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SMM Base Metals Market Daily Review (2014-6-4)
Jun 5,2014 10:20CST
price review forecast
Dampened by a decline in LME copper prices, the most active SHFE copper contract started lower at RMB 48,500/mt, swinging by less than RMB 100/mt, during Tuesday’s night session.


Dampened by a decline in LME copper prices, the most active SHFE copper contract started lower at RMB 48,500/mt, swinging by less than RMB 100/mt, during Tuesday’s night session. Prices for the contract dipped as low as RMB 48,420/mt, and closed down RMB 190/mt at RMB 48,480/mt. During the night session, traded volumes fell slightly to around 60,000 lots, while positions gained 1,368 lots. On Wednesday, SHFE copper prices tested support at the RMB 48,000/mt mark during the morning trading session due to a broad selloff. The red metal narrowed losses to hover narrowly around RMB 48,100/mt during the afternoon trading session, and ended down RMB 550/mt, or 1.13%, at RMB 48,120/mt on Wednesday. Traded volumes for the most active contract added 130,000 lots, while positions expanded 12,928 lots. Meanwhile, traded volumes and positions for the SHFE 1409 copper contract increased 47,538 and 12,574 lots, respectively. SHFE copper prices have broken below the 20-day moving average and are likely to trend lower for the near term due to increasing sell-offs of SHFE back-month copper contracts and negative technical indicators.

In the Shanghai physical market, copper was quoted Wednesday at a RMB 320-500/mt premium over the SHFE front-month copper contract. Traded prices were RMB 49,900-49,980/mt for standard-quality copper and RMB 50,000-50,100/mt for high-quality copper. As SHFE copper prices fell sharply Wednesday, proportion of imported copper was still rather limited, with the overall copper supply down. In this context, physical premiums held firm and rallied after SHFE copper prices dropped further. Some speculators entered the market to purchase physical copper and sell copper futures contracts, while downstream producers continued to take a wait-and-see stance at prices above RMB 50,000/mt. A majority of transactions were done among middlemen, with the market still dominated by cautious sentiment on Wednesday. As SHFE copper prices continued to hover at low levels during the afternoon trading session, physical premiums remained high. Although high-quality copper prices were essentially unchanged, the price gap between high-quality and standard-quality copper narrowed. Copper was largely offered at a RMB 350-500/mt premium and traded at RMB 49,900-50,080/mt on Wednesday.

The most active SHFE 1408 aluminum contract started Tuesday’s night session lower at RMB 13,440/mt, but later advanced to RMB 13,495/mt before ending at RMB 13,485/mt. During the night session, traded volumes totaled 18,854 lots, while positions gained 942 lots to 136,020 lots. On Wednesday, SHFE aluminum prices fell further, surrendering gains made during the night session, with SHFE copper prices leading the losses. The light metal later sank as low as RMB 13,360/mt, and closed at RMB 13,365/mt. Traded volumes reached 36,654 lots, while positions lost 216 lots to 135,804 lots on Wednesday. The bearish sentiment gradually dominated the market as an investigation into metal trade finance irregularities at the Chinese port of Qingdao persisted. SHFE aluminum prices, however, can still find some base support at major moving averages.

Physical aluminum traded mostly between RMB 13,200-13,210/mt in Shanghai on Wednesday, a discount of RMB 70-80/mt over the SHFE 1406 aluminum contract. Mainstream traded prices were RMB 13,190-13,200/mt Wuxi and RMB 13,240-13,250/mt in Hangzhou. After SHFE aluminum prices fell sharply, cargo holders continued to hold prices firm, while downstream producers intended to purchase goods at low prices, leaving little profit for middlemen. Cargo holders turned disinclined to trade after SHFE aluminum prices fell further by the afternoon trading hours, with light traded volumes on Wednesday.

The most active SHFE 1407 lead contract started Tuesday's night session at RMB 14,020/mt, and then dipped as low as RMB 13,955/mt before closing up RMB 10/mt at RMB 13,995/mt. During the night session, traded positions totaled 10 lots, while positions gained 4 lots to 4,752 lots. On Wednesday, SHFE lead prices managed to hover around RMB 13,985/mt during the morning trading session, but fell sharply subsequently to end down RMB 30/mt at RMB 13,955/mt on Wednesday. Traded volumes amounted to 264 lots, while positions shed 320 lots to 4,428 lots.

In the Shanghai physical lead market, goods from Chihong Zn & Ge and Nanfang traded Wednesday at RMB 13,920-13,940/mt, a RMB 50-60/mt discount over the most active SHFE 1407 lead contract. Traded prices were RMB 13,920/mt for Humon resources and RMB 13,900-13,910/mt for Shuangyan and Hanjiang supply. Sufficient lead supply put a dent in prices, sending traded prices down RMB 10-20/mt from quotes, since some lead smelters moved goods normally. Motive power battery producers did not build stocks in large amounts as expected although the seasonally high consumption period draws near.

SHFE 1408 zinc contract prices moved between moving averages with LME zinc prices. As a large number of longs entered the market, SHFE 1408 zinc contract prices edged up to RMB 15,200/mt, and closing at RMB 15,190/mt. SHFE 1408 zinc contract prices opened at RMB 15,195/mt on Wednesday, then moved between RMB 15,165-15,185/mt, with transactions muted, and closing at RMB 15,175/mt, down RMB 15/mt or 0.1%. Trading volumes decreased by 830 lots, to 11,354 lots, and total positions increased by 268 lots, to 73,146 lots.

#0 zinc prices were between RMB 15,160-15,180/mt, with spot discounts of RMB 0-20/mt against SHFE 1408 zinc contract prices. #1 zinc prices were between RMB 15,120-15,140/mt. SHFE zinc prices fell to RMB 15,175/mt, with cargo holders moving goods actively. As Shuangyan branded #0 zinc prices fell slightly, and since stocks have been consumed, traders purchased goods modestly. But downstream buyers purchased on an as-needed basis, with transactions improving. Shuangyan branded #0 zinc were between RMB 15,170-15,180/mt, with RMB 15,160-15,170/mt for Yuguang, Qinxin and Jiulong branded #0 zinc. AZ branded #0 zinc prices were RMB 15,140-15,150/mt. SHFE 1408 zinc contract prices consolidated in the afternoon, with #0 zinc prices between RMB 15,160-15,180/mt.

Spot tin prices in Shanghai were between RMB 139,000-140,500/mt, with RMB 139,000/mt for Jinlong branded tin. Transactions were quiet, with smelters holding prices firm, leaving supply limited. Downstream buying interest was weak.

SMM #1 nickel prices were quoted between RMB 132,600-133,100/mt. Jinchuan lowered nickel prices by RMB 3,500/mt to RMB 133,500/mt. Transactions were muted, with Jinchuan nickel traded RMB 300/mt below prices of nickel for July delivery on the Wuxi electronic trading, with Russian nickel prices RMB 600/mt below prices of nickel for July delivery. Traders lacked arbitrage opportunities, and end users lacked buying interest due to cash flow tightness. Traders mainly operated in the spot market, with prices falling to RMB 132,000-132,200/mt.


SHFE copper prices
SHFE aluminum prices
lead prices
zinc prices
tin prices
nickel prices

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