SMM Base Metals Market Daily Review (2014-4-17)

SHANGHAI, Apr. 18 (SMM) –

Copper
The most active SHFE copper contract price started Wednesday’s night session higher at RMB 46,730/mt, boosted by a rally in LME copper prices, and later surrendered some gains to end up RMB 430/mt at RMB 46,500/mt. Traded volumes held steady at around 210,000 lots, while positions added 4,094 lots. The red metal suffered resistance at RMB 46,700/mt on Thursday, and subsequently tracked LME copper prices down to an intraday low of RMB 46,370/mt. SHFE copper prices at last finished up RMB 470/mt, or 1.02%, at RMB 46,540/mt. Traded volumes shed 106,000 lots, and positions gained 5,088 lots. SHFE copper prices have rebounded above the 5-day moving average, with longs and shorts struggling at RMB 46,500/mt. With the lack of guidance from LME copper prices, the SHFE/LME copper arbitrage ratio is expected to improve in the next two trading days.

In the Shanghai physical market, copper was offered Thursday at a RMB 580-720/mt premium to the SHFE current-month contract. Traded prices were RMB 47,720-47,820/mt for standard-quality copper and RMB 47,800-47,920/mt for high-quality copper. As SHFE copper prices rebounded, cargo holders continued to push up physical premiums on a view that supply will remain comparatively tight this week. Some speculators still entered the market to purchase goods, but downstream producers sat tight temporarily, leaving traded volumes less than Wednesday’s level. After SHFE copper prices fell back during the afternoon trading hours, cargo holders continued to drive up physical premiums, with supplies down. Standard-quality copper was barely quoted, and high-quality copper prevailed in the market, with Guixi brand offered at a RMB 750/mt premium to the nearby SHFE contract. Copper was mostly offered at a RMB 650-730/mt premium and was sold between RMB 47,750-47,950/mt, with slower trading activity. Some middlemen sold off goods at the tail of the trading when prices were high, helping inflate physical supply.

Aluminum
On Wednesday night, SHFE 1406 aluminum contract vacillated between RMB 13,215-13,255/mt after starting at RMB 13,230/mt. Trading volumes totaled 6,802 lots, and positions contracted 828 lots to 119,442 lots. On Thursday, the most active contract was range-bound, and closed the day at RMB 13,240/mt. Trading volumes totaled 7,874 lots, and positions fell 1,402 lots to 118,040 lots.

Spot aluminum largely traded at RMB 12,990-13,000/mt in Shanghai, Wuxi and Hangzhou on Thursday. Rising SHFE 1405 aluminum contract drove spot aluminum prices up as well. Higher prices depressed buying interest. In the afternoon, offers were little changed. A few deals were done at RMB 13,000/mt.

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 1407 zinc contracts became the most actively traded contracts on Wednesday evening, with prices opening at RMB 15,070/mt, touching RMB 15,110/mt due to strong long momentum, and closing at RMB 15,090/mt, up RMB 95/mt or 0.63%. Trading volumes increased by 4,908 lots to 10,922 lots, and total positions increased by 6,038 lots to 59,118 lots.

SHFE 1406 zinc contract prices opened at RMB 15,090/mt on Thursday, then fluctuated between RMB 15,080-15,100/mt as LME zinc price volatility was low, and closing at RMB 15,090/mt, up RMB 95/mt or 0.63%. Trading volumes increased by 4,758 lots, to 11,374 lots, and total positions increased by 2,432 lots, to 61,550 lots.

#0 zinc prices were between RMB 15,020-15,040/mt, with spot discounts between RMB 0-20/mt against SHFE 1406 zinc contract prices. #1 zinc prices were around RMB 15,010/mt. SHFE 1406 zinc contract prices opened at RMB 15,050/mt on Thursday, and then fluctuated around RMB 15,040/mt. Tight spot supply pushed up spot prices, with spot discounts level with Wednesday. Zinc prices continued to rise above RMB 15,000/mt, stimulating some traders to sell goods. But some cargo holders were unwilling to move goods due to firm prices. Downstream buying interest was low due to high zinc prices, but overall transactions improved, and mainly made among traders. Shuangyan branded #0 zinc prices were around RMB 15,040/mt, with RMB 15,030/mt for Jiulong, Qinxin, Feilong, Yuguang and SMC branded #0 zinc.

Tin
In Shanghai physical tin market, mainstream traded prices remained stable at RMB 139,500-141,000/mt on Thursday. Yunshan and Nanshan brand tin was offered at the lower end of the price band. Trading was bleak as LME tin’s failure to extend gains fuelled bearishness.

Nickel
In Shanghai, SMM #1 nickel prices were between RMB 121,300-122,200/mt. Jinchuan raised nickel prices by RMB 4,000/mt, to RMB 123,000/mt. Spot transactions were quiet in the morning due to falling LME nickel prices. Traders purchased at lower prices between RMB 119,400-120,400/mt. But transactions remained muted although prices rebounded in the afternoon, with traded prices between RMB 120,800-121,800/mt.