SMM Base Metals Market Daily Review (2014-6-26)

SHANGHAI, Jun. 27 (SMM) –

Copper
Prices for the most active SHFE copper contract rallied to a high of RMB 49,550/mt after starting Wednesday’s night session at RMB 48,950/mt, and ended up RMB 440/mt at RMB 49,460/mt. Trading volumes for the most active contract rose to around 150,000 lots, and positions surged by 15,842 lots.

On Thursday, SHFE copper prices advanced to as high as RMB 49,680/mt during the afternoon trading session, and finished up RMB 570/mt, or 1.16%, at RMB 49,590/mt. Trading volumes for the most active contract gained by 153,000 lots, and positions expanded by 15,106 lots.

In the Shanghai physical market, copper was offered Thursday at a RMB 150-420/mt premium over the SHFE front-month copper contract. Traded prices were RMB 50,430-50,570/mt for standard-quality copper and RMB 50,570-50,730/mt for high-quality copper.

SHFE copper prices extended gains on Thursday. In response, cargo holders continued to trade in large volumes to raise cash, pressured by tight liquidity at the end of June. Premiums for high-quality copper, however, remained firm, since some supply was used to satisfy demand from long-term contracts. In contrast, premiums for standard-quality copper fell sharply, and those for hydro-copper were quoted below RMB 100/mt by the midday due to ample supply. Some middlemen with sufficient cash flows entered the market to buy low-priced goods, while downstream producers expressed little buying interest on Thursday.

As SHFE copper prices rallied further during the afternoon trading session, premiums for high-quality copper narrowed, but those for standard-quality copper remained unchanged. Physical copper was largely quoted at a RMB 150-380/mt premium and traded slightly higher at RMB 50,570-50,770/mt. Trading activity for standard-quality copper improved to a small extent on Thursday. 

Aluminum     
On Wednesday night, SHFE 1409 aluminum contract moved higher after starting at RMB 13,520/mt, and finished the night session at RMB 13,580/mt. Trading volumes totaled 12,152 lots, with positions up 2,208 lots to 133,356 lots. On Thursday, the most active contract hit a session high of RMB 13,595/mt before ending at RMB 13,590/mt. Trading volumes totaled 23,958 lots, with positions up 10,076 lots to 141,224 lots.  
 
Spot aluminum largely traded between RMB 13,340-13,350/mt in Shanghai and Wuxi on Thursday, a discount of RMB 70-80/mt over SHFE 1407 aluminum contract. Mainstream traded prices were RMB 13,360-13,370/mt in Hangzhou. Sellers held offers firm, depressing buying interest. In the afternoon, most sellers held back goods out of optimism after SHFE 1407 aluminum contract lurched higher. Goods offered at RMB 13,360/mt were quickly sold out.

Lead
Prices for the most active SHFE 1408 lead contract fluctuated largely between RMB 14,045-14,115/mt during Wednesday’s night session, and ended down RMB 40/mt at RMB 14,080/mt. During the night session, SHFE lead prices found support at RMB 14,020-14,040/mt, with trading volumes totaling 94 lots and positions down 14 lots to 7,058 lots.

On Thursday, SHFE lead prices swung largely between RMB 14,080-14,100/mt during the morning trading session, but later advanced to a high of RMB 14,165/mt before ending up RMB 10/mt at RMB 14,130/mt. Trading volumes for the most active contract totaled only 614 lots, and positions added 32 lots to 7,104 lots.

In the Shanghai physical lead market, goods from Chihong Zn & Ge were offered Thursday at RMB 13,920/mt, but traded lower at RMB 13,910/mt. Supply from Shuangyan, Humon, and Hanjiang was sold at RMB 13,900-13,910/mt, with few transactions. Market supply remained sufficient on Thursday, even as lead smelters curtailed deliveries. Downstream producers showed higher willingness to buy after lead prices fell, with traded volumes for low-priced goods up. 

Zinc
SHFE 1409 zinc contract prices opened at RMB 15,660/mt on Wednesday evening, then rose to RMB 15,730/mt, and closing at RMB 15,735/mt, up RMB 70/mt or 0.45%. SHFE 1409 zinc contract prices opened at RMB 15,735/mt on Thursday, then fluctuated between RMB 15,705-15,745/mt in the morning. As a large number of longs entered the market, SHFE 1409 zinc contract prices surged to RMB 15,800/mt, up nearly 1%, and closing at RMB 15,795/mt, up RMB 130/mt or 0.83%. Trading volumes during day session increased by 9,780 lots, to 57,194 lots, and trading volumes for both day and night sessions increased by 36,944 lots to 103,444 lots, and total positions increased by 10,326 lots, to 153,606 lots. Total positions of SHFE zinc were up 18,712 lots to 99,674 lots.
 
#0 zinc prices were between RMB 15,560-15,580/mt, with spot discounts of RMB 150-130/mt against SHFE 1409 zinc contract prices. #1 zinc prices were between RMB 15,510-15,530/mt. Shuangyan branded #0 prices were between RMB 15,570-15,580/mt, and RMB 15,560-15,570/mt for Qinxin and Baohui branded #0 zinc. Prices for Yuguang branded #0 zinc were RMB 15,570/mt, and RMB 15,540/mt for imported zinc, with supply tight. SHFE 1409 zinc contract prices fluctuated around RMB 15,725/mt, with spot discounts of #0 zinc expanding further. Cargo holders were unwilling to sell, when combined with limited imported zinc arriving, supply was tight. Downstream buying interest improved slightly, but mid-year cash flow tightness and high zinc prices restrained transactions. SHFE 1409 zinc contract prices breached RMB 15,800/mt, leaving cargo holders on the sidelines, and #0 zinc prices between RMB 15,590-15,630/mt.

Tin
In Shanghai physical tin market, mainstream traded prices remained stable between RMB 138,000-140,000/mt on Thursday. Smelters sat on their inventories against sluggish prices, while buyers bought only as needed. 

Nickel  
SMM #1 nickel prices were quoted between RMB 126,100-126,600/mt. Transactions on the Wuxi electronic trading were brisk after 1408 nickel contracts became the most actively traded contracts. But spot prices were sluggish, with quotes between RMB 125,800-126,400/mt in the afternoon. End-users remained cautious as the price spread between Russian nickel and Jinchuan nickel narrowed.