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SMM Base Metals Market Daily Review (2014-6-18)
Jun 19,2014 10:05CST
SMM Comments
The most active SHFE copper contract stabilized above the RMB 48,000/mt mark during Tuesday's night session, aided by a rebound in LME copper prices, and finished up RMB 60/mt at RMB 48,200/mt.

SHANGHAI, Jun. 19 (SMM) -

The most active SHFE copper contract stabilized above the RMB 48,000/mt mark during Tuesday's night session, aided by a rebound in LME copper prices, and finished up RMB 60/mt at RMB 48,200/mt. During the night session, trading volumes for the contract maintained at some 60,000 lots, and positions added by 1,756 lots.

On Wednesday, SHFE copper prices fell back to the RMB 48,000/mt mark after meeting resistance at RMB 48,420/mt, surrendering all early gains, and ended down RMB 10/mt, or 0.02%, at RMB 48,130/mt. Trading volumes for the most active contract shrank by 12,068 lots, and positions gained by 2,072 lots. Trading volumes for the SHFE 1409 copper contract increased by 3,242 lots, and positions expanded by 4,824 lots. SHFE copper prices encountered resistance at the 20-day moving average, but are expected to rebound for the foreseeable future due to positive technical indicators.

In the Shanghai physical market, copper was offered Wednesday at a RMB 400-580/mt premium over the SHFE front-month copper contract. Traded prices were RMB 49,200-49,250/mt for standard-quality copper and RMB 49,300-49,450/mt for high-quality copper. Despite a fall in SHFE copper prices, cargo holders continued to hold prices firm, with physical premiums little changed. Downstream producers began entering the market to purchase low-price goods following the delivery date. Standard-quality copper and hydro-copper both were quoted at firm prices since they gained favor with market players on Wednesday. Middlemen also entered the market, with trading activity improving slightly. Physical premiums are not expected to fall in the near term.

A fall in SHFE copper prices during the afternoon trading session discouraged cargo holders from holing prices firm, with prices for high-quality copper brands lowered. Standard-quality copper and hydro-copper supplies were barely found in the market. The price gap between high-quality and standard-quality copper narrowed close to zero at the tail of the trading. Physical copper was largely quoted at RMB 420-550/mt premium and traded slightly lower at RMB 49,050-49,250/mt.
On Tuesday night, SHFE 1408 aluminum contract started at RMB 13,440/mt, and finished the night session at RMB 13,465/mt. Trading volumes totaled 32,054 lots, with positions up 234 lots to 147,992 lots. On Wednesday, housing data announced by the National Bureau of Statistics indicated that China's property sector cooled at a faster pace. This caused the most active contract to tumble to RMB 13,380/mt and close the day at RMB 13,390/mt. Trading volumes totaled 30,684 lots, with positions down 5,420 lots to 142,338 lots. 
Spot aluminum largely traded between RMB 13,280-13,290/mt in Shanghai and Wuxi on Wednesday, a discount of RMB 90-100/mt over SHFE 1407 aluminum contract. Mainstream traded prices were RMB 13,290-13,300/mt in Hangzhou. SHFE front-month contract has been moving sideways for several days, so wait-and-see sentiment among downstream producers faded, pushing the low-end price up. In the afternoon, prices for the front-month contract drifted lower, sending spot aluminum prices down to RMB 13,260-13,270/mt. Trading was muted.  

SHFE 1408 zinc contract prices opened at RMB 15,545/mt on Wednesday, and touched RMB 15,590/mt with SHFE copper prices, but meeting resistance at RMB 15,600/mt now that positive effects from deposit reserve ratio cut by the State Council has been absorbed and since domestic stocks had been plummeting for two consecutive days. SHFE 1408 zinc contract prices rolled back early gains and closed at RMB 15,500/mt, up RMB 80/mt or 0.52%. Trading volumes increased by 20,174 lots, to 55,380 lots, and total positions decreased by 3,152 lots, to 104,416 lots.
#0 zinc prices were between RMB 15,420-15,450/mt, with spot discounts of RMB 80-100/mt against SHFE 1408 zinc contract prices. #1 zinc prices were between RMB 15,360-15,370/mt. Shuangyan branded #0 prices were between RMB 15,440-15,450/mt, and RMB 15,420-15,430/mt for Yuguang and Feilong branded #0 zinc and RMB 15,380-15,390/mt for AZ branded #0 zinc. Prices for other imported brands were between RMB 15,360-15,370/mt. SHFE 1408 zinc contract prices touched RMB 15,585/mt before falling during the first trading session, but spot zinc price gains were not as strong as SHFE zinc prices, causing spot discounts to expand to RMB 100-120/mt. This gave incentives to trades moving goods, causing transactions to improve. During the second trading session, SHFE 1408 zinc contract prices stabilized between RMB 15,510-15,540/mt, with spot discounts narrowing and keeping market players on the sidelines. As zinc prices rose, some smelters began to hold back goods. But ample supply of imported zinc dragged down #1 and undeliverable brands of #0 zinc prices, with downstream buying interest low. SHFE 1408 zinc contract prices fell in the afternoon to RMB 15,490/mt, with spot discounts narrowing to RMB 60-90/mt, and #0 zinc prices between RMB 15,400-15,430/mt.
The most active SHFE 1408 lead contract followed LME lead prices up to RMB 14,090/mt after starting Tuesday's night session at a low of RMB 13,990/mt, and ended up RMB 75/mt, or 0.54%, at RMB 14,040/mt. During the night session, a total of 636 lots were traded, the highest trading volumes since May 9.

Data from the National Bureau of Statistics (NBS) show that new residential real estate prices in 35 cities among 70 major Chinese medium and large cities fell in May from a month ago, in relation to only 8 cities in April. The weakening property market weighed down base metals markets as a whole. In response, SHFE lead prices dipped to as low as RMB 13,975/mt after advancing to RMB 14,000/mt, and closed up RMB 5/mt at RMB 13,975/mt. Trading volumes totaled 982 lots, and positions lost 66 lots to 5,644 lots. SHFE lead prices are now stuck around the RMB 14,000/mt mark.

In the Shanghai physical lead market, goods from Chihong, Shuangyan, and Hangjiang traded Wednesday at RMB 13,860-13,870/mt, a RMB 130/mt discount over the most active SHFE 1408 lead contract. Traded prices were RMB 13,840-13,850/mt for Humon resources, and RMB 13,830/mt for Shuangyan supply wrapped with iron sheet. Lead smelters ramped up deliveries slightly, but traders expressed little buying interest. Tight liquidity, sluggish end-use consumption, as well as high finished goods inventories, all had a severe impact on purchases at lead-acid battery producers on Wednesday.
In Shanghai physical tin market, mainstream traded prices were RMB 138,000-140,000/mt on Wednesday. Trading activity petered out as buyers are bearish. 
SMM #1 nickel prices were quoted between RMB 131,100-132,100/mt. Jinchuan raised nickel prices by RMB 3,200/mt to RMB 132,000/mt. Downstream buyers mainly took a wait-and-see attitude, with transactions mainly made among traders, which purchased goods actively. Traded prices were between RMB 130,500-131,500/mt in the afternoon.

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

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