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SMM Base Metals Market Daily Review (2014-4-15)
Apr 16,2014 10:27CST
price review forecast
The most active SHFE copper contract price swung by less than RMB 200/mt after starting Monday’s night session at RMB 46,790/mt.

SHANGHAI, Apr. 16 (SMM) –

The most active SHFE copper contract price swung by less than RMB 200/mt after starting Monday’s night session at RMB 46,790/mt, meeting resistance at RMB 46,840/mt, and ended up RMB 40/mt at RMB 46,730/mt. Traded volumes fell to around 160,000 lots, while positions rose by 2,050 lots, with slower trading activity. SHFE copper prices rallied Tuesday to 47,800/mt, boosted by the SHFE current-month copper contract price, but later followed LME copper prices down to RMB 46,300/mt. The red metal hovered narrowly below RMB 46,500/mt during the afternoon trading hours, and finished down RMB 130/mt, or 0.28%, at RMB 46,560/mt. Traded volumes for the most active SHFE copper contract shed 159,000 lots, and positions lost 13,236 lots. SHFE copper prices should remain range-bound for the near term with mixed technical indicators.

In the Shanghai physical market, copper was offered Tuesday at discounts of RMB 150-300/mt over SHFE current-month copper contract prices. Traded prices were RMB 47,500-47,750/mt for standard-quality copper and RMB 47,600-47,880/mt for high-quality copper. Although SHFE copper prices gradually fell back, the price gap between SHFE 1404 and 1405 copper contracts still hovered at a high of RMB 800/mt. This, combined with the improved SHFE/LME arbitrage ratio, drew inflows of imported copper, which aggravated oversupply of physical copper in the market. Consequently, physical copper was quoted at discounts, and the discounts later expanded. After the price gap between SHFE 1404 and 1405 copper contracts narrowed to around RMB 600/mt, some speculators entered the market to purchase goods on a bullish sentiment towards physical premiums after the delivery date. As SHFE copper prices swung narrowly during the afternoon trading hours, cargo holders turned bullish on prices after the delivery date. Spot copper supply decreased, with imported brands prevailing in the market, causing volatility in copper discounts. Physical discounts initially were offered at RMB 120-200/mt, but narrowed to RMB 40-100/mt at the tail of the trading, with traded prices in the RMB 47,600-47,780/mt band. Some speculators still entered the market to purchase goods, while downstream producers remained on the sidelines before the delivery. Most investors expect physical premiums to be elevated on Wednesday.

On Monday night, SHFE 1406 aluminum contract hovered around RMB 13,240/mt for most of the night session after starting at RMB 13,230/mt, and finished the session at RMB 13,245/mt. Trading volumes totaled 8,984 lots, and positions added 216 lots to 124,440 lots. On Tuesday, the most active contract slipped to RMB 13,195/mt before closing down RMB 5/mt at RMB 13,210/mt. Trading volumes during the daytime hours totaled 14,318 lots, and positions tumbled 1,888 lots to 122,552 lots. SHFE 1407 aluminum contract looks set to become the most active contract soon.

Spot aluminum largely traded at RMB 12,970-12,990/mt in Shanghai, RMB 12,980-12,990/mt in Wuxi, and RMB 12,990-13,000/mt in Hangzhou on Tuesday. SHFE 1405 aluminum contracts, which will switch to the new current-month contract tomorrow, were firm, luring buyers in. In the afternoon, offers were unchanged and trading was thin.

The most active SHFE 1405 lead contract price advanced to RMB 13,820/mt after starting Monday’s night session at RMB 13,770/mt, and closed up RMB 45/mt, or 0.33%, at RMB 13,805/mt. Trading activity was brisk on Tuesday with the arrival of delivery for the SHFE 1404 lead contract. The most active SHFE 1405 lead contract price, however, dipped to around RMB 13,710/mt, dampened by the fall in the Shanghai Composite Index, and finished down RMB 15/mt, or 0.11%, at RMB 13,745/mt. Traded volumes added 618 lots to 1,316 lots, while positions gained 234 lots to 6,440 lots. SHFE lead prices have found strong support at RMB 13,700/mt, but encountered resistance at RMB 13,800/mt.

In the Shanghai physical lead market, goods from Chihong Zn & Ge traded between RMB 13,760-13,770/mt, initially at a par with the SHFE 1405 lead contract price but later at premiums of RMB 30-40/mt over the contract price. Traded prices were RMB 13,750/mt for Nanfang and Shuangyan brands, and RMB 13,730-13,740/mt for Humon resources. Smelters and traders cut back on deliveries in the wake of a sudden fall in SHFE lead prices, while downstream producers also expressed significantly lower buying interest with a wait-and-see posture. Traded volumes registered a marked drop Tuesday as against Monday’s level.

SHFE 1406 zinc contract prices opened high at RMB 15,000/mt on Monday evening, touching RMB 15,030/mt, and finally closing at RMB 15,000/mt, up RMB 50/mt or 0.33%. Trading volumes decreased by 3,660 lots to 5,802 lots, and total positions increased by 146 lots to 59,588 lots.

SHFE 1406 zinc contract prices opened at RMB 15,005/mt on Tuesday, then touched RMB 15020/mt before falling back, meeting resistance at the 60-day moving average, hovering between RMB 14,970-14,985/mt in the afternoon, and closing at RMB 14,975/mt, up RMB 25/mt or 0.17%. Trading volumes decreased by 1,052 lots, to 9,476 lots, and total positions decreased by 1,582 lots, to 58,006 lots.

#0 zinc prices were between RMB 14,950-14,970/mt, with spot discounts between RMB 10-40/mt against SHFE 1406 zinc contract prices. #1 zinc prices were around RMB 14,920/mt. SHFE 1406 zinc contract prices opened at RMB 15,020/mt on Tuesday, and then fluctuated between RMB 14,990-15,000/mt. Spot prices rose in response, with quotes for Shuangyan brand between RMB 14,960-14,970/mt. SHFE base metals prices dropped after the first trading session, and SHFE zinc prices were weighed down as a large number of longs left the market, dipping to RMB 14,980/mt. High spot quotes were down, but mainstream prices remained largely unchanged, with spot discounts narrowing to RMB 10-40/mt. Supply of some brands was tight, and downstream buying interest was depressed due to high prices, but purchases were brisk due to the high demand season for zinc. Shuangyan branded #0 zinc prices were between RMB 14,950-14,960/mt, with RMB 14,940-14,950/mt for Baohui branded #0 zinc, and RMB 14,950/mt for Yuguang, Jiulong, Qinxin and Feilong branded #0 zinc.

In Shanghai physical tin market, most transactions were between RMB 140,000-141,000/mt on Tuesday. Supply and demand waned in tandem as uncertain LME tin price movement drove market players into a wait-and-see posture.

In Shanghai, SMM #1 nickel prices were between RMB 121,500-122,500/mt. Jinchuan raised nickel prices by RMB 2,000/mt, to RMB 123,000/mt. Transactions were quiet in the morning due to market caution, but brisk in the afternoon as bargain hunters entered the market after nickel prices leveled out. But end-users took a wait-and-see attitude. Jinchuan nickel prices dropped to RMB 114,500-118,000/mt in the afternoon, and Russian nickel prices were RMB 900-1,000/mt below Jinchuan nickel prices.


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