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SMM Base Metals Market Daily Review (2013-11-5)
Nov 6,2013 10:24CST
price review forecast
Falling LME copper caused SHFE 1401 copper contract prices to open RMB 160/mt lower at RMB 51,600/mt on Tuesday.

SHANGHAI, Nov. 6 (SMM)--

Falling LME copper caused SHFE 1401 copper contract prices to open RMB 160/mt lower at RMB 51,600/mt on Tuesday. The prices then fell to RMB 51,380/mt before bouncing back to near RMB 51,500/mt. In the afternoon session, LME copper broke through USD 7,200/mt and Chinese A-shares rebounded, driving SHFE 1401 copper contract up to an intraday high of RMB 51,770/mt. But the prices fell again just before the session ended, closing RMB 160/mt or 0.31% lower at RMB 51,600/mt. Trading volumes and open interest were off 18,172 lots and 9,308 lots, respectively. Caution continued to prevail in the market, and the red metal met resistance at the 10-day moving average. 
Spot copper in Shanghai was quoted at a contango of RMB 0-100/mt over SHFE 1311 copper contract in the morning. Traded prices were RMB 51,580-51,680/mt for standard-quality copper, and RMB 51,620-51,780/mt for high-quality copper. SHFE copper inched down, helping narrow contango, especially that of standard-quality copper. Prices for hydro-copper rose due to tighter supply, narrowing its price spread with standard-quality copper. Traders bought at the bottom, while downstream producers became more willing to buy once prices fell below RMB 52,000/mt. Some cargo holders refrained from selling after SHFE copper stabilized in the afternoon, with spot copper offered at a contango of RMB 0-80/mt. Traded prices were mainly at RMB 51,700-52,850/mt, but transactions were modest. 
January aluminum on the Shanghai Futures Exchange (SHFE), the most active one, opened lower at RMB 14,350/mt on Tuesday. The light metal ranged between day's high of RMB 14,375/mt and day's low of RMB 14,325/mt, ending the day down RMB 40/mt at RMB 14,335/mt. Trading volumes increased 2,652 lots to 9,370 lots, but positions fell 3,500 lots to 47,486 lots. SHFE 1401 aluminum contract will test support at the 30-day moving average.

SHFE 1311 aluminum contract crept higher to RMB 14,410/mt before mid-day after opening lower at RMB 14,405/mt on Tuesday. Mainstream traded prices for spot aluminum in Shanghai were RMB 14,440-14,450/mt, RMB 14,460-14,470/mt in Wuxi, and RMB 14,420-14,440/mt in Hangzhou. Despite tight supply, aluminum prices failed to rise sharply. Low aluminum prices lured buyers to step in, improving trading activity. Trading volumes in Wuxi were thinner than in Shanghai as higher prices there depressed buying interest. In the afternoon, spot aluminum traded prices remained little changed, with thin trading reported. 
SHFE 1401 zinc contract prices opened low at RMB 14,990/mt, then hovered around RMB 14,980/mt. As the US dollar index rebounded in the afternoon, LME zinc prices fell further, dipping to a low of USD 1,916.3/mt. But since UK service PMI continued to improve, LME zinc prices leveled out at the 60-day moving average. US ISM non-manufacturing PMI recorded 55.4, better than expected. But the positive only gave limited support to LME zinc prices as US non-farm employment data will be released this week, hovering between USD 1,920-1,930/mt, and closing at RMB 1,925.3/mt, down RMB 3.8/mt. Trading volumes decreased by 1,491 lots, to 6,130 lots, and total positions increased by 2,519 lots, to 299,000 lots.

#0 zinc prices were between RMB 15,040-15,090/mt, with spot premiums between RMB 60-110/mt against SHFE 1401 zinc contract prices. Prices of Shuangyan and Hongda branded zinc rpices were between RMB 15080-15090/mt, and other branded zinc was traded between RMB 15,040-15,070/mt. #1 zinc prices firm between RMB 15,010-15,030/mt, with supply tight. Belgium and Indian #0 zinc prices were between RMB 15,020-15,030/mt, with KZ and SMC #0 zinc prices higher around RMB 15,040/mt. SHFE zinc prices opened low then leveled out, and downstream buying interest was low due to pessimism. Cargo holders were actively selling goods, but traders stood on the sidelines, leaving transactions muted.

The most active SHFE lead contract price opened lower at RMB 14,365/mt and soon dipped to a low of RMB 14,300/mt pressured by shorts. SHFE lead moved between RMB 14,300-14,320/mt for the rest of the day, hovering around the 20-day moving average, and finally closed at RMB 14,330/mt, down RMB 35/mt. Traded volumes increased by 12 lots to 1,084 lots, and open interest dropped 532 lots to 10,292 lots.
Spot lead market in Shanghai was enlivened on Tuesday as the narrowing spot discounts inspired arbitrage. Chihong Zn & Ge, Nanfang, and Shuikoushan were initially quoted at RMB 14,240/mt, but offers were cut to RMB 14,220/mt later. Chengyuan was traded at a discount of RMB 100/mt against the SHFE 1312 lead contract prices. Quotes for Humon and Shenqian were around RMB 14,160/mt. Traders moved goods actively, while downstream buyers increased purchases. Smelters limited supplies on bullish outlook.
Traded prices for spot tin in Shanghai continued to fall on Tuesday to RMB 144,000-147,500/mt, as supply for cheap resources was ample. Prices for Nanshan, Jinlong, Yinsheng, and Yunxiang, were RMB 144,000-144,500/mt, with some goods sold lower than futures prices. Well-known brands, such as YT and Yunheng, were traded at RMB 145,000-147,000/mt. In the afternoon, trading improved some as the falling prices encouraged buying appetite.

In Shanghai, Jinchuan did not adjust prices. SMM #1 nickel prices were between RMB 97,300-98,300/mt, with deliverable nickel prices between RMB 97,500-98,500/mt. As LME nickel prices had dropped for three days in a row and leveled out, increasing number of bargain hunters entered the market, with traders buying interest also improving.


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aluminum prices
lead prices
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tin prices
nickel prices

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