SMM Base Metals Market Daily Review (2013-11-27)

 

SHFE 1402 copper contract prices opened RMB 60/mt lower at RMB 50,710/mt on Wednesday influenced by a slight fall in LME copper overnight. The most active contract met resistance at RMB 50,740/mt and found its low at RMB 50,470/mt. Finally, the red metal finished down RMB 110/mt or 0.22% at RMB 50,660/mt. Trading volumes plunged 42,798 lots, while positions added 7,788 lots.

 

Spot copper in Shanghai was quoted at a discount of RMB 0-50/mt and a premium of RMB 0-30/mt over SHFE 1312 copper contract on Wednesday. Traded prices were RMB 50,720-50,800/mt for standard-quality copper, and RMB 50,760-50,880/mt for high-quality copper. Cash squeeze forced cargo holders to resort to discount. Standard-quality copper was offered at below SHFE 1312 copper contacts prices. Short supply of domestic standard-quality copper allowed its price gap with high-quality copper to narrow. Traders refrained from stepping in until spot discounts expanded further. Downstream producers stood on the sidelines. Supply will remain in surplus as suppliers will remain anxious to sell against tightening liquidity at the month’s end. Quotations and traded prices for spot copper both remained little changed in the afternoon.

 

SHFE 1402 aluminum contract, the most active one, opened at RMB 14,070/mt on Wednesday. The Shanghai Composite Index and Shenzhen Component Index gained 0.82% and 0.92%, respectively, driving the light metal up to RMB 14,110/mt in the morning session. SHFE aluminum for February delivery, however, was dragged down by other base metals in the afternoon session to end the day RMB 5/mt or 0.04% lower at RMB 14,085/mt. Trading volumes fell 610 lots to 4,290 lots, while positions increased 1,120 lots to 51,582 lots. Some investors may step in after SHFE 1402 aluminum contract sinks to RMB 14,060/mt.

 

SHFE 1312 aluminum contract hovered near its opening price of RMB 14,275/mt before lunchtime on Wednesday. Spot aluminum prices were RMB 14,320-14,330/mt in Shanghai, and RMB 14,310-14,320/mt in Wuxi and Hangzhou. Ample supply left cargo holders rushing to sell. Downstream producers pushed for lower input costs, depriving spot aluminum prices of any upward momentum. In the afternoon, spot aluminum prices dipped RMB 10/mt, tracking SHFE 1312 aluminum contracts.

 

The most active SHFE 1401 lead price started at RMB 13,980/mt and moved between RMB 13,945-13,980/mt on Wednesday, hovering narrowly around the settle price. SHFE lead finally ended RMB 5/mt or 0.04% higher at RMB 13,965/mt. Trading volume shed 14 lots to 956 lots, while positions gained 638 lots to 11,092 lots on Wednesday.

 

In China’s spot lead market, goods of Chihong Zn & Ge were offered at RMB 13,900/mt and traded between RMB 13,880-13,890/mt, a discount of around RMB 80/mt over the most active SHFE lead price on Wednesday. Nanfang and Chengyuan resources were sold at roughly RMB 13,870/mt, on a par with SHFE 1312 lead price, while Humon was traded at RMB 13,850/mt. Trading was fairly calm as downstream purchase was restrained by liquidity drain and is not expected to recover significantly this week. 

 

SHFE 1402 zinc contract prices opened lower at RMB 14,800/mt, dragged down by LME zinc prices overnight, then leveling out between RMB 14,810-14,825/mt. In the afternoon, with strong short momentum, SHFE zinc prices hovered around RMB 14,800/mt, and closed the day at RMB 14,800/mt, down RMB 40/mt. Trading volumes increased by 552 lots, to 19,448 lots, and total positions increased by 4,922 lots, to 119,000 lots.

 

#0 zinc prices were between RMB 14,890-14,930/mt, with spot premiums between RMB 80-120/mt against SHFE 1402 zinc contract prices. Lida branded #1 zinc prices were between RMB 14,850-14,860/mt, with spot premiums of SMC branded zinc RMB 80-90/mt against SHFE 1402 zinc contract prices, trading between RMB 14,890-14,900/mt, and Belgian zinc prices were lower at RMB 14,850/mt. SHFE 1402 zinc contract prices opened lower at RMB 14,800/mt, then leveling out around the moving average, hovering within a RMB 30/mt range, depressing market sentiment. Cargo holders were actively moving goods, but downstream buying interest remained low, leaving transactions muted. Shuangyan branded #0 zinc prices were between RMB 14,920-14,930/mt, Qinxin and Jiulong branded #0 zinc prices were between RMB 14,900-14,910/mt, with RMB 14,880-14,890/mt for Baohui branded #0 zinc. 

On November 28, spot tin prices in Shanghai fell to RMB 142,000-146,000/mt, with trading still quiet. Cargo holders reported poor trading despite falling prices.

 

 In Shanghai, SMM #1 nickel prices were between RMB 93,900-94,900/mt, with transactions muted and rarely made among traders, and downstream buyers purchased on an as-needed basis. Although LME nickel prices edged up during Asian trading hours, spot prices in Shanghai dropped. Jinchuan nickel prices were around RMB 94,800/mt, with the low-end of RMB 95,000/mt, and the price spread with Russian nickel prices around RMB 1,000/mt.