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SMM Base Metals Market Daily Review (2014-3-20)
Mar 21,2014 12:51CST
price review forecast
LME copper prices fell as low as to USD 6,300/mt, and closed higher at USD 6,580/mt on Wednesday.

SHANGHAI, Mar. 21 (SMM) –

LME copper prices fell as low as to USD 6,300/mt, and closed higher at USD 6,580/mt on Wednesday. SHFE copper prices followed LME copper prices down to a low of RMB 43,770/mt last seen in July 2009, but surged to RMB 46,500/mt at the tail of the trading in Wednesday’s night session, breaking above the 10-day moving average. During the trading hours, trading volumes exceeded 1 million lots, while positions tumbled by over 38,000 lots. SHFE copper prices hovered around RMB 44,750/mt after starting at RMB 44,800/mt on Thursday. In the Asian trading hours, markets continued to digest the US Federal Reserve’s statements, while the US dollar index held steady above the 80 mark. The red metal fell again in the afternoon trading session, and ended up RMB 440/mt, or 0.98%, at an intraday low of RMB 45,190/mt. Trading volumes neared 1.6 million lots, up 872,000 lots, and positions contracted by 51,690 lots. Positions for SHFE 1405 copper contract and 1406 copper contract decreased by more than 70,000 lots, with turnover rate reaching 400%.

Copper was offered at a premium of RMB 0-100/mt over SHFE current-month copper contract prices in Shanghai on Thursday. Traded prices were RMB 45,650-45,780/mt for standard-quality copper and RMB 45,700-45,880/mt for high-quality copper. After SHFE copper prices rebounded dramatically on Thursday, a majority of cargo holders offered high prices to push spot premium higher, but received little recognition in the market. An increasing number of downstream producers stayed out of the market, awaiting guidance from clearer SHFE copper price movements. As SHFE copper prices continued to fall during the afternoon trading session, spot trading activity slowed, with transactions done mostly by middlemen. High-quality copper was offered lower at a premium of RMB 40-80/mt over SHFE current-month copper contract prices, while standard-quality copper traded at a par between RMB 45,400-44,750/mt.

SHFE 1406 aluminum contract dipped to RMB 12,635/mt after opening at RMB 12,835/mt on Wednesday night, but then rebounded to close the night session at RMB 13,010/mt. On Thursday, the most active contract fell again to RMB 12,830/mt before ending RMB 140/mt or 1.08% lower at RMB 12,810/mt. Trading volumes soared 31,950 lots to 61,616 lots, but positions were down 1,268 lots to 117,506 lots. On the technical side, June aluminum on the SHFE may level out soon.

Spot aluminum largely traded at RMB 12,400-12,420/mt in Shanghai on Thursday, RMB 12,390-12,420/mt in Wuxi, and RMB 12,430-12,450/mt in Hangzhou. Sellers became anxious to sell against falling SHFE 1404 aluminum contract and mounting inventories, but tight cash drove downstream producers into a wait-and-see posture. In the afternoon, prices remained little changed, and trading was light.

The most active SHFE 1405 lead contract prices dipped to RMB 13,660/mt after starting at RMB 13,680/mt, but later followed LME lead prices up to around RMB 13,750/mt in Wednesday’s night session. The contract prices closed up RMB 30/mt at RMB 13,755/mt. During the trading hours, trading volumes rose to 136 lots, while positions shrunk 44 lots to 7,114 lots. SHFE 1405 lead contract prices fell slightly to RMB 13,755/mt after advancing to the RMB 13,800/mt mark, and finished up RMB 20/mt, or 0.15%, at RMB 13,745/mt on Thursday. Trading volumes shed 276 lots to 714 lots, and positions added 102 lots to 7,260 lots. Lead smelters were reluctant to move goods against shortages of lead concentrates in China, lending some support to SHFE lead prices.

In the Shanghai physical lead market, goods from Chihong Zn & Ge traded on Thursday at RMB 13,720/mt, a discount of RMB 50/mt over the most active SHFE lead contract prices. Tongguan and Humon resources were sold at RMB 13,710/mt and RMB 13,670-13,680/mt, respectively. Lead smelters stepped up moving goods after spot lead prices were underpinned by a rise in SHFE lead prices, but there was still limited amount of lead warrant supply flowing in the physical market. Although downstream producers had significantly higher buying interest, tight lead supply in Shanghai restrained trading activity on Thursday.

SHFE 1406 zinc contract followed LME zinc down to RMB 14,620/mt after opening lower at RMB 14,705/mt on Wednesday night. However, prices bounced back to a session high of RMB 14,890/mt later in the day due to investors closing short positions. The most active contract ended the night session up RMB 110/mt or 0.75% at RMB 14,860/mt. On Thursday, June zinc on the SHFE opened at RMB 14,860/mt before following LME zinc down to RMB 14,780/mt. The contract fluctuated between RMB 14,780-14,810/mt for most of the day, closing RMB 30/mt or 0.2% higher at RMB 14,780/mt. Trading volumes added 2,654 lots to 24,032 lots, but positions were down 1,712 lots to 73,772 lots.

In Shanghai’s physical zinc market, #0 zinc largely traded between RMB 14,640-14,670/mt on Thursday, RMB 120-150/mt below SHFE 1406 zinc contract prices. #1 zinc prices were between RMB 14,620-14,630/mt. Smelters held back goods at low prices. Some downstream producers became more interest in buying now that zinc prices have stabilized, improving trading slightly. Prices were RMB 14,660-14,670/mt for Shuangyan brand #0 zinc, RMB 14,640-14,650/mt for Qinxin, Jiulong and Feilong brand #0 zinc, and RMB 14,640/mt for #0 Tongguan brand zinc. In the afternoon, Shuangyan brand #0 zinc hovered near RMB 14,660/mt.

In Shanghai’s physical tin market, most transactions were reported between RMB 139,000-140,500/mt on Thursday. Yunxi brand tin traded near RMB 140,500/mt, while first-tier brand tin other than Yunxi brand traded between RMB 139,500-140,000/mt. Trading was bleak.

SMM prices for #1 refined nickel were RMB 104,000-105,000/mt on Thursday. Jinchuan Group raised ex-works prices in Shanghai market to RMB 105,000/mt, up RMB 2,000/mt. Trading was brisk, and average traded volume at traders was 200 mt. However, downstream buyers showed limited buying interest. In the afternoon, spot prices edged lower to RMB 103,700-104,700/mt.

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