SMM Base Metals Daily Review (2013-11-21)

SHANGHAI, Nov. 22 (SMM) –

 

SHFE 1402 copper contract prices opened RMB 150/mt lower at RMB 50,110/mt on Thursday, weighted down by falling LME copper overnight. SHFE 1402 copper contract fell to RMB 49,910/mt due to selloffs, but followed LME copper up in the afternoon and rose further to RMB 50,380/mt after investors closed short positions. The contract ended the day up RMB 20/mt or 0.04% at RMB 50,280/mt. Trading volumes and positions were up 19,990 lots and 16,878 lots, respectively. Despite the rally, bearish sentiment still lingers.   

 

Spot copper in Shanghai was quoted at a premium of RMB 80-180/mt over SHFE 1312 copper contract on Thursday. Traded prices were RMB 50,420-50,480/mt for standard-quality copper, and RMB 50,480-50,580/mt for high-quality copper. Holders of imported copper became more willing to sell to raise cash. Trading activity was brisk early in the morning, but diminished once copper prices rose. Suppliers of Guixi copper insisted on high offers. Traders bought in small amounts, while downstream producers watched from the sidelines. In the afternoon, cargo holders moved goods aggressively as SHFE copper rose slightly, adding to oversupply pressure in the market, but trading improved as traders sourced goods in the market and downstream buyers also went bargain hunting. Spot copper was quoted at RMB 90-210/mt over the SHFE current-month copper contract, with traded prices at RMB 50,450-50,700/mt.

 

SHFE 1402 aluminum contract became the most active one on Thursday and opened at RMB 14,155/mt. The contract slipped to its lowest since September 24 at RMB 14,130/mt as bearish sentiment dominated. The light metal rallied slightly in late trading hours before ending the day down RMB 40/mt at RMB 14,155/mt. Trading volumes tumbled 4,454 lots to 4,746 lots, but positions added 1,736 lots to 45,604 lots.

 

SHFE 1312 aluminum contract stayed above RMB 14,300/mt on Thursday. Spot aluminum prices were RMB 14,350-14,360/mt in Shanghai, RMB 14,340-14,360/mt in Wuxi, and RMB 14,330-14,340/mt in Hangzhou. Cargo holders held offers firm, while downstream producers and traders increased purchases, improving overall trading.  

 

The most active SHFE 1401 lead contract price started at RMB 14,015/mt on Thursday before dipping below RMB 14,000/mt, and extended losses in afternoon trading session, touching a low of RMB 13,920/mt. LME lead price and the Shanghai Composite Index narrowed their losses before the end of the trading, giving a boost to SHFE lead price. SHFE lead finally ended at RMB 13,950/mt, down RMB 55/mt or 0.39% on Thursday. Transactions expanded 180 lots to 1,138 lots, while open interest increased 6 lots to 10,526 lots.

 

In China’s spot lead market, goods of Chihong Zn & Ge were offered at RMB 13,930/mt, a discount of RMB 40/mt over the most active SHFE lead price. Yuguang resources were quoted at premiums of RMB 50 over SHFE 1312 lead price, while Nanfang and Chengyuan traded between RMB 13,870-13,890/mt, flat with SHFE 1312 lead price. Humon, Hanjiang and Shuangyan were sold in a RMB 13,870-13,880/mt band. On Thursday, smelters were reluctant to move goods, while downstream producers had low buying interest, for fear of lead price declining further and relatively tight liquidity.

 

Dragged down by LME zinc prices overnight, SHFE 1402 zinc contract prices opened low at RMB 14,845/mt, and then fell to RMB 14,810/mt. HSBC's November PMI for China was only 50.4, falling short of expectations and October's levels, and new export orders returned to contraction  trajectory. Enterprises replenished stocks slowly, depressing market sentiment. SHFE zinc prices dropped to RMB 14,790/mt, but stopped falling in the afternoon, closing the day at RMB 14,820/mt, down RMB 50/mt. Trading volumes decreased by 356 lots, to 27,890 lots, and total positions increased by 2,018 lots, to 116,000 lots.

 

#0 zinc prices were between RMB 14,900-14,930/mt, with spot premiums between RMB 100-130/mt against SHFE 1402 zinc contract prices. Lida branded #1 zinc prices were between RMB 14,870-14,880/mt, and Belgian #0 zinc prices were RMB 14,850/mt, with spot premiums of KZ and SMC #0 zinc RMB 80-100/mt against SHFE 1402 zinc contract prices, trading between RMB 14,880-14,900/mt. SHFE 1402 zinc contract prices opened low at RMB 14,845/mt, then moved weakly since HSBC's November PMI for China was 50.4, falling short of both expectations and October's levels, with market remaining bearish. Smelters were moving goods actively, while downstream buyers purchased goods on an as-needed basis. Traders lacked interest to operate due to the lack of arbitrage opportunities, with transactions muted. Shuangyan branded #0 zinc prices were between RMB 14,920-14,930/mt, and Qinxin, Jiulong and Baohui #0 zinc prices were around RMB 14,900/mt.

 

In Shanghai spot tin market, mainstream traded prices were RMB 143,500-146,000/mt on Thursday, with a few goods of Yunnan Tin Group sold at RMB 146,500/mt. Wait-and-see sentiment permeated in the market due to the directionless LME tin prices, and smelters confronted great sales pressure given the tight cash flow by year’s end, dragging down spot tin prices. 

 

In Shanghai, traders watched on the sidelines as nickel prices moved weakly and due to the cash flow tightness at the end of the month, while downstream buyers purchased actively at lower prices. SMM #1 nickel prices were between RMB 94,200-95,200/mt, down RMB 500/mt. Jinchuan quoted between RMB 95,200-95,300/mt, with the price spread with Russian nickel at 1,000/mt.