SMM Base Metals Market Daily Review (2014-8-6)

SHANGHAI, Aug. 7 (SMM) –

Copper
The most active SHFE 1410 copper contract fluctuated by around RMB 150/mt after starting Tuesday’s night session at RMB 50,160/mt, dipping to RMB 50,040/mt, and ended down RMB 400/mt at RMB 50,140/mt. During the night session, trading volumes for the most active contract rose slightly to 110,000 lots, and positions added by 5,808 lots.

On Wednesday, SHFE copper prices managed to hover above the RMB 50,000/mt mark during the morning trading session, but dipped to RMB 49,710/mt subsequently to end down RMB 820/mt, or 1.62%, at RMB 49,720/mt. Trading volumes for the SHFE 1410 copper contract gained by 147,000 lots, and positions expanded by 3,074 lots.

In the Shanghai physical market, copper was offered between a RMB 50/mt discount and a RMB 20/mt premium over the SHFE 1408 copper contract. Traded prices were RMB 50,330-50,430/mt for standard-quality copper and RMB 50,360-50,480/mt for high-quality copper. Physical copper initially managed to trade at a low premium after SHFE copper prices tumbled, with standard-quality and hydro-copper prices holding firm due to tight supply. Middlemen entered the market actively during the morning trading session, while downstream producers went bargain-hunting after prices fell, with slightly better trading on Wednesday.

As SHFE copper prices fell back during the afternoon trading session, the SHFE 1408 copper contract dropped by nearly RMB 600/mt, with physical copper discounts narrowing. Copper was largely offered between a RMB 30/mt discount and a RMB 40/mt premium and traded lower at RMB 50,200-50,250/mt. Hydro-copper brands were quoted at an around 50/mt discount, with ample supply.

Aluminum
On Tuesday night, SHFE 1410 aluminum contract moved sideways after starting at RMB 14,075/mt, and finished the night session at RMB 14,080/mt. Trading volumes totaled 30,882 lots, with positions down 1,058 lots to 155,904 lots.

On Wednesday, the most active contract followed LME aluminum down to RMB 14,035/mt. Trading volumes were up 29,346 lots to 60,228 lots, with positions down 5,108 lots to 150,796 lots. The light metal may be vulnerable at the 20-day moving average.

Spot aluminum largely traded at RMB 13,950-13,960/mt in Shanghai and Wuxi on Wednesday, a discount of RMB 30-40/mt over SHFE 1408 aluminum contract. Mainstream traded prices were RMB 13,960-13,970/mt in Hangzhou. Spot aluminum prices followed SHFE 1408 aluminum contract down RMB 60/mt. Traders lost buying interest, while downstream producers sourced only on an as-needed basis. In the afternoon, cargo holders cut offers to RMB 13,950/mt after SHFE aluminum drifted lower, but trading was muted.

Lead
The most active SHFE 1410 lead contract started Tuesday’s night session at RMB 14,840/mt, and later followed LME lead price down to RMB 14,700/mt before ending RMB 245/mt, or 1.64% lower at RMB 14,730/mt. During the night session, trading volumes totaled 51,100 lots, and positions added 1,558 lots to 42,604 lots.

SHFE lead prices rose to RMB 14,785/mt during the morning trading session, but fell to as low as RMB 14,660/mt subsequently to close down RMB 285/mt at RMB 14,690/mt. Trading volumes for the SHFE 1410 lead contract were 82,272 lots, and positions were off 1,956 lots to 39,090 lots.

In the Shanghai physical lead market, quotations for goods from Chihong Zn & Ge were initially at RMB 14,670-14,680/mt, but later fell to RMB 14,650/mt due to light transactions. Traded prices were RMB 14,650/mt for Chengyuan and Nanfang brands, and RMB 14,620/mt for Humon brand. Although lead smelters were willing to move goods on Wednesday, traders and downstream producers stayed on the sidelines following a sharp fall in lead prices, leaving extremely sluggish trading.

Zinc
SHFE 1410 zinc contract prices opened lower at RMB 16,950/mt on Tuesday evening, falling to the five-day moving average before rising slightly, and closing at RMB 16,970/mt, down RMB 100/mt or 0.59%. Trading volumes decreased by 90,000 to 228,000 lots, and total positions decreased by 2,758 to 284,716 lots. SHFE 1410 zinc contract prices opened at RMB 16,970/mt on Wednesday, and fell to RMB 16,900/mt due to rising US dollar index and China’s sluggish PMI in the service sector, as well as weakening LME zinc prices, and closed at RMB 16,875/mt, down RMB 195/mt or 1.14%. Trading volumes decreased by 34,574 lots, to 197,720 lots, and total positions decreased by 10,790 lots to 273,926 lots. SHFE 1410 zinc contract prices met resistance at the 10-day moving average, and are expected to test support from the 20-day moving average this evening.

#0 zinc prices were between RMB 16,880-16,950/mt, with spot prices ranging from RMB 20/mt below to RMB 10/mt above SHFE 1410 zinc contract prices. #1 zinc prices were between RMB 16,850-16,870/mt. Although smelters sold modestly, speculators were actively moving goods due to narrowing spot discounts, leading to various brands available. Some speculators purchased at lower prices, while downstream buying interest remained weak. But transactions improved and were mainly made between traders. Shuangyan branded #0 zinc prices were RMB 16,930-16,950/mt in the morning, then moved between RMB 16,910-16,920/mt, once quoted RMB 20/mt above SHFE 1410 zinc contract prices. Prices for Yuguang, Qinxin, Tiefeng, Hongye and Feilong RMB 16,900-16,910/mt, with trading between RMB 16,880-16,890/mt at the end of trading. SHFE 1410 zinc contract prices dipped to RMB 16,830/mt in the afternoon, with spot premiums between RMB 0-10/mt against SHFE 1410 zinc contract prices. #0 zinc prices were between RMB 16,840-16,900/mt.

Tin
In Shanghai spot tin market, most deals closed between RMB 140,000-141,500/mt on Wednesday, with the high-end price down RMB 500/mt. Nanshan and Jinlong brand tin traded around RMB 139,800/mt. Yunnan Tin Group offered at RMB 143,000/mt, but few buyers were willing to buy at such high price. Overall consumption was sluggish.

Nickel
SMM #1 nickel prices were between RMB 128,700-129,300/mt, with spot trading quiet in the morning and nickel prices in Shanghai between RMB 128,500-128,900/mt. Prices on the Wuxi electronic trading fell with LME nickel prices in the afternoon to RMB 128,300-128,600/mt. Transactions were quiet as end-user demand was sluggish.