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SMM Base Metals Market Daily Review (2014-4-11)
Apr 14,2014 10:19CST
price review forecast
SHFE copper prices fell to as low as RMB 46,260/mt after starting at RMB 46,430/mt, but then encountered resistance at RMB 46,490/mt during Thursday’s night session.

SHANGHAI, Apr. 14 (SMM) –

SHFE copper prices fell to as low as RMB 46,260/mt after starting at RMB 46,430/mt, but then encountered resistance at RMB 46,490/mt during Thursday’s night session. The red metal closed up RMB 220/mt at RMB 46,440/mt. Traded volumes fell further to around 120,000 lots, while positions increased by 7,484 lots. On Friday, SHFE copper prices fell to find support at RMB 46,200/mt, and later rebounded to RMB 46,350/mt. The red metal followed LME copper prices up during the afternoon trading session to as high as RMB 46,850/mt and finished up RMB 520/mt, or 1.13%, at RMB 46,740/mt. Traded volumes shed by 44,298 lots, and positions expanded by 4,708 lots.

In the Shanghai physical market, copper was offered Friday at premiums of RMB 200-280/mt over the SHFE current-month copper contract price. Traded prices were RMB 47,350-47,430/mt for standard-quality copper and RMB 47,400-47,480/mt for high-quality copper. As SHFE copper prices rebounded slightly and the price gap between the SHFE 1404 copper contract and the SHFE 1405 copper contract hovered around RMB 400/mt, cargo holders continued to push up physical copper premiums. Hydro-copper was barely found in the market. Middlemen entered the market to purchase copper, while downstream producers had higher buying interest as well ahead of the weekends, with a smaller amount of copper supply. Physical premiums rose further by the midday due to decreasing supply, and trading activity also improved slightly on Friday. Cargo holders turned more bullish after SHFE copper prices rallied by nearly RMB 500/mt, and when combined with a wider RMB 500/mt price gap between the SHFE copper contracts drove up physical premiums during the afternoon trading hours. Those in need of delivering goods for long-term orders purchased a large amount of copper in the market, causing shortages of physical supply. High-quality copper was sparsely offered at premiums of RMB 270-350/mt, and traded prices rose accordingly. Some cargo holders intended to push premiums up to above RMB 500/mt, but transactions were rare, while downstream producers held a wait-and-see posture. The SHFE reported continuous declines in copper inventories, down further 29,699 mt to 142,671 mt, since downstream purchased in larger volumes and imported copper was hindered.

On last Thursday night, SHFE 1406 aluminum contract crept higher to RMB 13,245/mt after starting at RMB 13,175/mt, and finished the night session up RMB 70/mt at RMB 13,200/mt. Trading volumes totaled 21,158 lots, and positions dropped 294 lots to 125,874 lots. On last Friday, the most active contract fell back below RMB 13,200/mt before bouncing back to RMB 13,290/mt, ending the daytime trading hours RMB 135/mt or 1.03% higher at RMB 13,265/mt. Trading volumes totaled 26,714 lots, and positions increased 1,288 lots to 127,162 lots. On the technical side, the light metal should challenge resistance at the 60-day moving average this coming week.

Spot aluminum largely traded at RMB 12,910-12,920/mt in Shanghai, RMB 12,890-12,920/mt in Wuxi, and RMB 12,900-12,930/mt in Hangzhou last Friday. Rising SHFE aluminum prices lured traders in. Downstream buyers increased raw material purchases slightly heading into the weekend. In the afternoon, sellers hiked offers to RMB 12,940-12,950/mt, and trading was modest.

The most active SHFE 1405 lead contract price advanced to the range of RMB 13,720-13,750 after starting at RMB 13,710/mt, and ended up RMB 35/mt, or 0.26%, at RMB 13,750/mt during Thursday’s night session. Traded volumes were only 14 lots, while positions were off 8 lots to 6,326 lots.

On Friday, SHFE lead prices initially sank to RMB 13,715/mt, but later surged to RMB 13,785/mt, helped by a sharp rally in LME lead prices. The metal closed up RMB 65/mt, or 0.47%, at RMB 13,780/mt on Friday. Traded volumes gained 338 lots to 996 lots, while positions added 120 lots to 6,454 lots. SHFE lead prices found solid support at RMB 13,700/mt, and are expected to test resistance at the RMB 13,800/mt mark in the near term.

As the delivery date approached, the SHFE 1404 lead contract price still was below physical prices. Positions for the contract rose sharply by over 3,000 lots during the past two trading days, and reached 6,570 lots on Friday.

In the Shanghai physical lead market, goods from Chihong Zn & Ge, Nanfang, Tongguan, and Yuguang traded Friday between RMB 13,740-13,750/mt at a par with the most active SHFE 1405 lead contract price. Humon resources were sold at RMB 13,730/mt. A majority of physical lead supply came from warehouses owned by traders, while only Humon and Nanfang moved goods among lead smelters. Despite the clear upside trend in lead prices, downstream producers still only purchased as needed, with insignificant increase in trading volumes.

SHFE 1406 zinc contract prices opened high at RMB 14,980/mt on Thursday evening, the highest in the night trading. LME zinc prices lacked ability to rise further during US trading hours, and SHFE 1406 zinc contract prices hovered between RMB 14,955-14,790/mt, and closing at RMB 14,970/mt, up RMB 55/mt or 0.37%.

SHFE 1406 zinc contract prices opened at RMB 14,960/mt on Friday, hovering between RMB 14,950-14,960/mt in the morning, and edging up with LME zinc prices, once touching 15,010/mt, and closing at RMB 15,000/mt, up RMB 85/mt or 0.57%. Trading volumes increased by 50 lots, to 12,980 lots, and total positions decreased by 1,498 lots, to 61,078 lots.

#0 zinc prices were between RMB 14,860-14,880/mt, with spot discounts between RMB 80-100/mt against SHFE 1406 zinc contract prices. #1 zinc prices were between RMB 14,830-14,840/mt. SHFE 1406 zinc contract prices opened at RMB 14,960/mt on Friday, and then leveled out. Some smelters conducted maintenance, while traders were holding back goods, causing supply tightness and keeping spot prices firm. Spot discounts narrowed by RMB 10-20/mt. Transactions improved as downstream enterprises replenished stocks at the week’s end. Shuangyan branded #0 zinc prices were between RMB 14,870-14,880/mt, with RMB 14,860-14,870/mt for Yuguang, Qinxin, Jiulong and Baohui branded #0 zinc.

In Shanghai physical tin market, prevailing traded prices were RMB 140,000-141,000/mt last Friday. A few offered at RMB 139,500/mt, but such cheap goods were quickly sold out. Rising LME tin allowed smelters in China to raise offers, but downstream producers were modestly interested in buying.

In Shanghai, SMM #1 nickel prices were between RMB 117,300-118,300/mt. Jinchuan raised nickel prices by RMB 2,000/mt, to RMB 120,000/mt. Spot transactions were down as spot prices have been rising for several consecutive days, with traded prices only up to RMB 117,500-118,500/mt in the afternoon. Downstream purchasing was modest.

SHFE base metals

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