SMM Base Metals Market Daily Review (2014-4-22)

SHANGHAI, Apr. 23 (SMM) -

Copper:
With the absence of guidance from LME copper prices, the most active SHFE copper price swung by only RMB 100/mt after starting at RMB 46,600/mt, and ended up RMB 140/mt at RMB 46,640/mt during Monday's night session. Traded volumes stood at around 60,000 lots, while positions gained 3,116 lots. On Tuesday, SHFE copper prices followed LME copper prices down to a low of RMB 46,320/mt after rallying briefly to RMB 46,700/mt, and finished down RMB 70/mt, or 0.15%, at RMB 46,430/mt. Traded volumes for the most active SHFE contract added 36,786 lot, but positions fell 2,910 lots. Traded volumes and positions for the SHFE 1408 copper contract expanded 51,792 lots and 21,248 lots, respectively.

In the Shanghai physical market, copper was offered Tuesday at a premium of RMB 580-750/mt over the nearby SHFE contract. Traded prices were RMB 47,880-48,040/mt for standard-quality copper and RMB 47,980-48,300/mt for high-quality copper. After SHFE copper prices fell back from highs and trading resumed on the London Metal Exchange, the SHFE/LME copper arbitrage ratio improved slightly, allowing importers to move goods in large amounts. In addition, some traders with goods from long-term contracts ramped up deliveries to raise cash at high premiums, which added to oversupply pressure and in turn sent premiums down sharply. Standard-quality copper and hydro-copper brands both gained favor with market participants, with their prices drawing close to prices for high-quality copper. Middlemen began staying on the sidelines, while downstream producers stepped up bargain-hunting after their buying interest were restrained by high premiums on Monday. As SHFE copper prices hovered narrowly during the afternoon trading session, cargo holders began actively moving goods to raise cash at high prices, causing physical premiums to narrow further. Copper was offered mostly at a premium of RMB 570-700/mt and traded below the RMB 48,000/mt mark, with relatively light traded volumes. It is unlikely that cargo holders alone will push up physical premiums to high levels for the near term.
       
Aluminum:
On Monday night, SHFE 1406 aluminum contract fluctuated in a RMB 13,190-13,205/mt band after starting at RMB 13,200/mt, and finished the night session at RMB 13,205/mt. Trading volumes totaled 456 lots, and positions added 54 lots to 112,268 lots. On Tuesday, the most active contract followed LME aluminum up to RMB 13,260/mt in the afternoon before closing the day up RMB 50/mt at RMB 13,250/mt. Trading volumes totaled 11,434 lots, and positions fell 3,108 lots to 109,160 lots.

Spot aluminum largely traded at RMB 13,010-13,020/mt in Shanghai and Wuxi, and RMB 13,020-13,030/mt in Hangzhou on Tuesday. Sellers raised offers above RMB 13,000/mt out of optimism, while downstream producers sourced to need. In the afternoon, rising SHFE 1405 aluminum contract allowed sellers to raise offers to RMB 13,030-13,040/mt, and some buyers were still willing to buy at high prices.

Zinc:
SHFE 1407 zinc contract prices opened at RMB 15,075/mt on Monday evening, and then moved between RMB 15,050-15,065/mt, with the lack of directions from the LME market, and closing at RMB 15,065/mt, up RMB 5/mt or 0.03%. Trading volumes decreased by 218 lots to 1,384 lots, and total positions decreased by 200 lots to 64,282 lots. SHFE 1407 zinc contract prices opened at RMB 15,055/mt on Tuesday, then dipped to RMB 15,040/mt, but rising in the afternoon to touch RMB 15,090/mt, and closing at RMB 15,070/mt, up RMB 10/mt or 0.07%. Trading volumes increased by 2,098 lots, to 12,682 lots, and total positions increased by 4,302 lots, to 68,784 lots.

#0 zinc prices were between RMB 15,050-15,070/mt, with spot premiums of RMB 0-10/mt against SHFE 1407 zinc contract prices. #1 zinc prices were between RMB 15,030-15,040/mt. SHFE 1407 zinc contract prices opened at RMB 15,060/mt on Tuesday, dipping to RMB 15,040/mt and then stabilizing around RMB 15,055/mt. supply in Shanghai remained tight, with smelters moving goods normally. Supply of some brands was limited due to ongoing maintenance at smelters, and traders were actively purchasing goods. Downstream caution increased due to continuously climbing zinc prices, with transactions mainly made among traders. Shuangyan branded #0 zinc prices were between RMB 15,050-15,070/mt, with RMB 15,050-15,060/mt for Jiulong and Qinxin branded #0 zinc, and RMB 15,050-15,070/mt for Yuguang branded #0 zinc.
  
Lead:
Prices for the most active SHFE lead contract hovered most of Monday's night session around RMB 13,810/mt, up RMB 5/mt, with only 2 lots of traded volumes, pointing to a cautious sentiment among investors. On Tuesday, SHFE lead prices tracked LME lead prices up to a high of RMB 13,900/mt, and closed up RMB 75/mt, or 0.54%, at RMB 13,880/mt. Traded volumes lost 352 lots to 802 lots, while positions shed 356 lots to 6,486 lots. SHFE lead prices have found support at the 5-day moving average, with additional technical indicators positive. European and US economic reports due for release late Tuesday and HSBC's China manufacturing PMI all are expected to come in positive, and SHFE lead prices should continue to test resistance at the RMB 13,900/mt mark for the near term.

In the Shanghai physical lead market, goods from Chihong Zn & Ge were offered Tuesday at RMB 13,870/mt, a premium of RMB 50/mt over the most active SHFE 1405 lead contract price. Traded prices were RMB 13,840/mt for Nanfang brand, and RMB 13,820-13,830/mt for Shuangyan, Hanjiang, and Humon resources. Smelters and traders both expressed little selling interest, causing relatively scarce quotations and with traded prices up RMB 10-20/mt from Monday. In the meantime, downstream producers considered present lead prices too high and had lower enthusiasm for purchases, resulting in a significant fall in traded volumes.
    
Tin:
In Shanghai physical tin market, mainstream traded prices inched down to RMB 139,500-140,500/mt on Tuesday. Trading was thin.
 
Nickel:
SMM #1 nickel prices were between RMB 122,600-123,500/mt, with spot transactions brisk. Some arbitrage traders moved goods actively, with prices edging up. Russian nickel prices rose to RMB 123,500/mt in the afternoon, but Jinchuan prices resisted increases, with the high end of the price range RMB 124,200/mt. A large number of bargain hunters entered the market. Jinchuan raised nickel prices by RMB 2,700/mt, to RMB 124,000/mt.