SMM Base Metals Market Daily Review (2014-4-29)

SHANGHAI, Apr. 30 (SMM) –

Copper
The most active SHFE copper contract started Monday’s night session at RMB 47,840/mt, and then swung by less than RMB 100/mt. The contract still failed to rise above the RMB 48,000/mt mark during the session, and closed down at RMB 47,920/mt. Traded volumes held around 80,000 lots, while positions added 1,818 lots. On Tuesday, SHFE copper prices sank to RMB 47,800/mt by the midday after briefly testing resistance at RMB 48,050/mt. Dampened by the Shanghai Composite Index falling below the 2,000 level at some stage, the red metal dipped as low as RMB 47,580/mt, and ended Tuesday down RMB 280/mt, or 0.58%, at RMB 47,640/mt. Traded volumes and positions for the most active SHFE contract decreased by 64,958 lots and 11,784 lots, respectively. With regard to the SHFE 1408 contract, traded volumes lost 5,014 lots, but positions added 10,732 lots. SHFE distant-month copper contract prices are unlikely to rebound for the short term due to persistent selling pressure.

In the Shanghai physical market, copper was offered Tuesday at premiums of RMB 580-800/mt over the nearby SHFE contract. Traded prices were RMB 49,700-49,880/mt for standard-quality copper and RMB 49,850-50,050/mt for high-quality copper. After SHFE copper prices fell from highs, cargo holders significantly ramped up deliveries to raise cash ahead of the May Day holiday, with physical premiums down sharply. Speculators were cautious in entering the market, while downstream producers increased purchases. Supply growth, however, exceeded demand growth Tuesday, fueling angst among investors. As SHFE copper prices extended losses during the afternoon trading session, a larger number of downstream producers entered the market to hunt for bargains, with trading activity turning brisker. Transactions for standard-quality copper outperformed those for high-quality copper. Physical premiums initially hovered between RMB 650-800/mt, but later rose to the RMB 800-1,000/mt range, with traded prices down slightly to RMB 49,600-49,900/mt.

Aluminum
On Monday night, SHFE 1407 aluminum contract started at RMB 13,490/mt before finishing the night session at RMB 13,495/mt. Trading volumes totaled 16,502 lots, and positions increased 2,018 lots to 117,766 lots. On Tuesday, the most active contract followed LME aluminum down to RMB 13,405/mt, ending the day at RMB 13,420/mt. Trading volumes totaled 32,014 lots, and positions shrank 1236 lots to 116,530 lots. Strong risk aversion ahead of the holiday should send the light metal down further.

Spot aluminum largely traded at RMB 13,360-13,400/mt in Shanghai, RMB 13,360-13,390/mt in Wuxi, and RMB 13,380-13,430/mt in Hangzhou on Tuesday. Cargo holders were eager to sell to avoid a pileup of goods through the upcoming holiday, but traders stayed out of the market. Some downstream producers went bargain hunting. In the afternoon, some suppliers cut offers to RMB 13,320/mt, but few deals were completed.

Lead
The most active SHFE 1405 lead contract started Monday’s night session at RMB 13,885/mt, and finished down RMB 10/mt at RMB 13,905/mt, with only 12 lots of traded volumes. On Tuesday, SHFE lead prices slid as low as RMB 13,860/mt, but recovered some subsequently to hit a high of RMB 13,895/mt before ending down RMB 35/mt at RMB 13,880/mt. Traded volumes rose 562 lots to 1,476 lots, and positions added 26 lots to 6,006 lots. SHFE lead prices should be rather resistant to declines for the near term.

In the Shanghai physical lead market, goods from Chihong Zn & Ge traded initially between RMB 13,940-13,950/mt at a higher premium of RMB 70/mt over the SHFE 1405 lead contract. Quotations for the brand later, however, fell to RMB 13,930/mt due to relatively ample supply and downstream producers regarding physical premiums as too high after SHFE lead prices dropped. Traded prices were RMB 13,920-13,930/mt for Shuangyan and Hanjiang resources and RMB 13,900/mt for Humon brand. Chengyuan entered maintenance cycles, while Nanfang held back goods, with supply from these two brands rarely found in the market. Trading activity was comparatively sluggish Tuesday since downstream producers still had low willingness to build stocks.

Zinc
SHFE 1407 zinc contract prices opened at RMB 15,125/mt on Monday evening, and then hovered between RMB 15,120-15,150/mt, and closed at RMB 15,125/mt, down RMB 25/mt or 0.17%. Trading volumes decreased by 2,306 lots to 5,356 lots, and total positions increased by 520 lots to 87,088 lots.
SHFE 1407 zinc contract prices opened at RMB 15,130/mt on Tuesday, and then moved between RMB 15,120-15,150/mt most of the day. Before the end of trading, SHFE 1407 zinc contract prices plunged as a large number of longs left the market, dipping to RMB 15,040/mt at one point, and closing at RMB 15,065/mt, down RMB 85/mt or 0.56%. Trading volumes decreased by 3,144 lots, to 20,880 lots, and total positions increased by 2,542 lots, to 89,630 lots.

#0 zinc prices were between RMB 15,130-15,160/mt, with spot prices ranging from RMB 10/mt below to RMB 20/mt above SHFE 1407 zinc contract prices. #1 zinc prices were between RMB 15,110-15,120/mt. SHFE 1407 zinc contract prices fluctuated around RMB 15,135/mt after opening, and spot premiums fell slightly since spot prices dropped on increasing supply. Smelters were actively moving goods at highs, and other cargo holders also increased supply, causing supply tightness to ease. But traders lacked interest in operations before the release of a series of macroeconomic news and the upcoming May Day holiday. Downstream buyers lacked interest in replenishing goods before the holiday. Shuangyan branded #0 zinc prices were between RMB 15,150-15,160/mt, with RMB 15,140/mt for Qinxin and Yuguang branded #0 zinc. Jiulong and Feilong branded #0 zinc prices were around 15,130/mt. AZ branded #0 zinc prices were between RMB 15,110-15,120/mt.

Tin
In Shanghai physical tin market, mainstream traded prices inched down to RMB 141,000-142,500/mt on Tuesday. Jinlong and Nanshan brand tin traded at the lower end of the price band, while Yunxi brand tin traded at the upper end. Overall trading was subdued.  

Nickel  
SMM #1 nickel prices were between RMB 124,100-124,700/mt. Jinchuan lowered nickel prices by RMB 3500/mt, to RMB 124,500/mt. Spot price volatility was up, with Jinchuan nickel prices between RMB 123,500-124,500/mt and Russian nickel prices between RMB 123,000-124,000/mt. End-user demand was strong, but traders moved Russian nickel modestly due to low goods availability, with transactions muted.