session due to short sellers closing positions, but still finished the day down RMB 540/mt or 1.03% at RMB 51,730/mt. Trading volumes and positions of SHFE 1401 copper contract were up 78,944 lots and 3,364 lots, respectively, while trading volumes and positions of SHFE 1402 copper contract also increased by 30,444 lots and 14,354 lots, respectively. 
 
Spot copper in Shanghai was quoted at a contango of RMB 0-140/mt over SHFE 1311 copper contract on Thursday. Traded prices were RMB 51,820-51,900/mt for standard-quality copper, and RMB 51,920-52,020/mt for high-quality copper. Upbeat HSBC’s flash China manufacturing PMI helped SHFE copper stop falling after a low opening. Contango narrowed only slightly due to ample supply. Traders and downstream producers became more interested in buying now that prices have fallen below RMB 52,000/mt. The rallying SHFE copper in the afternoon left contango for spot copper narrowing to RMB 10-80/mt, and traded prices were down to RMB 51,700-51,850/mt. Transactions continued to pick up.

Aluminum
December aluminum on the Shanghai Futures Exchange (SHFE), the most active one, slipped to RMB 14,340/mt after opening lower at RMB 14,355/mt on Thursday, dragged down by falling LME aluminum overnight. The light metal, however, bounced back to RMB 14,395/mt later in the day on positive HSBC’s flash China manufacturing PMI for October, which hit a 7-month high of 50.9. Finally, SHFE aluminum for January delivery closed at RMB 14,390/mt. Trading volumes contracted 4,644 lots to 4,164 lots, while positions grew 108 lots to 59,058 lots.

SHFE 1311 aluminum contract drifted higher to RMB 14,485/mt after a low opening on Thursday, boosted by upbeat HSBC’s flash China manufacturing PMI for October. Spot aluminum prices in Shanghai slid to RMB 14,470-14,490/mt as arrivals grew slightly, a discount of RMB 0-20/mt over SHFE current-month aluminum contract. Prices were RMB 14,470-14,480/mt in Wuxi and Hangzhou. Demand from downstream producers picked up a little, while traders contributed most to today’s transactions. In the afternoon, suppliers remained eager to sell, but few buyers entered the market, with traded prices little changed. 

Lead
SHFE 1312 lead contract prices opened RMB 65/mt lower at RMB 14,400/mt and dip as low as RMB 14,330/mt Thursday. Later, the positive HSBC’s China manufacturing PMI failed to offer strong impetus to the market, with SHFE lead falling back to RMB 14,360/mt after a brief touch to RMB 14,400/mt. The most active SHFE lead contract rose marginally to end at RMB 14,390/mt helped by some buying support, down RMB 40/mt. Trading volumes contracted by 562 lots to 680 lots, and positions shed by 98 lots to 10,484 lots. 
 
Spot lead in Shanghai followed SHFE lead down on Thursday. Goods of Jinsha and Chengyuan both were traded at RMB 14,270/mt, a discount of RMB 130/mt over the most active SHFE lead contact. Traded prices were RMB 14,230-14,250/mt for Hanjiang, Mengzi, Dongling and Shuangyan, and RMB 14,160-14,180/mt for Humon. Cargo holders remained eager to sell, but downstream producers largely stayed on the sidelines, leaving trading depressed.   

Zinc
SHFE 1401 zinc contract prices opened at RMB 15,000/mt as LME zinc prices overnight plunged by 1.86%, and then dipped to RMB 14,930/mt. HSBC’s October PMI for China was better than the flash data and September’s, but as the market had absorbed the news, SHFE zinc prices lacked ability to rise, hovering around the RMB 15,000/mt, and closing at RMB 15,015/mt, down RMB 25/mt. Trading volumes decreased by 21,892 lots, to 40,124 lots, and total positions decreased by 5,336 lots, to 132,000 lots.
 
#0 zinc prices were between RMB 15,080-15,130/mt, with spot premiums expanding to RMB 80-120/mt against SHFE 1401 zinc contract prices. #1 zinc prices were between RMB 15,000-15,020/mt, but transactions were muted. SHFE 1401 zinc contract prices opened low as LME zinc prices overnight plummeted by 1%. Despite HSBC’s October PMI was better than both the flash data and September’s, SHFE zinc prices lacked impetus to rise as the market had absorbed the news, hovering around RMB 15,000/mt. Smelters increased supply, while traders took a wait-and-see attitude, and downstream buyers watched on the sidelines, leaving trading muted.

Tin
Spot tin prices in Shanghai moved down to RMB 146,700-150,500/mt Thursday influenced by the falling LME tin prices overnight. A few resources were traded at RMB 146,500/mt. Major smelters lowered quotations, but transactions remained weak.

Nickel
In Shanghai, Jinchuan lowered nickel prices by RMB 2,300/mt, to RMB 100,200/mt. SMM #1 nickel prices were between RMB 99,100-100,100/mt, with transactions quiet. Downstream buyers purchased on an as-needed basis, and transactions were mainly made among traders. As LME nickel prices rebounded, #1 nickel prices rose to RMB 99,300-100,300/mt.