SMM Base Metals Market Daily Review (2014-3-7)

SHANGHAI, Mar. 10 (SMM) –

Copper
The most active SHFE 1405 copper contract dropped to RMB 49,140/mt after starting at RMB 49,180/mt, and then reached as high as RMB 49,310/mt in Thursday’s night session. The red metal later fell back to RMB 49,230/mt, and finished up RMB 70/mt at RMB 49,260/mt. During the night session, trading volumes shed by 185,000 lots, and positions gained by 2,460 lots. SHFE copper prices touched an intraday high of RMB 49,390/mt after opening at RMB 49,260/mt, and fell to RMB 48,890/mt during the afternoon trading hours, dragged down by a fall in LME lead prices. SHFE copper sank to an intraday low of RMB 48,850/mt subsequently, and closed down RMB 270/mt or 0.55% at RMB 48,920/mt. Trading volumes expanded 2,154 lots to 134,000 lots, positions rose 8,686 lots to 284,000 lots. Trading volumes for SHFE 1406 copper contract surged 22,516 lots to 134,000 lots, and positions reached a record high of 201,000 lots. SHFE copper prices have fallen below all moving averages.

Spot copper was offered at discounts of RMB 80-160/mt in Shanghai on Friday. Traded prices were RMB 48,880-48,980/mt for standard-quality copper and RMB 48,900-49,120/mt for high-quality copper. Dragged down by declining SHFE copper prices, spot copper prices fell below RMB 49,000/mt. Cargo holders were active in moving goods, and downstream producers had slightly higher buying interest on Friday. Since price gap between high-quality copper and standard-quality copper remained less than RMB 50/mt, middlemen were inactive in trading. Markets were dominated by wary sentiment due to massive sell-offs on Friday.

Aluminum
SHFE 1406 aluminum contract became the most active one last Thursday, which drifted higher after starting the night session at RMB 13,300/mt and closed at a session high of RMB 13,325/mt. Trading volumes during the night hours totaled 5,072 lots, and positions added 480 lots to 98,284 lots. However, the light metal erased all the gains built up overnight last Friday. Prices fell to RMB 13,250/mt before finishing RMB 25/mt or 0.19% lower at RMB 13,270/mt. Trading volumes during the daytime session totaled 9,048 lots, and positions were up 4,148 lots to 101,952 lots.

Spot aluminum largely traded at RMB 12,800-12,810/mt in Shanghai last Friday, a discount of RMB 260-270/mt over SHFE 1403 aluminum contract prices, RMB 12,770-12,790/mt in Wuxi, and RMB 12,810-12,820/mt in Hangzhou. Downstream producers went bargain hunting after prices in Shanghai fell to RMB 12,790/mt, allowing sellers to raise offers. However, consumption faltered once prices rose. In the afternoon, offers in spot aluminum markets held flat at RMB 12,800-12,810/mt. SHFE aluminum inventories grew 26,080 mt to 309,654 mt last week, which will weigh aluminum prices down this coming week.

Lead
The most active SHFE 1404 lead contract started at RMB 13,800/m, and rose to RMB 13,830/mt, driven by rising LME lead prices at Thursday’s night session. The metal later hovered narrowly around RMB 13,815/mt with a lack of buying support, and closed up RMB 5/mt or 0.04% at RMB 13,810/mt. During the night session, trading volumes were only 36 lots, and positions were off 26 lots to 9,988 lots. SHFE lead prices fluctuated between RMB 13,770-13,810/mt on Friday, falling to a low of RMB 13,760/mt, and finished up RMB 10/mt or 0.07% at RMB 13,815/mt. Trading volumes shed 260 lots to 1,430 lots, and positions gained 526 lots to 10,540 lots on Friday.

In the Shanghai physical lead market on Friday, goods from Chihong Zn & Ge, Chengyuan, and Yubei traded between RMB 13,720-13,730/mt with narrower discounts of RMB 50/mt over the most active SHFE lead contract. Humon resources were sold at RMB 13,710/mt. Chihong Zn & Ge and Humon moved goods as usual, but other lead smelters were disinclined to trade. Lead warrant supply increased on Friday since spot discounts narrowed. Downstream small and medium-size producers went bargain-hunting, leaving transactions better than Thursday.

Zinc
SHFE 1405 zinc contract prices opened at RMB 15,185/mt on Thursday evening, then edged up with rising LME zinc prices, touching RMB 15,210/mt, and finally closing at RMB 15,210/mt, up RMB 5/mt or 0.03%. Trading volumes decreased by 2,110 lots to 13,972 lots, and total positions increased by 1,178 lots to 120,912 lots. SHFE 1405 zinc contract prices opened at RMB 15,210/mt on Friday, then edged down, dipping to RMB 15,130/mt in the afternoon due to mounting short momentum, hovering between RMB 15,145-15,165/mt, and closing at RMB 15,170/mt, down RMB 35/mt or 0.23%. Trading volumes decreased by 17,040 lots, to 45,020 lots, and total positions decreased by 6,390 lots, to 113,344 lots.

#0 zinc prices were between RMB 14,930-14,970/mt, with spot discounts between RMB 200-240/mt against SHFE 1405 zinc contract prices. #1 zinc prices were between RMB 14,870-14,880/mt. SHFE 1405 zinc contract prices opened at RMB 15,210/mt on Friday, then edged down during the first session, dragging down Shuangyan branded #0 zinc prices from RMB 14,990/mt to RMB 14,960/mt. During the second session, SHFE zinc prices leveled out between RMB 15,160-15,170/mt, with most traders actively moving goods, and some pessimistic investors purchasing goods. Some downstream buyers entered the market at the week’s end. Shuangyan branded #0 zinc prices were around RMB 14,960/mt, with RMB 14,940/mt for Yuguang branded #0 zinc, and RMB 14,930/mt for Qinxin, Jiulong and Feilong branded #0 zinc.

Tin
In Shanghai, spot tin largely traded between RMB 140,800-143,000/mt last Friday. Prices were RMB 143,000-143,500/mt for Yunxi brand tin, and RMB 140,800-141,500/mt for other brands. Trading activity remained thin.

Nickel
In Shanghai, SMM #1 nickel prices were between RMB 94,900-95,900/mt. Transactions were brisk as a large number of steel plants purchased goods, with traders mostly purchasing at the low whilst selling at the high. Purchasing made by traders also improved significantly, with spot prices between RMB 95,100-96,100/mt.