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SMM Base Metals Market Daily Review (2014-3-11)
Mar 12,2014 10:10CST
price review forecast
Pressured by massive sell-offs, SHFE copper prices dipped to RMB 45,560/mt after gapping lower at RMB 46,120/mt, and finished down RMB 1,660/mt at RMB 46,600/mt in Monday’s night trading session.

SHANGHAI, Mar. 12 (SMM) –

Pressured by massive sell-offs, SHFE copper prices dipped to RMB 45,560/mt after gapping lower at RMB 46,120/mt, and finished down RMB 1,660/mt at RMB 46,600/mt in Monday’s night trading session. During the night session, positions shrunk by 9,786 lots, and trading volumes totaled 260,544 lots for the most active SHFE copper contract. Positions surged by 35,528 lots, and trading volumes amounted to 252,880 lots for the SHFE 1406 copper contract. The most active SHFE copper contract shifted to the SHFE 1406 copper contract after both long and short investors liquidated positions in large scale. SHFE copper prices later rallied to RMB 46,600/mt after gaining support at RMB 45,560/mt, and hovered mostly around RMB 46,300/mt at the tail of the trading. The red metal ended down RMB 1,010/mt, or 2.14% at FMB 46,240/mt. SHFE 1406 copper contract prices opened on Tuesday at RMB 46,300/mt, reaching as low as RMB 45,330/mt and as high as RMB 46,570/mt, and closed down RMB 1,080/mt, or 2.28% at RMB 46,190/mt. Trading volumes increased by 107,000 lots, and positions decreased by 49,500 lots for SHFE 1405 copper contracts, while trading volumes gained 379,000 lots, and positions rose by 53,980 lots for SHFE 1406 copper contracts on Tuesday. SHFE copper prices should brace for higher volatility in the future.

In the Shanghai physical market, copper was offered on Tuesday at a discount of RMB 20-160/mt over SHFE current-month copper contract. Traded prices were RMB 45,680-46,200/mt for standard-quality copper and RMB 45,740-46,300/mt for high-quality copper. As SHFE copper stabilized, hedged copper supply continued to flock into physical markets, leaving spot copper still trading at a discount. With brisk inquiries in the morning, trading activity recovered. Price gap between standard-quality copper and high-quality copper widened to around RMB 100/mt, and investors favored standard-quality copper and hydro-copper. SHFE copper prices later rebounded by nearly RMB 300/mt, and price gap between SHFE distant-month contracts and SHFE current-month contracts expanded to more than RMB 100/mt, causing cargo holders to hold prices firm. Middlemen thus purchase spot copper and sell off futures contract actively, while downstream producers were increasingly willing to hunt for bargains, with a pickup in trading activity. Spot copper prices hovered between RMB 45,000-46,000/mt on Tuesday. As SHFE copper prices continued to stabilize in the afternoon trading session, cargo holders were more willing to hold prices firm, with high-quality copper trading at a discount of RMB 50/mt and a premium of RMB 60/mt. At the tail of the trading, spot copper was quoted at a discount of RMB 20-80/mt, but downstream produces still had buying interest, driving prices up to RMB 46,100-46,250/mt on Tuesday.

SHFE 1406 aluminum contract crept higher to RMB 13,220/mt after starting Monday’s night session at RMB 13,160/mt, and finally ended at RMB 13,200/mt. Trading volumes during the night hours totaled 6,382 lots, and positions added 118 lots to 103,112 lots. The most active contract hovered near the daily moving average for most of Tuesday’s daytime trading hours, but advanced to RMB 13,280/mt on short-covering as the closing bell approached, closing RMB 75/mt higher at RMB 13,245/mt. Trading volumes during the daytime hours totaled 14,464 lots, and positions were off 270 lots to 102,606 lots.

Spot aluminum largely traded at RMB 12,690-13,700/mt in Shanghai on Tuesday, a discount of RMB 260-270/mt over SHFE 1403 aluminum contract prices, RMB 12,700-12,710/mt in Wuxi, and RMB 12,710-12,720/mt in Hangzhou. Inquiries in spot markets increased after SHFE current-month aluminum contract rebounded, but any increase in consumption was limited. In the afternoon, SHFE 1403 aluminum contract rose further, allowing spot aluminum suppliers to hike offers to RMB 12,730/mt, but higher prices undermined buying interest.

