SHANGHAI, Aug. 14 (SMM)--
The most active SHFE 1410 copper contract tested support at RMB 49,530/mt after starting Tuesday's night session at RMB 49,820/mt, and finished down RMB 100/mt at RMB 49,630/mt. During the night session, trading volumes were around 110,000 lots, and positions gained by 5,772 lots.
On Wednesday, SHFE copper prices managed to hover around RMB 49,600/mt during the morning trading session, but later dipped to a trough of RMB 49,270/mt before ending down RMB 430/mt, or 0.86%, at RMB 49,300/mt. Trading volumes added by 66,588 lots, and positions increased by 11,202 lots. The price of the red metal has dropped below the 60-day moving average amid broader sell-offs and looks set to test support the RMB 49,000/mt mark for the near term.
In the Shanghai physical market, copper was offered Wednesday at a RMB 10-80/mt discount over the SHFE 1408 copper contract. Traded prices were RMB 49,820-50,100/mt for standard-quality copper and RMB 49,860-50,160/mt for high-quality copper.
As SHFE copper prices fell slightly, the price gap between the SHFE 1408 and 1409 copper contracts remained above RMB 250/mt. Cargo holders continued to convert goods into cash during the morning trading, while some speculative investors entered the market to buy physical copper while building short positions on the futures market.
After the SHFE front-month copper contract fell below the RMB 50,000/mt mark, down by more than RMB 300/mt, some arbitraged supply flowed in the physical market, adding to pressure from growing supply. A variety of imported copper brands were available in the market, with increasing hydro-copper brands and non-standard copper brands. Middlemen continued to buy low-priced goods, while downstream producers ramped up purchases after copper prices dropped below RMB 50,000/mt. Trading activity turned brisker, but pressure from rising supply also increased on Wednesday.
As SHFE copper prices hovered at low levels during the afternoon trading session, a small number of middlemen entered the market to buy, causing supply to decrease. Physical copper was largely offered between a RMB 50/mt discount and a RMB 20/mt premium and traded at RMB 48,830-50,000/mt.
On Tuesday night, SHFE 1410 aluminum contract rose to RMB 14,240/mt after starting higher at RMB 14,210/mt, and finished the night session at RMB 14,190/mt. Trading volumes totaled 69,802 lots, with positions up 2,637 lots to 151,948 lots.
On Wednesday, the most active contract gave back previous day's gains by falling to RMB 14,115/mt before the release of a raft of Chinese economic data. Prices, however, rebounded afterwards to end at RMB 14,155/mt. Trading volumes totaled 56,338 lots, with positions down 7,799 lots to 144,148 lots.
Spot aluminum largely traded at RMB 14,050-14,070/mt in Shanghai on Wednesday, a discount of RMB 10-30/mt over SHFE 1408 aluminum contract, versus RMB 14,060-14,080/mt in Wuxi and RMB 14,060-14,070/mt in Hangzhou. Buying interest dwindled after SHFE aluminum drifted lower. In the afternoon, suppliers raised offers to RMB 14,070/mt from RMB 14,040/mt after SHFE aluminum rallied, further cooling demand
SHFE 1410 zinc contract prices opened higher at RMB 16,805/mt Tuesday evening, but were dragged down by the exodus of longs, dipping to as low as RMB 16,675/mt, and closing at RMB 16,695/mt, down RMB 5/mt or 0.03%. Trading volumes increased by 68,932 to 246,782 lots, and total positions fell by 4,700 to 263,922 lots. SHFE 1410 zinc contract prices opened at RMB 16,695/mt on Wednesday, touching an intraday high of RMB 16,760/mt in the morning, but falling below RMB 16,600/mt mark due to sluggish economic data from China, and closing at RMB 16,580/mt, down RMB 120/mt or 0.72%. Trading volumes decreased by 50,366 lots, to 582,714 lots, and total positions decreased by 21,538 lots to 247,084 lots. SHFE 1410 zinc contract prices are expected to test the 40-day moving average given resistance from moving averages and weakening LME zinc prices.
#0 zinc prices were between RMB 16,620-16,750/mt, with spot prices RMB 0-40/mt above SHFE 1410 zinc contract prices. #1 zinc prices were between RMB 16,630-16,670/mt. SHFE 1410 zinc contract prices fluctuated between RMB 16,710-16,760/mt during the first trading session, with spot premiums between RMB 0-30/mt. Speculators stood on the sidelines due to firm spot prices. As SHFE 1410 zinc contract prices plunged to RMB 16,570/mt during the second trading session, depressing downstream buying interest and leaving some traders cautious. Spot premiums only expanding by RMB 10/mt, when combined with falling zinc prices, smelters held goods, with transactions mainly made among speculators and trading muted. Shuangyan branded #0 zinc prices were RMB 16,650-16,750/mt, with RMB 16,620-16,740/mt for Yuguang, Qinxin, Tiefeng and Jiulong zinc. AZ and SMC #0 zinc was traded between RMB 16,610-16,720/mt. SHFE 1410 zinc contract prices remained weak in the afternoon, with spot premiums between RMB 20-40/mt against SHFE 1410 zinc contract prices, with transactions quiet.
The most active SHFE 1410 lead contract initially surged to RMB 14,835/mt during Tuesday's night session, but then followed LME lead prices down to finish up RMB 35/mt at RMB 14,755/mt. Trading volumes totaled 27,128 lots, and positions added 1,264 lots to 51,942 lots.
On Wednesday, SHFE lead prices opened at RMB 14,755/mt, and then dipped to a low of RMB 14,635/mt on disappointing Chinese data before ending down RMB 70/mt at RMB 14,650/mt. Trading volumes increased by 44,014 lots, and positions lost 248 lots to 33,256 lots on Wednesday.
In the Shanghai physical lead market, goods from Chihong Zn & Ge initially traded Wednesday at RMB 14,530-14,540/mt, an around RMB 160/mt discount over the most active 1410 lead contract. Humon resources were sold at RMB 14,500/mt, but were offered lower at RMB 14,480/mt after SHFE lead prices fell.
In general, supply from lead smelters failed to increase in the Shanghai market. The expanding physical discounts discouraged traders from moving goods, with supply down. Meanwhile, downstream producers stayed on the sidelines or turned to buy secondary refined lead on bearish sentiment after SHFE lead prices dropped. Traded prices were RMB 14,470-14,500/mt for Shuangyan and Humon brands during the afternoon trading on Wednesday.
In Shanghai spot tin market, mainstream traded prices remained stable between RMB 139,500-141,500/mt on Wednesday morning, but rose to RMB 140,000-142,000/mt in the afternoon. Supply from Yunnan Tin Group was tight, fuelling bullish sentiment. Trading activity thus became more active than yesterday.
SMM #1 nickel prices were between RMB 130,000-130,300/mt, with traded prices within SMM price range and spot trading brisk in the morning. Jinchuan Group raised nickel prices by RMB 500/mt to RMB 130,300/mt. Prices of 1409 nickel contract on the Wuxi electronic trading dropped to RMB 129,900/mt in the afternoon, causing spot trading to mute, with prices between RMB 129,500-129,800/mt. End-user demand improved.