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

SHANGHAI, Jun. 9 (SMM) –

Copper
The most active SHFE copper contract started Thursday’s night session at RMB 48,070/mt, and closed up RMB 220/mt at RMB 48,280/mt. During the night session, traded volumes for the most active contract totaled around 130,000 lots, while positions lost 1,212 lots.

On Friday, SHFE copper prices hovered mostly around RMB 48,300/mt, meeting resistance at RMB 48,360/mt, and finished up RMB 200/mt, or 0.42%, at RMB 48,260/mt. Traded volumes for the most active contract shed 64,122 lots, while positions decreased 12,630 lots.

In the Shanghai physical market, copper was offered Friday at RMB 240-420/mt premium over the SHFE front-month copper contract. Traded prices were RMB 49,800-50,100/mt for standard-quality copper and RMB 49,900-50,100/mt for high-quality copper. SHFE copper prices became more resistant to declines, while the SHFE/LME copper price ratio also improved appreciably. Meanwhile, the probe into metals financing at the Chinese port of Qingdao fermented.

As a result, a large amount of warehouse receipts flocked into the market, significantly inflating market supply, and cargo holders slashed premiums to make deals. Physical premiums gradually fell to RMB 350/mt, down from RMB 500/mt in the morning trading session. Middlemen were mostly selling goods, while downstream producers began purchasing goods ahead of the weekend. Supply, however, continued to outpace demand in the market with prevailing panic sentiment.

The SHFE front-month copper contract fell during the afternoon trading session, helping narrow the price gap between the SHFE 1406 and 1407 copper contracts. Cargo holders continued to move goods at lower premiums, with standard-quality copper barely found in the market. Physical copper was largely offered at a RMB 200-350/mt premium and traded between RMB 49,750-49,900/mt. Premiums rebounded at the tail of the trading after SHFE copper prices fell further, but no transactions were reported. In addition, SHFE copper inventories decreased by 5,447 lots to 86,500 lots last week. As an increasingly larger amount of imported copper flock in the market, copper premiums look set to extend losses. Meanwhile, China’s copper inventories are expected to grow with imported copper flowing into the market as collateral for financing.

Aluminum
The most active SHFE 1408 aluminum contract started last Thursday’s night session at RMB 13,385/mt, and finished at RMB 13,405/mt. During the night session, traded volumes totaled 15,526 lots, while positions gained 1,138 lots to 135,372 lots.

Last Friday, the most active contract rallied to a high of RMB 13,460/mt, and ended up RMB 70/mt at RMB 13,425/mt. Traded volumes amounted to 28,404 lots, while positions contracted 1,854 lots to 133,518 lots.

Physical aluminum traded mostly between RMB 13,170-13,180/mt in Shanghai last Friday, a discount of RMB 100-110/mt over the SHFE 1406 aluminum contract. Mainstream traded prices were RMB 13,150-13,160/mt Wuxi and RMB 13,200-13,210/mt in Hangzhou. Cargo holders showed higher willingness to move goods after SHFE aluminum prices went up ahead of the weekend. Downstream producers, however, barely built stocks, and intended to push down traded prices in regions where supply was sufficient. In the afternoon, rising SHFE aluminum prices allowed cargo holders to raise offers to RMB 13,190-13,210/mt, but trading activity petered out.

Lead
The most active SHFE 1408 lead contract started Thursday’s night session at RMB 14,015/mt, with the upper end at RMB 14,050/mt and the lower end at RMB 13,995/mt, and ended up RMB 10/mt at RMB 14,020/mt. Traded volumes for the most active contract were 8 lots, while positions were off 4 lots to 5,016 lots. Total traded volumes were only 28 lots.

On Friday, SHFE lead prices opened at RMB 14,020/mt, and hovered mostly between RMB 14,000-14,035/mt before closing up RMB 20/mt, or 0.14%, at RMB 14,030/mt. Traded volumes gained 138 lots to 322 lots, while positions shed 26 lots to 4,994 lots.

In China’s physical lead markets, goods from Chihong Zn & Ge traded Friday at RMB 13,890-13,900/mt, a RMB 110/mt discount over the most active SHFE 1408 lead contract. Traded prices were RMB 13,890/mt for Humon brand and Shuangyan supply wrapped with plastic steel, and RMB 13,840/mt for Shuangyan supply wrapped with iron sheet and resources from Shaanxi Zinc Industry. Traders continued to move goods actively, with prices subdued by sufficient supply from leading brands, while downstream producers expressed little buying interest, resulting in light transactions on Friday.

Zinc
SHFE 1408 zinc contract prices opened at RMB 15,195/mt last Thursday evening, then hovering around RMB 15,200/mt, and closing at RMB 15,190/mt, up RMB 20/mt or 0.13%. Trading volumes decreased by 820 lots to 4,962 lots, and total positions increased by 782 lots to 74,580 lots. SHFE 1408 zinc contract prices fluctuated between RMB 15,180-15,200/mt on Friday, and closing at RMB 15,200/mt, up RMB 30/mt or 0.2%. Trading volumes decreased by over 3,000 lots, and total positions decreased by over 1,000 lots, to 73,000 lots.

#0 zinc prices were between RMB 15,170-15,190/mt, with spot discounts of RMB 0-20/mt against SHFE 1408 zinc contract prices. #1 zinc prices were between RMB 15,130-15,140/mt. SHFE zinc prices hovered around RMB 15,190/mt. smelters contributed limited goods to the market, and there will be large pants conducting maintenance in June, which gives support to zinc prices. Transactions remained largely unchanged as the low demand season is coming up and due to downstream caution given high zinc prices. Shuangyan and Yuguang branded #0 zinc supply was sufficient, with prices between RMB 15,180-15,190/mt and RMB 15,170-15,180/mt, respectively. Transactions for Qinxin, Jiulong and Feilong branded #0 zinc were rarely made. AZ and Belgian #0 zinc prices were between RMB 15,130-15,140/mt. SHFE 1408 zinc contract prices fluctuated narrowly in the afternoon, with #0 zinc prices between RMB 15,160-15,190/mt.

Tin
In Shanghai physical tin market, mainstream traded prices were RMB 139,000-140,500/mt last Friday. Yunxiang brand tin traded between RMB 139,300-139,500/mt, while Jinlong and Nanshan brand tin traded between RMB 139,000-139,500/mt.

Nickel
SMM #1 nickel prices were quoted between RMB 133,600-134,000/mt. Jinchuan raised nickel prices by RMB 500/mt to RMB 134,000/mt. traders were unwilling to sell goods at the week’s end, when combined with market optimism, they held prices firm, with transactions made with the RMB 133,600-134,000/mt SMM quote range.