SHANGHAI, Jun. 18 (SMM) -
LME copper prices overnight failed to stage a rebound seen in other base metals prices. In response, the most active SHFE 1408 copper contract swung by less than RMB 100/mt during Monday's night session, hovering mostly around the RMB 48,000/mt mark, and ended up RMB 130/mt at RMB 48,060/mt. During the night session, trading volumes for the most active contract continued to stand around 60,000 lots, and positions increased by 1,598 lots.
On Tuesday, SHFE copper prices fluctuated narrowly around RMB 48,200/mt after confronting resistance at RMB 48,250/mt, and closed up RMB 260/mt, or 0.54%, at RMB 48,190/mt. Trading volumes for the most active contract shed by 36,020 lots, and positions shrunk by 1,490 lots. SHFE copper prices are bouncing back, but whether the rebound is sustainable remains uncertain.
In the Shanghai physical market, copper was offered Tuesday at a RMB 380-600/mt premium over the SHFE front-month copper contract. Traded prices were RMB 49,150-49,230/mt for standard-quality copper and RMB 49,220-49,400/mt for high-quality copper. As SHFE copper prices extended gains, cargo holders intended to push traded prices higher to levels seen Monday following the delivery date. Market players regarded physical premiums in the morning trading as too much high, and virtually no transactions were reported. Physical premiums narrowed subsequently. The price gap between standard-quality and high-quality copper remained large since the SHFE/LME copper price ratio hovered at high levels. Guixi copper brand was quoted at firm prices. Middlemen entered the market to buy low-price copper supply, and downstream producers expressed low buying interest, universally holding that physical premiums were too high. Trading volumes were thin on Tuesday, with most transactions done among middlemen.
As SHFE copper prices hovered at high levels during the afternoon trading session, physical copper was quoted at a RMB 400-600/mt premium and traded at RMB 49,130-49,470/mt. Supply increased compared to volumes in the morning trading session, but trading activity remained quite on Tuesday.
On Monday night, SHFE 1408 aluminum contract crept higher to RMB 13,500/mt after starting at RMB 13,450/mt, and finished the night session at RMB 13,450/mt. Trading volumes totaled 28,222 lots, with positions up 1,838 lots to 153,424 lots. On Tuesday, the most active contract vacillated between the 10-day and 20-day moving average before closing at RMB 13,460/mt. Trading volumes totaled 22,582 lots, with positions down 5,666 lots to 147,758 lots. At current positions, SHFE aluminum contract for September delivery may become the most active one in the near term.
Spot aluminum largely traded between RMB 13,270-13,290/mt in Shanghai on Tuesday, a discount of RMB 100-120/mt over SHFE 1407 aluminum contract. Mainstream traded prices were RMB 13,280-13,290/mt Wuxi and RMB 13,290-13,300/mt in Hangzhou. Downstream producers entered the market out of bullishness, sending prices up. In the afternoon, offers remained stable, but trading was thin.
SHFE 1408 zinc contract prices opened at RMB 15,375/mt on Monday evening, then touched RMB 15,435/mt, and closing at RMB 15,430/mt, up RMB 55/mt or 0.36%. SHFE 1408 zinc contract prices opened at RMB 15,430/mt, and touched RMB 15,475/mt before plummeting to RMB 15,375/mt. But with support from LME zinc prices, SHFE 1408 zinc contract prices inched up, and closing at RMB 15,450/mt, up RMB 75/mt or 0.49%. Trading volumes increased by 2,718 lots, to 35,206 lots, and total positions decreased by 6,766 lots, to 100,666 lots.
#0 zinc prices were between RMB 15,340-15,370/mt, with spot discounts of RMB 50-80/mt against SHFE 1408 zinc contract prices. #1 zinc prices were between RMB 15,290-15,300/mt. Shuangyan branded #0 prices were between RMB 15,360-15,370/mt, and RMB 15,340-15,350/mt for Yuguang, Jiulong, Qinxin and Feilong branded #0 zinc and RMB 15,310-15,320/mt for AZ branded #0 zinc. Prices for other mainstream brands were between RMB 15,280-15,300/mt. SHFE 1408 zinc contract prices stayed above RMB 15400/mt, but spot zinc price gains were not as strong as SHFE zinc prices, causing spot discounts to expand. Besides, China's deposit reserve ratio cut for some banks and Premier Li's statement boosted market sentiment, causing traders to purchase goods more actively. But downstream buying interest remained low, with transactions only improving slightly. SHFE 1408 zinc contract prices leveled out in the afternoon, with #0 zinc prices between RMB 15,340-15,370/mt.
The most active SHFE 1408 lead contract finished down RMB 5/mt at RMB 13,915/mt during Monday's night session, with only 6 lots traded for the contract.
On Tuesday, the most active contract fluctuated between RMB 13,955-13,985/mt after starting at RMB 13,985/mt, and ended at an intraday low of RMB 13,955/mt, down RMB 5/mt. Trading volumes for the most active contract totaled 588 lots, and positions gained 588 lots to 5,710 lots. SHFE lead prices are expected to swing largely in the RMB 13,950-14,000/mt range in the near term.
Goods from Chihong Zn & Ge, Nanfang, Chengyuan, and Tongguan traded Tuesday between RMB 13,860-13,870/mt, a discount of around RMB 110/mt over the most active SHFE 1408 lead contract. Traded prices were RMB 13,850/mt for Humon brand and Shuangyan supply wrapped with plastic steel, and RMB 13,820/mt for Shuangyan supply wrapped with iron sheet.
Lead smelters ramped up deliveries slightly amid tightening cash flows at the end of the second quarter, and traders were also moving goods actively due to growing inventories. As a result, lead supply outpaced demand in the market. Purchases by lead-acid battery producers remained essentially flat on Tuesday.
In Shanghai physical tin market, mainstream traded prices were RMB 138,000-140,000/mt on Tuesday. Consumption improved as low prices enticed some downstream producers to enter the market. Nanshan and Jinlong brand tin gained more favor, with prices reported between RMB 138,000-138,500/mt.
SMM #1 nickel prices were quoted between RMB 128,300-129,300/mt. Jinchuan raised nickel prices by RMB 1,000/mt to RMB 128,800/mt, with transactions brisk in the morning. Traders purchased goods actively at RMB 128,100-129,500/mt, with the price spread between Jinchuan and Russian nickel around RMB 1,000/mt. Downstream buyers lacked buying interest.