SMM Base Metals Market Daily Review (2014-3-27)

SHANGHAI, Mar. 28 (SMM)--

Copper:
SHFE copper prices managed to hover between RMB 45,850-46,050/mt, and closed down RMB 210/mt at RMB 45,930/mt during Wednesday's night session. During the trading hours, trading volumes fell to around 220,000 lots, while positions basically held flat for the most active SHFE copper contract. On Thursday, SHFE copper prices rebounded to a high of RMB 46,250/mt due to more investors liquidating positions during the afternoon trading session. The red metal, however, retreated to an intraday low of RMB 45,720/mt at the tail of the trading, and finished down RMB 410/mt, or 0.89%, at RMB 45,730/mt on Thursday. Trading volumes and positions for the most active SHFE copper contract were off 98,916 lots and 11,648 lots, respectively. Trading volumes for the SHFE 1407 copper contract contracted 22,028/mt, and positions gained 19,318 lots. SHFE copper prices are unlikely to rise significantly in the near term given negative technical indicators.

In the Shanghai physical market, copper was offered on Thursday at a premium of RMB 140-200/mt over SHFE current-month copper contracts. Traded prices were between RMB 46,300-46,350/mt for standard-quality copper and RMB 46,320-46,420/mt for high-quality copper. As SHFE copper prices lacked impetus to rebound, cargo holders moved goods to generate cash at high prices. Since market participants regarded the RMB 200/mt premium as too high, high-quality copper prices failed to rise further. Although price gap between standard-quality copper and high-quality copper narrowed to less than RMB 50/mt, middlemen traded less actively than Wednesday. Meanwhile, downstream producers purchased goods only as needed on Thursday. As SHFE copper prices fell during the afternoon trading session, cargo holders moved goods at high prices, with most transactions done with high-quality copper brands. Spot copper traded mostly between RMB 46,350-46,500/mt, at a narrower premium of RMB 120-180/mt on Thursday.
       
Aluminum:
On Wednesday night, SHFE 1406 aluminum contract moved lower to RMB 12,870/mt after starting at RMB 12,920/mt, and closed the session at RMB 12,880/mt. Trading volumes totaled 11,172 lots, and positions gained 696 lots to 117,946 lots. During Thursday's daytime trading hours, the most active contract rebounded to RMB 12,965/mt before finishing up RMB 10/mt at RMB 12,915/mt. Trading volumes totaled 16,936 lots, while positions were down 832 lots to 117,114 lots.

Spot aluminum largely traded at RMB 12,410-12,430/mt in Shanghai on Thursday, RMB 12,380-12,410/mt in Wuxi, and RMB 12,430-12,440/mt in Hangzhou. Market supply was limited, while buyers increased purchases, pushing prices up. In the afternoon, sellers raised offers to RMB 12,440-12,450/mt, but transactions were limited.

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 14,830/mt on Thursday, then moved between RMB 14,825-14,850/mt. As LME zinc prices fell with LME copper prices, SHFE 1406 zinc contract prices dipped to RMB 14,790/mt, and closing the day at RMB 14,805/mt, down RMB 40/mt or 0.27%. Trading volumes decreased by 7,876 lots, to 17,076 lots, and total positions decreased by 190 lots, to 76,480 lots.

#0 zinc prices were between RMB 14,660-14,680/mt, with spot discounts between RMB 150-170/mt against SHFE 1406 zinc contract prices. #1 zinc prices were around RMB 14,640/mt. SHFE 1406 zinc contract prices opened at RMB 14,830/mt on Thursday, and leveled out. Traders stayed on the sidelines, but some smelters increased supply due to cash flow problems. Downstream buying interest was low as zinc prices lacked ability to rebound, but replenished stocks before the week's end. Shuangyan and Huize branded #0 zinc prices were around RMB 14,680/mt, with RMB 14,670/mt for Yuguang and Qilin branded #0 zinc, and RMB 14,660/mt for Qinxin, Jiulong and Feilong branded #0 zinc.
 
Lead:
SHFE lead prices dipped briefly to RMB 13,760/mt after starting at RMB 13,770/mt, and then rebounded to end up RMB 15/mt at RMB 13,800/mt during Wednesday's night session. During the trading hours, trading volumes shed 100 lots to 58 lots, while positions gained 8 lots to 7,536 lots. On Thursday, SHFE lead prices sank to around RMB 13,760-13,780/mt, and finished down RMB 35/mt at RMB 13,750/mt. Trading volumes totaled 864 lots, while positions contracted 244 lots to 7,284 lots. SHFE lead prices look set to fluctuate between RMB 13,720-13,780/mt in the near term with the lack of guidance from major news.

In the Shanghai physical lead market, traded prices were essentially unchanged from Wednesday. Goods from Chihong Zn & Ge, Chengyuan, Nanfang, and Tongguan traded on Thursday at RMB 13,710/mt, a discount of around RMB 60/mt over SHFE 1405 lead contract prices. Shuangyan resources wrapped with iron sheet were offered at RMB 13,650/mt. Lead smelters had high willingness to trade due to tight liquidity by the end of the first quarter and a small rally in lead prices, with significantly more spot lead supply in the market. Downstream producers, however, had little buying interest against sales difficulty and banking loan repayment pressure, leaving trading activity still light on Thursday.
   
Tin:
In Shanghai physical tin market, tepid demand dragged prices down on Thursday. Goods from Jiangxi traded as low as RMB 138,000/mt, while those from Yunnan largely traded around RMB 139,000/mt. Holders of Yunxi brand tin held offers firm at RMB 140,000-140,500/mt, but few deals were completed.

Nickel:
In Shanghai, SMM #1 nickel prices were between RMB 100,500-101,500/mt. Jinchuan lowered nickel prices by RMB 1,000/mt to RMB 101,800/mt. Trading was muted, with trading volumes made by traders decreasing and downstream buyers taking a wait-and-see attitude.