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SMM Base Metals Market Daily Review (2014-3-19)
Mar 20,2014 10:54CST
price review forecast
The most active SHFE copper contract prices hovered above the 5-day moving average after opening at RMB 44,590/mt, but later faced resistance at the RMB 45,000/mt mark in Tuesday’s night session.

SHANGHAI, Mar. 20 (SMM) –

The most active SHFE copper contract prices hovered above the 5-day moving average after opening at RMB 44,590/mt, but later faced resistance at the RMB 45,000/mt mark in Tuesday’s night session. The contract prices finished up RMB 110/mt at RMB 44,910/mt. During the trading hours, traded volumes stood at around 300,000 lots, while positions rose 2,478 lots. SHFE copper prices fell as low as RMB 44,490/mt after encountering resistance at RMB 45,100/mt during the afternoon trading session, and closed down RMB 60/mt or 0.13% at RMB 44,730/mt. Traded volumes contracted 54,254 lots, and positions shrunk 8,272 lots for the most active SHFE copper contract. Traded volumes gained 34,226 lots, and positions surged 24,412 lots for SHFE 1407 copper contract. Trading activity for SHFE distant-month contracts strengthened. SHFE copper prices have found support at the 5-day moving average on Wednesday.

Copper was offered between a discount of RMB 50/mt and a premium of RMB 50/mt over SHFE current-month copper contract in Shanghai on Wednesday. Traded prices were RMB 44,900-45,060/mt for standard-quality copper and RMB 44,950-45,200/mt for high-quality copper. Cargo holders moved goods at high prices against volatile SHFE copper prices, but were disinclined to trade due to stuttering premiums for high-quality copper. Purchases of standard-quality copper and hydro-copper picked up at low prices. Some large-scale traders purchased certain amount of high-quality copper, while middlemen and downstream producers actively hunted for bargains. Spot copper prices largely hovered around RMB 45,000/mt on Wednesday. As SHFE copper prices fell back during the afternoon trading session, cargo holders turned reluctant to move goods at low prices. High-quality copper could barely be found in the market, while standard-quality copper narrowed its discount over SHFE current-month copper contract. Copper was mostly offered between a discount of RMB 30/mt and a premium of RMB 70/mt, and traded lower between RMB 44,850-45,000/mt. Speculators continued to buy high-quality copper, with trading activity improving.

SHFE 1406 aluminum contract crept up to RMB 13,035/mt after starting Tuesday’s night session at RMB 12,990/mt, and closed the session at RMB 13,020/mt. Trading volumes during the night hours totaled 7,054 lots, and positions added 1,978 lots to 116,418 lots. The most active contract slid to RMB 12,880/mt on Wednesday before ending the session at RMB 12,900/mt. Trading volumes during the daytime hours totaled 22,612 lots, and positions were up 4,334 lots to 118,774 lots. Rampant bearish sentiment means prices will fall further.

Spot aluminum in east China followed SHFE aluminum down below RMB 12,500/mt on Wednesday. Prices were 12,450-12,460/mt in Shanghai and Hangzhou, and RMB 12,430-12,450/mt in Wuxi. A few went bargain hunting earlier today, but held to the sidelines after suppliers sold aggressively. In the afternoon, suppliers cut offers to RMB 12,440-12,450/mt, but lower prices did not stoke buying.

The most active SHFE 1404 lead contract prices rose slightly to RMB 13,715/mt after opening at RMB 13,640/mt, boosted by LME lead prices, and finished up RMB 25/mt or 0.18% at RMB 13,635/mt in Tuesday’s night session. During the trading hours, trading volumes were only 28 lots, while positions were off merely 2 lots. SHFE 1405 lead contract became the most active contract to start at RMB 13,720/mt on Wednesday, and then hovered between RMB 13,715-13,740/mt. The contract later touched a high of RMB 13,745/mt, and ended up RMB 45/mt or 0.33% at RMB 13,745/mt. Trading volumes gained 302 lots to 990 lots, and positions shed 6 lots to 7,158 lots. SHFE lead prices encountered resistance at the 10-day moving average, but have found strong base support at RMB 13,670/mt on Wednesday.

Goods from Chihong Zn & Ge and Yubei traded on Wednesday between RMB 13,670-13,680/mt in Shanghai, a discount of around RMB 50/mt over SHFE 1405 lead contract. Shuangyan and Humon resources were sold between RMB 13,650-13,660/mt. Lead smelters still were reluctant to trade, with a vast majority of supply from Chihong Zn & Ge and Humon in the market. Traders didn’t move hedged goods actively on concern about the difficulty of restocking from lead smelters and on expectations of narrower spot discount in the future. Downstream producers continued to conduct purchases on an as-needed basis since market sentiment failed to improve after lead prices stabilized, with trading activity fairly light on Wednesday.

SHFE 1406 zinc contract followed LME zinc up to RMB 14,770/mt after opening lower at RMB 14,695/mt on Tuesday night, and finally closed at RMB 14,760/mt, up RMB 20/mt or 0.14%. Trading volumes during the night hours increased 768 lots to 11,936 lots, and positions also added 1,228 lots to 73,860 lots. The most active contract started Wednesday at RMB 14,765/mt, and fluctuated in a narrow band of RMB 14,740-14,780/mt as LME zinc was range-bound. Finally, June zinc on the SHFE ended RMB 15/mt or 0.1% higher at RMB 14,755/mt. Trading volumes during the daytime session dropped 9,266 lots to 21,378 lots, but positions were up 2,852 lots to 75,458 lots.

In Shanghai’s physical zinc market, #0 zinc largely traded between RMB 14,620-14,650/mt on Wednesday, RMB 120-150/mt below SHFE 1406 zinc contract prices. #1 zinc prices were between RMB 14,600-14,610/mt. SHFE 1406 zinc contract moved sideways, depressing traders’ buying interest. Smelters became less willing to sell. Some downstream producers entered the market now that zinc prices have stopped falling, but trading volumes still underperformed a day earlier. Prices were RMB 14,640-14,650/mt for Shuangyan brand #0 zinc, and RMB 14,620-14,630/mt for Qinxin, Jiulong and Feilong brand #0 zinc. In the afternoon, Shuangyan brand #0 zinc was mainly offered between RMB 14,640-14,650/mt.

In Shanghai’s physical tin market, most transactions were reported between RMB 139,000-140,500/mt on Wednesday. Small amounts of Nanshan and Jinlong brand tin traded lower at RMB 138,800/mt. Overall trading activity was thin.

In Shanghai, SMM #1 nickel prices rose to RMB 101,300-102,300/mt Wednesday. Jinchuan Group raised its ex-works prices by RMB 4,500/mt to RMB 103,000/mt. Nickel contract on China Stainless Steel Exchange posted noticeable increase for a second trading day, and the volatile prices enlivened arbitrage trade. Traders selling goods to downstream buyers held prices firm. Buyers made inquiries actively, but purchases remained limited. In the afternoon, quotes for spot nickel rose to RMB 102,000-103,000/mt, with trading still thin.

SHFE base metals
China metals prices
SHFE night trading

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