SMM Base Metals Market Daily Review (2014-3-25)

SHANGHAI, Mar. 26 (SMM)--

Copper:
The most active SHFE copper contract price started Monday's night session at RMB 45,480/mt, and later encountered resistance at RMB 45,630/mt. The red metal later dipped to a low of RMB 45,230/mt, and closed up RMB 20/mt at RMB 45,270/mt. During the night session, trading volumes fell slightly to around 250,000 lots, while positions were barely changed. The most active SHFE copper contract prices fluctuated between RMB 45,150-45,350/mt on Tuesday, and then surged by nearly RMB 800/mt to RMB 46,350/mt. The contract prices hovered around RMB 45,800/mt during the afternoon trading session, and finished up RMB 640/mt, or 1.41%, at RMB 45,890/mt on Tuesday. Trading volumes gained by 51,082 lots, and positions shed by sharply 43,156 lots. SHFE copper prices have found stronger support at the 5-day moving average on Tuesday and are expected to bounce back in the near term.

Copper was offered on Monday at a premium of RMB 80-170/mt over SHFE current-month copper contract prices in the Shanghai market. Traded prices were RMB 45,550-46,100/mt for standard-quality copper and RMB 45,600-46,200/mt for high-quality copper. As SHFE copper prices traded in small swings during the morning trading session, cargo holders move goods steadily. Prices for standard-quality copper rose due to tight supply, and high-quality copper was sold at a higher premium, with downstream producers and middlemen trading briskly. After SHFE copper prices rose by RMB 200/mt, high-quality copper was quoted at a narrower premium of RMB 80-150/mt. SHFE current-month copper contract prices later followed LME copper prices up sharply by RMB 800/mt to touch a high of RMB 46,460/mt, leaving spot trading muted. Downstream producers and middlemen were cautious in buying goods at high prices. A rebound in SHFE copper prices, however, boosted market confidence in sustained spot premiums. Spot premiums of goods traded with invoices were around RMB 30/mt higher than those of goods traded without invoices on Tuesday. As SHFE copper prices moved narrowly during the afternoon trading session, spot copper was offered steadily at a premium of RMB 100-180/mt on Tuesday. Some middlemen continued to enter the market to buy goods, with spot copper prices barely changed.
      
Aluminum:
The most active SHFE 1406 aluminum contract went down after starting Monday's night session at RMB 12,765/mt, and ended at RMB 12,745/mt. Trading volumes totaled 7,466 lots, and positions gained 1,352 lots to 121,484 lots. On Tuesday, boosted by rising SHFE copper prices, SHFE aluminum for June delivery bounced back to an intraday high of RMB 12,880/mt, and finished at RMB 12,880/mt. Trading volumes surged to 26,476 lots, while positions contracted 2,316 lots to 119,168 lots.

Spot aluminum largely traded at RMB 12,270-12,310/mt in Shanghai on Tuesday, RMB 12,260-12,280/mt in Wuxi, and RMB 12,300-12,310/mt in Hangzhou. SHFE 1404 aluminum contract snapped two-week losing streak and gained RMB 70/mt in the morning session, allowing cargo holders in Shanghai to raise offers slightly. Downstream producers still held to the sidelines, though. Traders increased purchases against rising SHFE aluminum. In the afternoon, SHFE 1404 aluminum contract rose further, allowing sellers in spot markets to hike offers to RMB 12,340-12,370/mt, but such high prices depressed buying interest.

Zinc:
SHFE 1406 zinc contract prices opened at RMB 14,775/mt on Monday evening, and touched RMB 14,815/mt before falling to RMB 14,750-14,760/mt, and finally closing at RMB 14,750/mt, down RMB 10/mt or 0.07%.

SHFE 1406 zinc contract prices opened at RMB 14,755/mt on Tuesday, then moved between RMB 14,750-14,770/mt. As industry commodity prices jumped at 11:00 AM, SHFE copper prices rose, driving up SHFE 1406 zinc contract prices to touch RMB 14,850/mt, but lacking ability to rise further, then moving between RMB 14,790-14,810/mt, and closing the day at RMB 14,805/mt, up RMB 45/mt or 0.3%. Trading volumes increased by 13,092 lots, to 30,754 lots, and total positions decreased by 1,438 lots, to 76,588 lots.

#0 zinc prices were between RMB 14,620-14,650/mt, with spot discounts between RMB 120-170/mt against SHFE 1406 zinc contract prices. #1 zinc prices were between RMB 14,600-14,610/mt. SHFE 1406 zinc contract prices opened at RMB 14,755/mt on Tuesday, and leveled out between RMB 14,760-14,770/mt. Shuangyan branded #0 zinc prices were around RMB 14,640/mt, with spot discounts of RMB 120/mt against SHFE 1406 zinc contract prices. Prices for other regular brands were around RMB 14,620/mt. As SHFE copper prices soared after 11:00 AM, SHFE 1406 zinc contract prices rose sharply, but spot prices were resistant to increases, with discounts expanding to RMB 140-170/mt. Shuangyan branded #0 zinc prices rose to RMB 14,650-14,660/mt, with RMB 14,630-14,640/mt for Qilin, Jiulong and Feilong branded #0 zinc. Large amounts of #0 zinc from India and Belgium arrived, with prices between RMB 14,600-14,620/mt. Zinc price volatility increased, when combined with market optimism, traders were active. But downstream buyers continued to purchase as needed, with transactions improving and mainly made among traders.

Lead:
The most active SHFE 1405 lead contract price followed LME lead prices down to RMB 13,720/mt after starting at RMB 13,775/mt during Monday's night session. Trading volumes shed 314 lots to 136 lots, while positions added only 96 lots to 7,380 lots. Longs entered the market actively after the US dollar index fell below the 80 mark, pushing SHFE 1405 lead contract prices to RMB 13,775/mt. During the afternoon trading session, SHFE lead prices fluctuated around RMB 13,760/mt, and closed up RMB 30/mt or 0.22% at RMB 13,770/mt on Tuesday. Trading volumes contracted 44 lots to 406 lots, while positions gained 54 lots to 7,338 lots. SHFE lead prices met resistance at the 20-day moving average, but found solid support at the 5-day moving average on Tuesday.

Goods from Chihong Zn & Ge, Chengyuan, Nanfang, and Shuangyan traded on Monday between RMB 13,690-13,710/mt in Shanghai, a discount of around RMB 60/mt over the most active SHFE 1405 lead contract price. Price gap between various lead brands narrowed with a lack of low-priced supply. As lead prices stabilized and high demand season neared an end, lead smelters had higher willingness to move goods, while traders also were more inclined to purchase goods. Downstream lead-acid battery producers, however, only purchased as needed due to sluggish end-user consumption. Trading activity was modest on Tuesday.
   
Tin:
In Shanghai physical tin market, mainstream traded prices inched down to RMB 138,500-139,000/mt on Tuesday. Yunxi brand tin traded higher at RMB 140,000-140,500/mt. Trading was bleak. 
 
Nickel:
In Shanghai, SMM #1 nickel prices were between RMB 102,100-103,100/mt, with transactions brisk. Traders were holding back goods, while market players were actively replenishing stocks, with mainstream prices between RMB 102,400-103,400/mt in the afternoon. Downstream buyers purchased goods modestly.