SMM Base Metals Market Daily Review (2014-3-26)

SHANGHAI, Mar. 27 (SMM)--

Copper:
The most active SHFE copper contract price reached a high of RMB 46,400/mt after starting higher at RMB 46,150/mt in Tuesday's night session, helped by rising LME copper prices. The contract price closed up RMB 620/mt at RMB 46,240/mt. During the trading hours, trading volumes stood at around 340,000 lots, and positions added 9,998 lots for the most active SHFE copper contract. On Tuesday, SHFE copper prices hovered mostly between RMB 46,050-46,250/mt, touching a low of RMB 45,920/mt in the morning trading session, and finished up RMB 520/mt, or 1.14%, at RMB 46,140/mt. Trading volumes shed 126,000 lots, while positions contracted 9,888 lots for the most active SHFE copper contract. Trading volumes gained 11,810 lots, and positions rose 15,158 lots for SHFE 1407 copper contracts. SHFE copper was trapped between the 5-day and 20-day moving averages on Wednesday.

Spot copper was offered on Wednesday at a premium of RMB 140-200/mt in the Shanghai physical market. Traded prices were RMB 46,370-46,470/mt for standard-quality copper and RMB 46,400-46,530/mt for high-quality copper. As SHFE copper prices extended gains, cargo holders turned more bullish towards copper prices. Spot premiums were quoted higher due to shortage of spot copper supply since some hedged goods encountered difficult moving out. Guixi copper was offered at a premium of more than RMB 200/mt after SHFE copper prices rose slightly by the midday, but caution dominated the market at such high prices. Downstream producers purchased only as needed, while middlemen traded briskly on Wednesday. Most market participants believe there is still upside room for copper prices and spot premium. As SHFE copper prices fluctuated narrowly during the afternoon trading session, spot copper rarely traded above a premium of RMB 200/mt. Cargo holders thus moved goods at a narrower premium of RMB 120-200/mt, with traded prices barely changed from the morning trading hours.
      
Aluminum:
On Tuesday night, SHFE 1406 aluminum contract dipped to RMB 12,905/mt after opening higher at RMB 12,950/mt, and closed at RMB 12,925/mt. Trading volumes were 11,240 lots, while positions were off 342 lots to 118,826 lots. On Wednesday, the most active contract fell further to RMB 12,850/mt, but later recovered early losses to end up RMB 135/mt, or 1.05%, at RMB 12,940/mt. Trading volumes during the daytime session totaled 16,294 lots, and positions shrunk 1,576 lots to 117,250 lots.

Spot aluminum largely traded at RMB 12,350-12,370/mt in Shanghai on Wednesday, RMB 12,340-12,360/mt in Wuxi, and RMB 12,350-12,370/mt in Hangzhou. Buyers went bargain hunting early in the morning, but withdrew once prices rose. In the afternoon, SHFE 1404 aluminum contract drifted higher, allowing some sellers in spot markets to hike offers to RMB 12,380-12,390/mt.

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 hovered around RMB 13,780/mt after starting at RMB 13,795/mt, and closed up RMB 30/mt, or 0.15%, at RMB 13,780/mt during Tuesday's night session. During the trading hours, trading volumes totaled 158 lots, and positions added 126 lots to 7,464 lots. On Wednesday, SHFE lead prices rose to RMB 13,800/mt after dropping to RMB 13,765/mt, and finished up RMB 40/mt, or 0.29%, at RMB 13,790/mt. Trading volumes gained 364 lots to 770 lots, while positions expanded 190 lots to 7,528 lots. SHFE lead prices are expected to test resistance at the RMB 13,800/mt in the near term, with positive technical indicators.

Despite an uptick in SHFE lead prices on Wednesday, traded prices for spot lead were essentially unchanged from Tuesday. Goods from Chihong Zn & Ge and Chengyuan traded between RMB 13,710-13,720/mt, at a broader discount of around RMB 70/mt over the most active SHFE 1405 lead contract price. Traded prices were RMB 13,680/mt for Shuangyan supply wrapped with steel-plastic and RMB 13,670/mt for some wrapped with iron sheet. Low-priced lead supply was scarce in the Shanghai market. Lead smelters moved goods at a slower pace than Tuesday, while downstream producers had lower buying interest against tight liquidity on Wednesday, with modest trading activity.
   
Tin:
In Shanghai physical tin market, most transactions were between RMB 138,500-140,500/mt on Wednesday. Goods from Jiangxi traded at RMB 138,500/mt, while those from Yunnan largely traded at RMB 139,000-140,000/mt. A few smelters from Yunnan discounted to promote sales against tightening liquidity at the quarter's end. Trading was thin.

Nickel:
In Shanghai, SMM #1 nickel prices were between RMB 101,700-102,700/mt. most traders were holding back their goods, and downstream buying interest was low, leaving transactions muted. Nickel prices were between RMB 101,800-102,800/mt in the afternoon, with transactions mainly made for Russian nickel, and Jinchuan nickel supply with invoice low.