The most active SHFE 1404 lead contract basically hovered around RMB 13,630/mt after starting Monday’s night trading session at RMB 13,635/mt, and ended up RMB 30/mt, or 0.22% at RMB 13,635/mt. During the night session, trading volumes were only 38 lots, and positions were off 22 lots to 10,376 lots. Following the release of most bearish news, SHFE lead prices led the rise to peak at RMB 13,835/mt, and then fluctuated narrowly around the RMB 13,800/mt mark. The metal closed up RMB 160/mt or 1.18% at RMB 13,765/mt. Trading volumes shed 1,498 lots to 924 lots, and positions contracted 220 lots to 10,178 lots on Tuesday. Given downbeat technical indicators, the rebound in SHFE lead prices will not be sustained.

Goods from Chihong Zn & Ge initially traded at RMB 13,750/mt in Shanghai on Tuesday, a discount of RMB 50 over the most active SHFE lead contract price, and later traded between RMB 13,760-13,770/mt after SHFE lead prices rose. Tongguan, Humon, and Shuangyan resources were sold between RMB 13,720-13,730/mt. Boosted by a sharp rise in SHFE lead prices, spot lead prices traded RMB 100/mt higher than Monday in the Shanghai market. Lead smelters stepped up moving goods, but lead warrant supply decreased after spot lead began trading at a discount. Downstream lead-acid battery producers had low buying interest in a wait-and-see attitude towards a rebound in spot lead prices, with trading volumes down compared with Monday’s level.

SHFE 1405 zinc contract prices opened at RMB 14,750/mt on Monday evening, then rose as some bargain hunters entered the market and since a large number of shorts left the market after profit-taking, touching RMB 14,875/mt, and finally closing at RMB 14,845/mt, down RMB 25/mt or 0.17%. Trading volumes decreased by 29,052 lots to 106,776 lots, and total positions decreased by 72 lots to 110,334 lots.

SHFE 1405 zinc contract prices opened low at RMB 14,845/mt on Tuesday, climbing to RMB 14,935/mt before leveling out, touching an intraday high of RMB 14,960/mt before the end of the morning trading. In the afternoon, SHFE 1405 zinc contract prices edged up as a growing number of shorts left the market after profit-taking, and closing at RMB 14,920/mt, up RMB 50/mt or 0.34%. Trading volumes decreased by 40,826 lots, to 52,410 lots, and total positions decreased by 8,992 lots, to 101,414 lots.

#0 zinc prices were between RMB 14,750-14,800/mt, with spot discounts between RMB 100-140/mt against SHFE 1405 zinc contract prices. #1 zinc prices were between RMB 14,710-14,720/mt. SHFE 1405 zinc contract prices opened high at RMB 14,860/mt on Tuesday, then edged up, pushing up spot prices. Traders were moving goods actively, while smelters were unwilling to sell goods due to low zinc prices, with downstream buyers remaining cautious. Shuangyan branded #0 zinc prices were between RMB 14,760-14,790/mt initially, and surged to RMB 14,800-14,820/mt near the end of trading, with trades muted, and RMB 14,760/mt for Yuguang branded #0 zinc, and RMB 14,750/mt for Qinxin and Jiulong branded #0 zinc.

In Shanghai, spot tin largely traded between RMB 138,500-141,500/mt on Tuesday morning. Goods of RMB 138,000/mt were seen, but such cheap goods were quickly sold out. In the afternoon, the low-end price moved higher to RMB 138,800/mt.

In Shanghai, SMM #1 nickel prices were between RMB 93,900-94,900/mt. Jinchuan raised nickel prices by RMB 400/mt, to RMB 94,900/mt. Spot transactions were brisk since end-users purchased actively, causing traded prices to rise from RMB 93600-94600/mt in the morning to RMB 95,100-96,100/mt in the afternoon.

SHFE copper prices
SHFE aluminum prices
lead prices
zinc prices
tin prices
nickel prices

For queries, please contact Frank LIU at liuxiaolei@smm.cn

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