SMM Base Metals Market Daily Review (2014-3-28)

SHANGHAI, Mar. 31 (SMM) –

Copper
SHFE copper prices moved narrowly by less than RMB 100/mt swing after opening at RMB 46,020/mt, finding solid support at RMB 45,820/mt, and finished up RMB 40/mt at RMB 46,020/mt during Thursday’s night session. During the trading hours, trading volumes stood at around 210,000 lots, while positions contracted by 2,106 lots. On Friday, SHFE copper prices followed LME copper prices up to an intraday high of RMB 46,620/mt, and closed up RMB 470/mt, or 1.02% at RMB 46,450/mt on Friday. Trading volumes increased by 75,620 lots, and positions contracted by 32,154 lots for the most active SHFE copper contract.

In the Shanghai physical market, copper was offered on Friday at a premium of RMB 100-180/mt over SHFE current-month copper contract prices. Traded prices were RMB 46,500-46,540/mt for standard-quality copper and RMB 46,540-46,620/mt for high-quality copper. As SHFE copper prices basically held flat in the morning trading session, cargo holders continued to trade the same as Thursday, but gradually lowered spot premium due to sluggish trading activity. After SHFE copper prices later bounced back, spot premium for high-quality copper narrowed to RMB 150-160/mt near midday, while spot premium for standard-quality copper also contracted slightly. A smaller number of middlemen entered market, and downstream producers only purchased goods as needed before the weekend. Trading activity slowed on Friday since market participants did not expect spot premium to rise next week. As SHFE current-month copper contract prices rebounded by nearly RMB 400/mt during the afternoon trading session, spot copper supply grew accordingly. The red metal traded at a narrower premium of RMB 100-160/mt between RMB 46,500-46,750/mt. Some middlemen entered the market to purchase spot copper and sell futures positions. SHFE copper inventories contracted 16,176 mt to 193,725 mt last week, indicating that downstream producers began hunting for bargains as copper prices stabilized.

Aluminum
Last Thursday night, SHFE 1406 aluminum contract rose to RMB 12,960/mt after starting at RMB 12,920/mt, and ended at RMB 12,935/mt. Trading volumes totaled 9,930 lots, while positions gained 878 lots to 117,992 lots. Last Friday, The most active SHFE aluminum contract climbed to as high as RMB 13,095/mt by midday, but then pared some gains due to profit-taking to finish the daytime session at RMB 13,035/mt, up RMB 120/mt or 0.93%. Trading volumes totaled 24,076 lots, and positions shed 620 lots to 117,372 lots.

Spot aluminum largely traded at RMB 12,500-12,520/mt in Shanghai last Friday, RMB 12,500-12,530/mt in Wuxi, and RMB 12,490-12,510/mt in Hangzhou. SHFE 1404 aluminum contract recorded a five-day winning streak, enabling sellers in spot markets to hike offers. Buyers stepped up purchases ahead of the weekend, pushing prices up further. In the afternoon, SHFE 1404 aluminum contract rose further, enabling cargo holders to raise offers to RMB 12,550-12,570/mt. Trading was modest. 

Lead
The most active SHFE 1405 lead contract prices essentially hovered around RMB 13,755/mt after starting at RMB 13,745/mt, and finished down RMB 5/mt, or 0.04%, at RMB 13,760/mt during Thursday’s night session. During the trading hours, trading volumes were only 16 lots, while positions shed 2 lots to 7,282 lots. On Friday, SHFE lead prices followed LME lead prices up to a high of RMB 13,845/mt after breaking above the RMB 13,800/mt mark, and ended up RMB 60/mt, or 0.44%, at RMB 13,825/mt. Trading volumes contracted 412 lots to 452 lots, and positions shrunk 26 lots to 7,258 lots. SHFE lead prices are expected to test resistance at RMB 13,900/mt with upbeat technical indicators.

In the Shanghai physical lead market, goods from Chihong Zn & Ge and Chengyuan were offered on Friday between RMB 13,700-13,710/mt, at a broader discount of RMB 80/mt over SHFE 1405 lead contract prices. Humon and Shuangyan resources traded at RMB 13,680/mt and RMB 13,650/mt, respectively. With still ample supply in the market, traders stepped up purchases in a bullish attitude, but downstream producers were hindered from buying goods by tight liquidity at the end of March, causing a wider spot discount on Friday.
 
Zinc
SHFE 1406 zinc contract prices opened at RMB 14,825/mt on Thursday evening, and then moved between RMB 14,810-14,840/mt, and finally closing at RMB 14,820/mt, down RMB 5/mt or 0.03%.

SHFE 1406 zinc contract prices opened at RMB 14,820/mt on Friday, moving between RMB 14,820-14,840/mt in the morning session, and rising to RMB 14,885/mt with LME zinc prices, and closing the day at RMB 14,855/mt, up RMB 30/mt or 0.2%. Trading volumes decreased by 2,434 lots, to 19,510 lots, and total positions decreased by 2,956 lots, to 73,918 lots.

#0 zinc prices were between RMB 14,660-14,690/mt, with spot discounts between RMB 140-170/mt against SHFE 1406 zinc contract prices. #1 zinc prices were between RMB 14,630-14,650/mt. SHFE 1406 zinc contract prices opened at RMB 14,825/mt on Friday, and then moved between RMB 14,820-14,840/mt, flat with the previous day. Some smelters were moving goods actively due to cash flow tightness, but holding back some brands, leaving supply tight. Traders increased purchases, while downstream buyers also replenished stocks at the week’s end, causing transactions improve. Shuangyan branded #0 zinc prices were between RMB 14,680-14,690/mt, with RMB 14,680/mt for Yuguang, and RMB 14,660-14,670/mt for Qinxin, Jiulong and Feilong branded #0 zinc.

Tin
In Shanghai physical tin market, tightening liquidity at the quarter’s end took a toll on trading activity, sending prices down. Prices for Yunshan brand tin fell most sharply, with mainstream traded prices down to RMB 138,000-138,300/mt. Prices were RMB 137,800/mt for Nanshan and Jinlong brand tin, and RMB 139,000/mt for Yunheng brand tin. Yunxi brand tin largely traded around RMB 140,000/mt.

Nickel
In Shanghai, SMM #1 nickel prices were between RMB 100,500-101,500/mt. Spot transactions were brisk as some traders purchased at RMB 101,000-102,000/mt. But downstream buying interest was low.