SMM Base Metals Market Daily Review (2014-5-6)

SHANGHAI, May 7 (SMM) –

Copper
SHFE 1407 copper contract prices moved narrowing between RMB 47,600-47,700/mt after opening Monday’s night session at RMB 47,670/mt, due to a lack of direction from LME copper. The July-delivery contract closed the night trading out at RMB 47,650/mt, down RMB 60/mt. Traded volumes for the most active contract slumped to around 30,000 lots, while positions rose 488 lots. On Tuesday, the most active SHFE copper contract prices fell after opening and dipped to a low of RMB 47,410/mt before stabilizing. In the afternoon, the prices moved around RMB 47,500/mt and finished at RMB 47,560/mt, down RMB 150/mt, or 0.31%. Traded volumes for SHFE copper for July delivery increased 36,350 lots during the daytime, while positions dropped 8,060 lots. 51,786 lots were traded for SHFE 1408 copper contract, and holdings in the contract increased 15,262 lots. Longer-dated contracts were confronted with increasing selling pressure, and resistance at the 5-day moving averaged strengthened.

Copper was quoted at premiums of RMB 550-680/mt over the SHFE 1405 copper contract prices in the Shanghai physical market Tuesday morning. Traded prices were RMB 49,280-49,380/mt for standard-quality copper and RMB 49,350-49,500/mt for high-quality copper. SHFE copper prices continued falling before midday. Most goods available in the market were imported copper. Dealers mainly sold goods to raise cash against rising risks, leaving stronger selling pressure and dragging down spot premiums. Downstream buyers were still on the sidelines, with trading muted. In the afternoon, spot premiums narrowed to RMB 530-660/mt, and traded prices edged lower to RMB 49,250-49,450/mt.

Aluminum
On Monday night, SHFE 1407 aluminum contract crept higher to RMB 13,280/mt after opening at RMB 13,215/mt, and closed the night session at RMB 13,255/mt. Trading volumes totaled 7,962 lots, and positions gained 920 lots to 114,804 lots. On Tuesday, the most active contract wiped out last night’s gains. The light metal moved lower to RMB 13,145/mt before finishing down RMB 90/mt or 0.68% at RMB 13,190/mt. Trading volumes contracted to 5,253 lots, and positions also shrank 50 lots to 114,754 lots. Technical indicators suggest further declines may be on the way.

Spot aluminum largely traded at RMB 13,050-13,060/mt in Shanghai and Wuxi, and RMB 13,060-13,100/mt in Hangzhou on Tuesday. SHFE 1405 aluminum contract lost RMB 130/mt to RMB 13,110/mt, driving buyers in physical markets into a wait-and-see posture. In the afternoon, sellers cut offers to RMB 13,040-13,050/mt, but limited restocking activity was reported.

Lead
On Monday night, SHFE 1406 lead contract drifted lower after opening at RMB 13,975/mt, closing the night session down RMB 40/mt at RMB 13,875/mt. Trading volumes totaled 8 lots, and positions contracted 2 lots to 5,914 lots. On Tuesday, the most active contract slipped to RMB 13,880/mt as investors closed long positions, but followed LME lead up to end the day RMB 25/mt or 0.18% higher at RMB 13,940/mt. Trading volumes contracted 172 lots to 246 lots, and positions also shrank 116 lots to 5,800 lots.

In Shanghai physical lead market, goods from Yunnan Chihong Zn&Ge traded at RMB 13,930-13,940/mt on Tuesday, down RMB 10-20/mt from yesterday. Hanjiang and Hengbang brand lead traded at RMB 13,900-13,920/mt. Transactions of Shuangyan, Nanfang and Chengyuan brand lead were muted. Downstream producers in general stayed out of the market.

Zinc
SHFE 1407 zinc contract prices opened at RMB 15,055/mt on Monday, and then rose to touch RMB 15,155/mt, although prices lacked directions from the LME market, and closed at RMB 15,130/mt, up RMB 75/mt or 0.5%. Trading volumes increased by 3,060 lots to 20,628 lots, and total positions increased by 3,762 lots to 91,552 lots. SHFE 1407 zinc contract prices leveled out after opening on Wednesday, then followed a “V” curve, dipping to RMB 15,020/mt, and closing at RMB 15,070/mt. Trading volumes decreased by 3,312 lots, to 17,568 lots, and total positions decreased by 1,838 lots, to 87,790 lots.

#0 zinc prices were between RMB 15,100-15,130/mt, with spot premiums between RMB 0-30/mt against SHFE 1407 zinc contract prices. #1 zinc prices were between RMB 15,060-15,080/mt, with transactions quiet. SHFE 1407 zinc contract prices opened at RMB 15,115/mt, then inched down to RMB 15,075/mt, stabilizing at RMB 15,100/mt during the second trading session. Spot prices dropped in response, with spot premiums largely unchanged. Smelters were mostly actively moving goods, causing supply tightness to ease. Investors turned cautious as zinc prices lacked directions recently, with traders standing on the sidelines. Downstream buying interest was weak, leaving transactions muted. Shuangyan branded #0 zinc prices were between RMB 15,120-15,130/mt, with RMB 15,100-15,110/mt for Qinxin, Yuguang Jiulong and AZ branded #0 zinc. Haxin branded #1 zinc prices were around RMB 15,050/mt, with RMB 15,060-15,080/mt for Lida branded #1 zinc. SHFE 1407 zinc contract prices fluctuated narrowly in the afternoon, but surged at the end of trading, pushing up Shuangyan branded #0 zinc prices to RMB 15,150/mt.

Tin
In Shanghai physical tin market, mainstream traded prices fell to RMB 139,000-140,500/mt on Tuesday morning. A few suppliers offered Nanshan brand tin at RMB 138,500/mt. Yunxi brand tin was quoted at RMB 141,000/mt, but trading was muted. In the afternoon, mainstream traded prices dropped further to RMB 138,000-140,500/mt due to anemic demand.

Nickel
SMM #1 nickel prices were between RMB 126,800-127,100/mt. Jinchuan raised nickel prices by RMB 2,500/mt, to RMB 127,800/mt. Spot transactions were quiet, with downstream purchases for Russian nickel limited due to firm prices. but traders moved Russian nickel whilst purchasing low-priced Jinchuan nickel, with prices fluctuating in a narrow range.