SMM Base Metals Market Daily Review (2013-10-30)

 

The most active SHFE copper contract price opened RMB 330/mt higher at RMB 51,600/mt Wednesday, and continued to rise before stabilizing above the daily moving average. SHFE copper for January delivery then gained upward momentum after short sellers closed positions near mid-day, and rose further to RMB 52,000/mt, drawing support from a 1.3% uptick in Chinese A-share. Finally, SHFE 1401 copper contract ended RMB 810/mt or 1.58% higher at RMB 52,080/mt. Trading volumes and positions shrank by 107,000 lots and 23,088 lots, respectively. Shorts liquidated positions after failing to pressure prices, but longs also took no actions, leaving little impetus for the prices to make further breakthrough.  

 

Spot copper in Shanghai was quoted at a contango of RMB 50-180/mt over SHFE 1311 copper contract Wednesday morning. Traded prices were RMB 51,750-51,850/mt for standard-quality copper, and RMB 51,800-52,000/mt for high-quality copper. Contango expanded after SHFE copper rose, especially for high-quality copper. Traders with strong balance sheet chose to buy spot copper while selling SHFE copper. Most downstream buyers started month-end settlement and rarely entered the market. In the afternoon, contango expanded to RMB 80-200/mt, while traded prices moved up to RMB 51,950-51,150/mt. Trading was light.

 

January aluminum on the Shanghai Futures Exchange (SHFE), the most active one, opened at RMB 14,445/mt on Wednesday. The light metal sank to RMB 14,390/mt on selloff before bouncing back to RMB 14,490/mt as Chinese A-share rose by 1.48%. SHFE 1401 aluminum contract, however, erased some gains in late-trade hours as markets are cautious ahead of the US Federal Reserve’s policy decision, closing the day at RMB 14,460/mt. Trading volumes shrank 4,794 lots to 7,094 lots, while positions added 206 lots to 5,634 lots.

 

Spot aluminum prices in Shanghai and Wuxi were RMB 14,490-14,500/mt on Wednesday, a backwardation of RMB 10-20/mt over SHFE 1311 aluminum contract. Prices in Hangzhou were lower at RMB 14,470-14,480/mt. Cargo holders sold aggressively, but consumption was sluggish. In the afternoon, traded prices edged down by RMB 5-10/mt and trading was muted. 

 

The most active SHFE 1312 lead contract prices opened slightly lower at RMB 14,400/mt Wednesday. As investors were optimistic to the Fed’s decision on QE at its October policy meeting, and expected reform-related policies to be introduced at the Third Plenary Session of the 18th CPC Central Committee scheduled for November 9-12, the Shanghai Composite Index surged more than 1.5%, pushing up SHFE lead prices to end at RMB 14,470/mt. Trading volumes dropped 968 lots to 650 lots, while positions expanded 160 lots to 11,678 lots.       

 

In China’s spot lead market, goods of Chihong Zn & Ge were traded mostly at RMB 14,320/mt, a discount of around RMB 180/mt over SHFE 1312 lead contract prices. Traded prices for Nanfang and Humon were RMB 14,300/mt and RMB 14,180/mt, respectively, while Henan Jinli was mostly traded at RMB 14,190/mt. Downstream producers were mostly cautious in purchasing amid tight liquidity at the end of October and worries over economic uncertainties. Cargo holders, however, were trading aggressively, with transactions light. 

 

SHFE 1401 zinc contract prices opened higher at RMB 15,120/mt. With rising LME zinc prices and rebounding Shanghai Composite Index, SHFE zinc prices inched up, touching RMB 15,200/mt but then falling back to RMB 15,150-15,180/mt. As the Shanghai Composite Index extended gains in the afternoon, SHFE zinc prices hit an intraday high of RMB 15,225/mt. But the market remained cautious before the Fed announced the policy meeting result, pushing down SHFE zinc prices below RMB 15,200/mt, closing at RMB 15,180/mt, up RMB 80/mt or 0.53%. Trading volumes increased by 17,050 lots, to 70,756 lots, and total positions increased by 12,116 lots, to 142,670 lots.

 

#0 zinc prices were between RMB 15,120-15,200/mt, ranging from RMB 30/mt below to RMB 30/mt higher than SHFE 1401 zinc contract prices. #1 zinc prices were between RMB 15,060-15,080/mt. SHFE 1401 zinc contract prices opened higher at RMB 15,120/mt, soaring to RMB 15,200/mt, then hovering between RMB 15,150-15,180/mt. Spot prices rose in response, with Shuangyan branded #0 zinc prices between RMB 15,190-15,200/mt. Jiulong branded #0 zinc prices were between RMB 15,150-15,170/mt, and Baohui branded #0 zinc prices were between RMB 15,120-15,130/mt. Downstream buying interest was low, with trading quiet.

 

In Shanghai, spot tin prices fell on October 30, influenced by the weak LME tin prices, with some goods, primarily from Jiangxi province, quoted as low as RMB 146,000/mt. Traded prices for other brands were also low at RMB 146,500-148,000/mt, but goods of Yunnan Tin Group were sold at higher prices at RMB 149,500-150,000/mt. Trading was thin on the whole.

 

In Shanghai, traders lacked directions as LME nickel trading was delay 1 hour, with transactions muted in the morning. SMM #1 nickel prices were between RMB 99,300-100,300/mt, with trading mainly made between SMM price range. Transactions were mainly made among traders, and downstream buyers purchased on an as needed basis.