SMM Base Metals Market Daily Review (2014-4-16)

SHANGHAI, Apr. 17 (SMM) –

Copper
SHFE copper prices gapped lower at RMB 45,870/mt, dented by a slide in LME copper prices, and ended down RMB 460/mt, or 1%, at RMB 46,150/mt during Tuesday’s night session. Traded volumes and positions for the most active SHFE copper contract added 300,000 lots and 4,414 lots, respectively, while positions for the SHFE 1408 copper contract gained 13,714 lots. SHFE copper prices started Wednesday at RMB 46,150/mt, and then rallied to RMB 46,300/mt, boosted by the higher-than-expected China’s Q1 GDP, finding support between RMB 46,000-46,150/mt. The red metal hovered most of the trading day narrowly around RMB 46,200/mt, and finished down RMB 430/mt, or 0.92%, at RMB 46,180/mt. Traded volumes rose 60,874 lots to 484,000 lots, while positions shed over 500 lots to 290,000 lots. It was worth noting that positions for the SHFE 1408 copper contract expanded 19,426 lots to 170,000 lots on Wednesday. The SHFE 1407 and 1408 copper contract prices both fell sharply, encountering resistance at the 10-day moving average, with additional technical indicators in negative territory.

In the Shanghai physical market, copper was offered Wednesday at a RMB 480-600/mt premium to the nearby SHFE contract. Traded prices were RMB 47,340-47,420/mt for standard-quality copper and RMB 47,420-47,520/mt for high-quality copper. China’s Q1 GDP came in as disappointing as expected, while SHFE copper prices also followed LME copper prices down sharply. Cargo holders pushed up physical premiums to highs again. Middlemen barely entered the market with limited room for speculation, while downstream producers ramped up purchases, helping improve transactions. As SHFE copper prices consolidated narrowly during the afternoon trading session, physical copper was offered at a slightly higher premium of RMB 500-620/mt, but traded prices remained basically unchanged. Trading activity, however, slowed during the same period. Cargo holders were disinclined to trade in bulk to push up copper premiums higher, though most held that sustained high premiums were subject to supply. Premiums in the Guangdong market significantly narrowed to RMB 400-500/mt, and are unlikely to be elevated in the near term due to an increasing amount of copper supply. Premiums in the Shanghai market, however, will remain high this week.

Aluminum
On Tuesday night, SHFE 1406 aluminum contract climbed above the 5-day moving average after starting at RMB 13,150/mt, and finished the night session at RMB 13,180/mt. Trading volumes totaled 6,576 lots, and positions contracted 300 lots to 122,252 lots. China’s GDP grew 7.4% in Q1. The growth slowed down, but did beat forecasts. Value added at China’s large-scale industrial enterprises in March and fixed asset investment in China’s urban areas during Q1 both grew at a slower pace on an annual basis. However, market reaction was mild. The most active contract was range-bound on Wednesday, and closed the day at RMB 13,185/mt. Trading volumes totaled 8,586 lots, and positions fell 1,982 lots to 120,270 lots.

Spot aluminum largely traded at RMB 12,950-12,960/mt in Shanghai, RMB 12,940-12,950/mt in Wuxi, and RMB 12,940-12,960/mt in Hangzhou on Wednesday. Buyers pushed for lower prices and trading activity thinned compared to previous days. In the afternoon, a few cut offers to RMB 12,940/mt, but few deals were done.

Lead
The most active SHFE 1405 lead contract price rallied as high as RMB 13,830/mt after starting lower at RMB 13,705/mt, but then pulled back to end down RMB 25/mt at RMB 13,710/mt during Tuesday’s night session. Traded volumes were 70 lots, and positions were off 10 lots to 6,430 lots. China’s Q1 GDP was reported early Wednesday at 7.4%, slightly higher than the estimate of 7.3%. SHFE lead prices essentially fluctuated between RMB 13,700-13,730/mt, and closed down RMB 5/mt at RMB 13,730/mt. Traded volumes stood at merely 342 lots, while positions shed 190 lots to 6,250 lots.

In the Shanghai physical lead market, goods from Chihong Zn & Ge and Nanfang traded Wednesday between RMB 13,750-13,760/mt at a RMB 40/mt premium to the SHFE 1405 contract. Shuangyan and Humon resources were sold between RMB 13,730-13,740/mt. Smelters expressed low selling interest, with Nanfang and Humon moving goods in thin volumes, while downstream producers reverted to a wait-and-see posture after SHFE lead prices registered a fall. Some purchased goods only on an as-needed basis, with trading volumes down from Tuesday’s level.

Zinc
SHFE 1406 zinc contract prices opened low at RMB 14,920/mt on Monday evening. But as LME zinc prices clawed back losses, SHFE 1406 zinc contract prices were boosted and closed at RMB 14,950/mt, down RMB 45/mt or 0.3%. Trading volumes increased by 212 lots to 6,014 lots, and total positions decreased by 288 lots to 57,718 lots.

SHFE 1406 zinc contract prices opened at RMB 14,955/mt on Wednesday, then fluctuated between RMB 14,950-14,970/mt during Asian trading hours as LME zinc price volatility was low, touching RMB 15,000/mt near the end of trading, and closing at RMB 14,990/mt, down RMB 5/mt or 0.03%. Trading volumes decreased by 2,860 lots, to 6,616 lots, and total positions decreased by 1,368 lots, to 56,350 lots.

#0 zinc prices were between RMB 14,940-14,960/mt, with spot discounts between RMB 0-20/mt against SHFE 1406 zinc contract prices. #1 zinc prices were around RMB 14,920/mt. SHFE 1406 zinc contract prices opened at RMB 14,955/mt on Wednesday, and then fluctuated around opening price. Tight spot supply supported spot prices, causing spot discounts to narrow further. High zinc prices stimulate some smelters to sell goods, while narrowing spot discounts prompted some arbitrage traders to move goods. But supply tightness did not ease due to strong buying interest of traders. Downstream buying interest was low as zinc price approached RMB 15,000/mt. Shuangyan branded #0 zinc prices were between RMB 14,950-14,960/mt, with RMB 14,940-14,950/mt for Jiulong, Qinxin and Feilong branded #0 zinc, RMB 14950/mt for Yuguang branded #0 zinc and RMB 14,930-14,940/mt for Baohui branded #0 zinc. SMC #0 zinc prices were around RMB 14,950/mt.

Tin
In Shanghai physical tin market, mainstream traded prices inched down to RMB 139,500-141,000/mt on Wednesday. Yunxi brand tin was offered higher at RMB 142,000/mt. Supply of second- and third-tier brand tin remained limited. Consumption was sluggish.

Nickel
In Shanghai, SMM #1 nickel prices were between RMB 116,400-117,400/mt. Jinchuan lowered nickel prices by RMB 4,000/mt, to RMB 119,000/mt, with transactions quiet. Russian nickel holders were holding back goods, with Jinchuan nickel transactions mainly made among arbitrage traders. Some downstream buyers purchased Russian nickel, with prices rising to RMB 116,700-117,700/mt in the afternoon.