SMM Base Metals Daily Review (2013-11-8)

SHANGHAI, Nov. 11 (SMM) – 

Copper
SHFE 1401 copper contract prices opened RMB 20/mt lower at RMB 51,360/mt on Friday. Investors closed positions to avoid risks and Chinese A-shares slipped 1%, keeping the red metal in check. However, SHFE 1401 copper contract followed LME copper up to RMB 51,600/mt later in the day, though giving back some gains at the tail of the session, and closed the day out RMB 110/mt or 0.21% higher at RMB 51,490/mt. Trading volumes added 10,822 lots, but positions dropped 1,204 lots. Wait-and-see mood was fanned ahead of the release of US nonfarm payrolls, but prices are expected to show clearer direction this week.
 
Spot copper in Shanghai was quoted at a contango of RMB 0-50/mt and a backwardation of RMB 0-50/mt over SHFE 1311 copper contract in the morning. Traded prices were RMB 51,620-51,720/mt for standard-quality copper, and RMB 51,680-51,820/mt for high-quality copper. Some traders became eager to sell at highs after SHFE copper rebounded. Buyers shied away from higher prices, forcing cargo holders to cut offers. Traders refrained from buying, while downstream producers increased purchases slightly. In the afternoon, cargo holders raised backwardation after SHFE copper surrendered earlier gains, with spot copper offered between a contango of RMB 30/mt and a backwardation of RMB 70/mt. Traded prices remained little changed in the afternoon. SHFE copper stocks dropped 440 mt to 177,903 mt last week.

Aluminum
January aluminum on the Shanghai Futures Exchange (SHFE), the most active one, opened at RMB 14,290/mt last Friday. The light metal ranged between day’s high of RMB 14,320/mt and day’s low of RMB 14,290/mt, closing the day at RMB 14,305/mt. Prevailing wait-and-see sentiment ahead of the release of US non-farm employment data depressed trading activity in SHFE aluminum market. This was compounded by investors closing positions to avoid risks before the upcoming weekend. Trading volumes contracted 1,604 lots to 2,386 lots, and positions also shrank 522 lots to 42,606 lots.

Spot aluminum prices were RMB 14,420-14,430/mt in Shanghai, a premium of RMB 10-20/mt over SHFE 1311 aluminum contract. Prices were RMB 14,410-14,430/mt and Wuxi, and RMB 14,400-14,410/mt in Hangzhou. Cargo holders became more aggressive in selling, while traders increased purchases, leaving trading brisk. In the afternoon, a few cargo holders resorted to discounting to fuel buying interest. 

Lead
The most active SHFE lead prices followed LME lead prices down to start lower at RMB 14,280/mt Friday, and hovered at RMB 14,290/mt ahead of the afternoon trading session. However, rising risk aversion at the tail of trading caused SHFE 1312 lead contract prices to fall and finally end at an intraday low of RMB 14,250/mt, down RMB 60/mt. Trading volumes contracted 100 lots to 312 lots, and open interest shrank 173 lots to 9,286 lots.            
 
In spot markets, goods of Chihong Zn & Ge were offered at RMB 14,200/mt and traded at RMB 14,180/mt, a discount of RMB 110/mt against the most active SHFE lead contract prices. Nanfang and Dongling were traded at RMB 14,180/mt and RMB 14,150/mt, respectively, while Humon’s resources were sold at RMB 14,130/mt. The market was dominated by bearish sentiment. Smelters were increasingly willing to trade, but downstream producers were not active in purchasing, leaving transactions thin.
 
Zinc
SHFE 1401 zinc contract prices opened at RMB 14,930/mt, and found support at the 60-day moving average as LME zinc prices leveled out during Asian trading hours, then hovering between RMB 14,930-14,950/mt. Risk aversion permeated in the market at the week’s end and ahead of the release of US October non-farm employment data. Trading volumes increased by 3,242 lots, to 21,340 lots, and total positions decreased by 2,612 lots, to 106,932 lots.

#0 zinc prices were between RMB 15,030-15,060/mt, down RMB 10-20/mt, with spot premiums between RMB 90-120/mt against SHFE 1401 zinc contract prices. #1 zinc prices were around RMB 14,990/mt, with supply tight. KZ and SMC #0 zinc prices were between RMB 15,010-15,020/mt. SHFE zinc prices fluctuated between the 30 and 60-day moving average. Both suppliers and buyers remained cautious ahead of the release of US October non-farm employment data, leaving transactions muted.

Tin
In Shanghai spot tin market, trading was quite thin on Friday, with deals mainly done at RMB 144,800-147,500/mt. Supply for non-leading brands declined, but prices for well-known brands remained unimproved. That, combined with anemic demand, kept spot tin market gloomy. Most purchasers only waited on the sidelines, waiting for clear clues from LME tin prices.

Nickel
In Shanghai, Jinchuan lowered nickel prices by RMB 500/mt, to RMB 97,500/mt. Transactions improved, with inquiries made among traders active. As LME nickel prices plunged in the afternoon, most traders left the market. SMM #1 nickel prices were between RMB 96,700-97,700/mt, with mainstream traded prices within SMM price range.