SMM Base Metals Market Daily Review (2013-11-6)

SHANGHAI, Nov. 7 (SMM)--

Copper:
SHFE 1401 copper contract prices opened RMB 30/mt higher at RMB 51,600/mt on Wednesday. The red metal hovered near RMB 51,600/mt before sinking to RMB 51,360/mt on massive selloffs. SHFE 1401 copper contract hit a session high of RMB 51,690/mt in the afternoon session, but fell again before the session ended due to falling Chinese A-shares, closing RMB 20/mt or 0.04% higher at RMB 51,590/mt. Trading volumes tumbled by 16,298 lots, but positions surged by 7,014 lots.
 
Spot copper in Shanghai was quoted at a contango of RMB 0-80/mt and a backwardation of RMB 0-20/mt over SHFE 1311 copper contract Wednesday morning. Traded prices were RMB 51,500-51,600/mt for standard-quality copper, and RMB 51,550-51,750/mt for high-quality copper. Some traders bought aggressively in the morning, helping narrow contango. High-quality copper was offered at a backwardation. Downstream producers stepped in once prices fell back during the second trading session. In the afternoon, price gap between SHFE 1311 and 1312 copper contracts narrowed. Goods available in the spot market declined, but transactions were limited. Some traders sold goods at lower prices, and spot copper was offered between a contango of RMB 70/mt and a backwardation of RMB 20/mt. Traded prices were RMB 51,650-51,800/mt.
         
Aluminum:
January aluminum on the Shanghai Futures Exchange (SHFE), the most active one, opened lower at RMB 14,315/mt on Wednesday. The light metal touched a high of RMB 14,320/mt, but slid to RMB 14,285/mt later in the day, dragged down by falling Chinese A-share. SHFE 1401 aluminum contract rebounded slightly at the tail of the session before ending the day RMB 40/mt lower at RMB 14,300/mt. Trading volumes contracted 2,404 lots to 6,966 lots, and positions also shrank 2,930 lots to 4,456 lots.

SHFE 1311 aluminum contract dipped to RMB 14,390/mt after opening at RMB 14,400/mt on Wednesday. Spot aluminum prices in Shanghai were RMB 14,410-14,420/mt, RMB 14,430-14,440/mt in Wuxi, and RMB 14,400-14,410/mt in Hangzhou. Cargo holders were actively selling, while downstream producers engaged in modest purchasing at the bottom. In the afternoon, spot markets turned quiet.
 
Zinc:
SHFE 1401 zinc contract prices opened low at RMB 14,965/mt as LME zinc prices continued to fall, then leveled out, hovering between RMB 14,970-14,990/mt. In the afternoon, SHFE zinc prices touched RMB 15,000/mt with the Shanghai Composite Index, closing at USD 14,980/mt. Trading volumes increased by 1,660 lots, to 20,568 lots, and total positions decreased by 724 lots, to 108,000 lots.
 
#0 zinc prices were between RMB 15,040-15,090/mt, with spot premiums between RMB 50-100/mt against SHFE 1401 zinc contract prices. #1 zinc prices firm between RMB 15,000-15,020/mt, with supply tight. Belgium and Indian #0 zinc prices were between RMB 15,000-15,020/mt, with KZ #0 zinc prices around RMB 15,040/mt. SHFE zinc prices opened low then fluctuated around RMB 15,000/mt. Market players are cautious ahead of the release of Eurozone inflation and US non-farm employment data, with downstream buyers purchasing on an as-needed basis, leaving transactions muted.

Lead:
The most active SHFE lead contract prices opened at RMB 14,350/mt on Wednesday and moved between RMB 14,310-14,320/mt. SHFE lead for December delivery rose RMB 10/mt after midday driven by buying support, but trading activity was not brisk. The prices finally closed at RMB 14,330/mt, little changed from a day earlier. Given resistance at several moving averages, any price increase will depend on important positive reports. Traded volumes declined by 340 lots to 744 lots, and open interest fell 526 lots to 9,766 lots.
 
Shanghai spot lead market returned quiet on Wednesday. Chihong Zn & Ge was quoted at RMB 14,240/mt, with discount of RMB 70/mt against the most active SHFE lead contract price. Nanshan and Shuikoushan were offered at RMB 14,220/mt, but traded prices were around RMB 14,200/mt. Humon and Shenqian were sold at RMB 14,160/mt. Tight supply of lead concentrate left smelters more reluctant to sell, but traders still moved goods aggressively. Downstream consumption was soft.
   
Tin:
Traded prices for spot tin in Shanghai remained stable at RMB 144,000-147,000/mt Wednesday morning, and transactions were quiet. In the afternoon, some cargo holders raised quotes to RMB 145,000-148,000/mt as LME tin prices rose above USD 23,000/mt. Downstream buyers entered the market to purchase low-priced goods, while some sellers became less willing to purchase. Trading was enlivened in the afternoon.

Nickel:
In Shanghai, transactions were extremely quiet. SMM #1 nickel prices were between RMB 97,500-98,400/mt, with mainstream traded prices within SMM price range. As LME nickel prices rose in the afternoon, spot pirces edged up to RMB 97,500-98,500/mt, with Russian nickel prices firm.