SHANGHAI, Jul. 3 (SMM) –
Prices for the most active SHFE copper contract started Monday’s night session at RMB 49,660/mt, and then trended up to a high of RMB 50,390/mt, helped by LME copper prices rising above the USD 7,000/mt mark. SHFE copper prices closed up RMB 720/mt at RMB 50,250/mt. During the night session, trading volumes for the most active contract spiked to around 220,000 lots, while positions gained by 2,738 lots.
On Tuesday, SHFE copper prices hovered mostly around RMB 50,300/mt, and climbed to as high as RMB 50,420/mt at the tail of the trading before ending up RMB 850/mt, or 1.72%, at RMB 50,380/mt. Trading volumes for the most active contract added by 207,000 lots, and positions expanded by 6,714 lots. Totaled trading volumes increased by 261,000 lots, and total positions shed by 7,332 lots. Most positions liquidated were from the SHFE 1408 copper contract. Although market insiders remained cautious towards the price rally, SHFE copper prices are expected to rise further in the near term following a brief correction.
In the Shanghai physical market, copper was offered Tuesday at a RMB 120-330/mt premium over the SHFE 1407 copper contract. Traded prices were RMB 51,500-51,600/mt for standard-quality copper and RMB 51,570-51,750/mt for high-quality copper. SHFE copper prices rebounded sharply on Tuesday, with the front-month copper contract rising above the RMB 51,000/mt mark. In response, cargo holders expressed lower interest in raising cash as liquidity eased early in July and held prices firm in a bid to push up physical premiums further. Nevertheless, there was limited upside room for copper premiums since the rally in SHFE copper prices has already beaten expectations, with sluggish trading volumes. Standard-quality copper was quoted at lower prices, but high-quality copper prices held firm due to shortages of supply. Middlemen and downstream producers both barely entered the market since their cash flows remained tight early in July, putting a damper on trading activity.
As the SHFE front-month copper contract continued to rise during the afternoon trading session, physical premiums fell fractionally. Quotations for high-quality copper were lowered, but those for standard-quality copper and hydro-copper remained above RMB 100/mt due to shortages of supply. Copper was largely offered at a RMB 100-280/mt premium and traded higher at RMB 51,500-51,780/mt, with rare trading volumes on Tuesday.
On Monday night, SHFE 1409 aluminum contract climbed to RMB 13,565/mt after starting at RMB 13,490/mt, and finished the night session at RMB 13,540/mt. Trading volumes totaled 33,186 lots, with positions up 2,278 lots to 150,772 lots. On Tuesday, positive Chinese official manufacturing PMI helped the most active contract rise to RMB 13,630/mt and end at RMB 13,595/mt. Trading volumes surged to 40,634 lots, with positions down 482 lots to 150,290 lots.
Spot aluminum largely traded between RMB 13,340-13,360/mt in Shanghai on Tuesday, a discount of RMB 80-100/mt over SHFE 1407 aluminum contract. Mainstream traded prices were RMB 13,350-13,360/mt in Wuxi, and RMB 13,370-13,380/mt in Hangzhou. Rising SHFE aluminum allowed sellers to raise offers, and buyers became more willing to buy now that liquidity crunch has eased. This pushed prices up. In the afternoon, sellers hiked offers further to more than RMB 13,390/mt, driving buyers away.
Prices for the most active SHFE 1408 lead contract tracked LME lead prices up to RMB 14,150/mt after starting Monday’s night session at RMB 14,090/mt, and ended up RMB 20/mt at RMB 14,125/mt. During the night session, trading volumes for the most active contract totaled only 20 lots, while positions shed 16 lots to 6,828 lots.
On Tuesday, SHFE lead prices followed LME lead prices down to around RMB 14,085/mt, and finished down RMB 5/mt, or 0.04%, at RMB 14100/mt. Trading volumes shed 874 lots to 668 lots, while positions lost 76 lots to 6,768 lots. Investors remained cautious on Tuesday before the release of US June ADP jobs report and nonfarm payroll figures. SHFE lead prices should continue to trade in ranges in the near term, with mixed technical indicators.
In the Shanghai physical lead market, goods from Chihong Zn & Ge traded Tuesday at RMB 13,900-13,910/mt in light volumes, a RMB 190 discount/mt over the most active SHFE 1408 lead contract. Nanfang branded lead was offered at RMB 13,900/mt, but was barely traded. Hanjiang, Shuangyan, and Humon resources were sold at RMB 13,870-13,880/mt. Smelters of deliverable lead brands moved goods in small quantities, and supply from traders was also tied up to the futures market, resulting in tight supply of leading brands. Only a small number of downstream producers ramped up purchases on Tuesday since cash flows remained tight in the first trading day of July, leaving trading activity muted.
SHFE 1409 zinc contract prices opened at RMB 15,975/mt on Monday evening, and broke through RMB 16,000/mt since LME zinc prices breached USD 2,200/mt, touching RMB 16,140/mt, a record high since last February, and closing at RMB 16,045/mt, up RMB 100/mt or 0.63%. SHFE 1409 zinc contract prices opened at RMB 16,050/mt on Tuesday. China’s official PMI in June rose for the fourth straight month, reflecting China’s economy is improving. But SHFE 1409 zinc contract prices touched RMB 16,090/mt then rolled back most early gains after the positive economic news was absorbed and since a large number of investors left the market after profit-taking, but finding support at RMB 15,900/mt, and closing at RMB 16,040/mt, up RMB 195/mt or 1.23%. Trading volumes increased by 21,268 lots, to 114,458 lots, and total positions of SHFE 1409 zinc contracts increased by 5,032 lots to 181,910 lots. Total positions increased by 122,804 lots to 241,982 lots.
#0 zinc prices were between RMB 15,730-15,780/mt, with spot discounts of RMB 170-220/mt against SHFE 1409 zinc contract prices. #1 zinc prices were between RMB 15,660-15,680/mt. SHFE 1409 zinc contract prices dropped to RMB 15,910-15,960/mt yesterday, but spot zinc prices were firm. SMM #0 zinc prices were only RMB 20/mt below the record high of RMB 15,750/mt hit in 2013, stimulating smelters to sell. Arbitrage traders were holding prices firm, and downstream buying interest was low, with transactions mainly made among traders. Prices for deliverable brands were much higher than those for non-deliverable brands.
Shuangyan branded #0 prices were between RMB 15,750-15,780/mt, and RMB 15,740-15,760/mt for Yuguang and Huize branded #0 zinc. Prices for Qinxin branded zinc were RMB 15,730-15,740/mt. Imported zinc supply was ample, with prices for AZ brand around RMB 15,730-15,740/mt, RMB 15730/mt for SMC brand, and RMB 15,700-15,720/mt for other brands. SHFE 1409 zinc contract prices stabilized at RMB 16,000/mt, with #0 zinc prices between RMB 15,780-15,810/mt.
In Shanghai physical tin market, mainstream traded prices rebounded to RMB 138,000-139,500/mt on Tuesday. Rising LME tin overnight fuelled bullishness in Shanghai tin market, driving prices higher.
SMM #1 nickel prices were quoted between RMB 130,000-130,500/mt, with spot transactions mainly in the morning. Jinchuan raised nickel prices by RMB 2,500/mt, to RMB 130,500/mt, with transactions improving. Trading volumes by traders mostly between 100-200 mt, with traded prices between RMB 130,400-130,500/mt in the morning, and RMB 130,500-130,700/mt in the afternoon. Demand from stainless steel mills was soft due to suspensions in the summer.