SMM Base Metals Market Daily Review (2013-11-1)

SHANGHAI, Nov. 4 (SMM)--

Copper:
SHFE 1401 copper contract price opened RMB 100/mt lower at RMB 51,730/mt on Friday. Upbeat China manufacturing PMI and rising Chinese A-shares drove the red metal up to RMB 52,290/mt. Finally, SHFE 1401 copper contract ended RMB 410/mt or 0.79% higher at RMB 52,240/mt. Trading volumes and positions shrank by 21,420 lots and 12,602 lots, respectively. The rally, however, was driven mainly by short sellers closing positions. Longs may take profits at highs after copper prices rise further.
 
Spot copper in Shanghai was quoted at a contango of RMB 30-170/mt over SHFE 1311 copper contract Friday morning. Traded prices were RMB 51,900-51,980/mt for standard-quality copper, and RMB 52,000-52,120/mt for high-quality copper. Cargo holders raised offers slightly, but downstream buyers only purchased as needed, leaving trading moderate. Most transactions were done between traders. Market players expected that contango would narrow further this week. In the afternoon, the rising SHFE copper posed difficulty for arbitrage, with spot copper supply falling noticeably. Besides, some downstream consumers started to replenish stocks for the weekend, contango for spot copper narrowed to RMB 10-160/mt. Traded prices also rose to RMB 52,000-52,252/mt. SHFE copper stocks increased by 6,197 mt to 178,343 mt last week.
       
Aluminum:
January aluminum on the Shanghai Futures Exchange (SHFE), the most active one, opened lower at RMB 14,385/mt last Friday, weighted down falling LME aluminum overnight. The light metal dipped to RMB 14,375/mt. but rebounded later in the day on positive Chinese economic data. China's official manufacturing PMI released by the National Bureau of Statistics (NBS) came in at 51.4 in October, a record high since last April. Boosting market sentiment further was HSBC's China manufacturing PMI, which hit a 7-month high of 50.9 in October. SHFE 1401 aluminum contract gained RMB 30/mt to close the day at RMB 14,440/mt. Trading volumes decreased 2,980 lots to 4,760 lots, while positions also dropped 1,016 lots to 53,626 lots. The rally may be a short-lived one, though, since the price increase was driven primarily by investors closing bear positions.

Tighter supply pushed aluminum prices in Shanghai and Wuxi up to RMB 14,440-14,460/mt. Prices in Hangzhou were lower at RMB 14,430-14,440/mt due to abundant supply. Downstream producers increased purchases as liquidity has increased with the start of the new month and as the weekend was drawing near. In the afternoon, traded prices inched up RMB 10/mt and trading was moderate. 
 
Zinc:
SHFE 1401 zinc contract prices opened at RMB 14,970/mt. As China's October PMI was positive, LME zinc prices edged up to RMB 15,020/mt. When combined with the rising Shanghai Composite Index, SHFE zinc prices continued to rise and touched RMB 15,085/mt, and closed at RMB 15,075/mt, up RMB 110/mt or 0.75%. Trading volumes decreased by 82,732 lots, to 27,142 lots, and total positions decreased by 92 lots, to 115,302 lots. SHFE zinc prices found support at the 20-day moving average, struggling between the 5 and 10-day moving average.

#0 zinc prices were between RMB 15,070-15,110/mt, with spot premiums between RMB 60-100/mt against SHFE 1401 zinc contract prices, up RMB 100/mt. #1 zinc prices were between RMB 15,020-15,040/mt. SHFE 1401 zinc contract prices opened higher at RMB 14,970/mt, then edged up to RMB 15,000/mt as China's official October PMI was 51.4, up from the 51.1 in September. Shuangyan branded #0 zinc prices between RMB 15,100-15,110/mt, and other brands #0 zinc prices were between RMB 15,070-15,090/mt. cargo holders were actively moving goods, but downstream buying interest was low, with trading quiet.

Lead:
The most active SHFE lead prices started lower at RMB 14,315/mt on Friday dragged by a 1% fall of LME lead prices overnight. Later, China's official manufacturing PMI for October was reported at 51.4, higher than forecast and September's level. The figure has been rising for a fourth month straight and hit an 18-month high. In response, SHFE 1312 lead contract prices trended up to RMB 14,380/mt. In the afternoon trading, the Shanghai Composite Index staged a rally, while LME lead prices also extended gains, sending SHFE lead prices to a high of RMB 14,475/mt. SHFE lead for December delivery finally ended at RMB 14,425/mt, up RMB 50/mt. Trading volumes shed 932 lots to 558 lots, while positions declined 198 lots to 11,242 lots. 
 
In China's spot lead market, transactions failed to pick up on Friday despite easing of liquidity in early November. Downstream producers purchased only as needed and did not build considerable stocks, while cargo holders moved goods as usual. Goods of Chihong Zn & Ge were sold at RMB 14,300/mt, a discount of RMB 70/mt over the most active SHFE lead contract prices. Nanfang's resources were sold at RMB 14,290/mt. Prices for Hanjiang and Humon were RMB 14,240/mt and RMB 14,170/mt, respectively. Quotations were rarely heard from spot markets as many market players started the weekend.
  
Tin:
Spot prices in Shanghai tin market dropped to RMB 145,000-148,500/mt last Friday, influenced by falling LME tin prices. In the afternoon, some resources, primarily those from Jiangxi and secondary tin, were quoted lower at RMB 144,500/mt. The increasing supplies of low-priced goods forced traders to sell goods at lows. Trading remained modest, but some traders said the slipping prices attracted some downstream buyers to enter the market.

Nickel:
In Shanghai, SMM #1 nickel prices were between RMB 98,900-99,900/mt. Traders were unwilling to sell goods at the week's end, and downstream buyers purchased on an as-needed basis, with trades mainly made among traders. Jinchuan nickel prices were between RMB 99,800-100,100/mt, with the price spread with Russian nickel around RMB 1,000/mt.