SMM Base Metals Market Daily Review (2014-6-10)

SHANGHAI, Jun. 11 (SMM) –

Copper
The most active SHFE copper contract tracked LME lead prices up slightly after starting Monday’s night session at RMB 47,620/mt, but then encountered resistance at RMB 47,670/mt before ending down RMB 60/mt at RMB 47,620/mt. During the night session, traded volumes for the most active contract reached some 160,000 lots, while positions gained by 5,900 lots.

On Tuesday, SHFE lead prices initially found brief support at RMB 47,360/mt, and later rebounded some to close down RMB 200/mt, or 0.42%, at RMB 47,480/mt. Traded volumes for the most active contract decreased by 266,000 lots, and positions contracted by 6,774 lots.

In the Shanghai physical market, copper was offered Tuesday between a RMB 20/mt discount and a RMB 100/mt premium over the SHFE front-month copper contract. Traded prices were RMB 48,350-48,400/mt for standard-quality copper and RMB 48,400-48,500/mt for high-quality copper. As SHFE copper prices extended losses on Tuesday, cargo holders continued to raise cash at high prices, with sufficient physical copper in the market. Prices for standard-quality copper have fallen below those for the SHFE 1406 copper contract, while prices for hydro-copper held firm due to tight supply. The market remained dominated by high-quality copper. Some middlemen entered the market to hunt for bargains, while downstream producers purchased goods only to need, leaving modest transactions.

As SHFE copper prices stabilized during the afternoon trading session, some middlemen continued to purchase goods at lower prices. After physical supply declined some, standard-quality copper was no longer offered at a discount, while premiums for high-quality copper also inched up. Physical copper was largely quoted at a RMB 0-100/mt premium and traded between RMB 48,400-48,580/mt on Tuesday.

Aluminum
On Monday night, SHFE 1408 aluminum contract started at RMB 13,700/mt. The most active contract nudged up to RMB 13,845/mt, but then fell back to RMB 13,510/mt before finishing the night session at RMB 13,535/mt. Trading volumes totaled 354,088 lots, with positions up 204 lots to 181,556 lots. On Tuesday, SHFE aluminum for August delivery dropped in early session, but rebounded to RMB 13,620/mt in the afternoon before ending up RMB 70/mt at RMB 13,615/mt. Trading volumes soared another 102,870 lots, with positions down 6,810 lots to 174,338 lots. Chances for further price rise are slim.

Spot aluminum largely traded between RMB 13,300-13,310/mt in Shanghai on Tuesday, a discount of RMB 80-90/mt over SHFE 1406 aluminum contract. Mainstream traded prices were RMB 13,280-13,290/mt Wuxi and RMB 13,330-13,340/mt in Hangzhou. SHFE aluminum prices gave back gains, keeping buyers in physical markets cautious. In the afternoon, sellers raised offers to RMB 13,320-13,350/mt after SHFE aluminum prices rebounded.

Lead
The most active SHFE 1408 lead contract crept surged to a high of RMB 14,480/mt after starting Monday’s night session at RMB 14,100/mt, but later fell to end up RMB 50/mt at RMB 14,060/mt.

On Tuesday, SHFE lead prices swung mostly between RMB 14,000-14,060/mt, and rose slightly at the tail of the trading to finish up RMB 75/mt at RMB 14,085/mt. Traded volumes for he most active contract totaled 704 lots, and positions added 28 lots to 5,284 lots.

In the Shanghai physical lead market, goods from Chihong Zn & Ge, Nanfang, and Chengyuan traded Tuesday at RMB 13,900/mt, a discount of around RMB 130/mt over the most active SHFE 1408 lead contract. Prices for Chihong brand were lowered to RMB 13,890/mt subsequently due to sluggish trading activity. Traded prices were RMB 13,880-13,890/mt for Humon resources and Shuangyan supply wrapped with plastic steel, and low-priced lead brands including Shuangyan supply wrapped with iron sheet were barely offered.

The market remained dominated by supply from traders, with only Chihong Zn & Ge and Humon moving goods normally among other smelters. Downstream producers still expressed limited buying interest after lead prices rose, which was due largely to poor orders, towering inventories, as well as tight liquidity.

Zinc
SHFE 1408 zinc contract prices opened higher at RMB 15,360/mt on Monday evening, then touched RMB 15,410/mt, a record high since February, and closing at RMB 15,375/mt. SHFE 1408 zinc contract prices opened at RMB 15,370/mt, then fluctuated between RMB 15,315-15,375/mt. In the afternoon, SHFE 1408 zinc contract prices rose to touch RMB 15,415/mt, and closing at RMB 15,395/mt, up RMB 135/mt or 0.88%. Trading volumes decreased by 4,090 lots, to 33,952 lots, and total positions increased by over 2,774 lots, to 90,938 lots.

#0 zinc prices were between RMB 15,280-15,300/mt, with spot discounts of RMB 40-60/mt against SHFE 1408 zinc contract prices. #1 zinc prices were between RMB 15,210-15,220/mt. SHFE zinc prices rose slightly to RMB 15350/mt, but spot prices lacked ability to rise, causing spot discounts to expand and traders to enter the market. Smelters increased supply due to rising zinc prices, but downstream buyers took a wait-and-see attitude. Imported zinc supply was sufficient, when combined with an advantage over domestic prices, transactions for domestic well-known branded zinc were affected. Overall transactions did not improve. Shuangyan branded #0 prices were around RMB 15,300/mt, and RMB 15,280-15,290/mt for Yuguang and Qinxin branded #0 zinc. Imported #0 zinc prices were between RMB 15,230-15,250/mt. SHFE 1408 zinc contract prices hit an intraday high in the afternoon, keeping market players out of the market, with #0 zinc prices between RMB 15,300-15,330/mt.

Tin
In Shanghai physical tin market, mainstream traded prices remained stable between RMB 139,000-140,500/mt on Tuesday. Goods from Jiangxi province traded at the lower end of the price band. Demand was slack in the off-season.

Nickel
SMM #1 nickel prices were quoted between RMB 131,600-132,000/mt. Spot prices slid from RMB 132400/mt to RMB 131,900/mt in the morning, and were as low as RMB 131,500/mt in the afternoon, but transactions were muted as end-users lacked buying interest.