SMM Base Metals Market Daily Review (2013-10-29)

 

SHFE 1401 copper contract price started RMB 10/mt lower at RMB 51,490/mt on Tuesday, as LME copper fell overnight. Massive selloff and falling Chinese A-share sent the red metal down to RMB 51,000/mt. SHFE 1401 copper contract, however, recouped earlier losses after short sellers closed positions, closing RMB 10/mt or 0.02% higher at RMB 51,510/mt. Trading volumes and positions were up 167,000 lots and 20,946 lots, respectively. SHFE copper for January delivery still faces downward pressure.   

 

Spot copper in Shanghai was quoted at a contango of RMB 0-120/mt over SHFE 1311 copper contract Tuesday morning. Traded prices were RMB 51,350-51,500/mt for standard-quality copper, and RMB 51,400-51,650/mt for high-quality copper. Spot copper suppliers remained anxious to sell at contango to generate cash. Traders of financial strength still favored cheap resources, while downstream producers, expecting copper prices to fall, refrained from entering the market. In the afternoon, standard-quality copper was rarely found, and price gap between high-quality and standard-quality copper narrowed. Spot copper was mainly quoted at a contango of RMB 30-140/mt over the SHFE 1311 copper contract, and traded prices remained unchanged. Most transactions were done between traders.

 

Sources indicated that the London Metal Exchange might change its warehousing rules, which will ease oversupply in aluminum market should this comes true. This pushed LME aluminum up on Monday. As a result, December aluminum on the Shanghai Futures Exchange (SHFE), the most active one, started higher at RMB 14,440/mt on Tuesday. The light metal hit a 2-month high of RMB 14,470/mt, though edging lower later in the day on selling at highs. Finally, SHFE 1401 aluminum contract ended the day up RMB 55/mt at RMB 14,460/mt. Trading volumes added 3,920 lots to 11,888 lots, while positions decreased 1,684 lots to 56,728 lots.

 

Cargo holders in Shanghai were eager to sell, but demand was soft, leaving spot aluminum there at RMB 14,510-14,520/mt. Trading was brisk in Wuxi, where prices held flat with Shanghai. Prices in Hangzhou were lower at RMB 14,490-14,500/mt due to growing supply and faltering consumption. In the afternoon, spot markets turned quiet. 

 

The most active SHFE 1312 lead contract prices fell to RMB 14,400/mt after starting higher at RMB 14,445/m on Tuesday, but closed at an intraday high of RMB 14,480/mt due to increasing buying support, up RMB 45/mt from Monday. Trading volumes added 86 lots, while positions expanded 136 lots to 11,518 lots.  

 

In China’s spot lead market, lead prices held steady. Goods of Jinsha, Nanfang and Chengyuan were traded at RMB 14,300/mt, a discount of around RMB 150/mt over the most active SHFE lead prices. Dongling's resources were sold at RMB 14,250/mt and Humon was traded at RMB 14,180/mt. Lead smelters stepped up moving goods and transactions for deliverable brands picked up, but downstream producers still were reluctant to purchase.

SHFE 1401 zinc contract prices opened higher at RMB 15,105/mt, but gains fell short of market expectations, and then hovered between RMB 15,070-15,100/mt. In the afternoon, as the Shanghai Composite Index dropped then stabilized, SHFE zinc prices stopped falling and closed at RMB 15,145/mt, up RMB 75/mt. Trading volumes increased by 5,666 lots, to 53,706 lots, and total positions decreased by 1,502 lots, to 131,000 lots.

 

#0 zinc prices were between RMB 15,090-15,160/mt, with spot premiums between RMB 0-70/mt against SHFE 1401 zinc contract prices, down RMB 10-40/mt from the previous day due to sluggish demand. #1 zinc prices were around RMB 15,040-15,060/mt. Imported SMC and KZ #0 zinc prices were around RMB 15,100/mt. SHFE 1401 zinc contract prices opened high but moved lower, hovering around RMB 15,110/mt. Shuangyan branded #0 zinc prices were between RMB 15,170-15,180/mt, but as spot prices fell along with LME zinc prices later the day, Shuangyan branded #0 zinc prices inched down to RMB 15,150-15,160/mt, with Yuguang branded zinc prices around RMB 15,140/mt and sales limited. Month-end cash flow problems undermined downstream buying interest, with overall trading muted.

 

Mainstream traded prices were RMB 146,500-150,000/mt in Shanghai spot tin market October 29. Supply for low-priced goods increased slightly. Downstream buyers continued to purchase as needed, with many staying on the sidelines. Trading remained light.

 

In Shanghai, Jinchuan lowered #1 nickel prices by RMB 600/mt, to RMB 100,100/mt. SMM #1 nickel prices were between RMB 99,200-100,200/mt. Goods available were mainly Jinchuan nickel, with traded prices between RMB 100,200-100,400/mt, and transactions mainly made among traders.