SHANGHAI, Aug. 15 (SMM)--
The most active SHFE 1410 copper contract followed LME copper prices down to RMB 48,890/mt after starting Wednesday's night session at RMB 49,300/mt, and closed down RMB 560/mt at RMB 48,950/mt. During the night session, trading volumes for the most active contract rose to around 180,000 lots, and positions added by 9,032 lots.
On Thursday, SHFE copper prices advanced to a high of RMB 49,120/mt, meeting resistance at the RMB 49,000/mt mark, and ended down RMB 590/mt, or 1.19%, at RMB 48,920/mt. Trading volumes increased by 26,490 lots, and positions expanded by 13,258 lots. The price of the red metal is expected to fall further in the near term.
In the Shanghai physical market, copper was offered Thursday at a RMB 10-80/mt discount over the SHFE 1408 copper contract. Traded prices were RMB 49,440-49,500/mt for standard-quality copper, and RMB 49,480-49,560/mt for high-quality copper. As SHFE copper prices fell, the price gap between the SHFE 1408 and 1409 copper contracts still didn't narrow ahead of the delivery date, adding to concerns about a possible price fall. Cargo holders continued to convert inventories into cash. Copper supply thus was sufficient on Thursday, with the market dominated by hydro-copper and non-standard copper. Some middlemen entered the market to buy to satisfy demand under long-term contracts, while downstream producers expressed lower buying interest on bearish sentiment.
As the SHFE 1408 copper contract edged up during the afternoon trading session, standard-quality copper prices held firm on decreasing supply. Physical copper was largely offered Thursday at a RMB 10-50/mt discount and traded at RMB 49,500-49,560/mt.
On Wednesday night, SHFE 1410 aluminum contract dipped to RMB 14,095/mt after starting at RMB 14,145/mt, and finished the night session at RMB 14,115/mt. Trading volumes totaled 49,090 lots, with positions down 56 lots to 144,092 lots.
On Thursday, the most active contract briefly retreated below the 20-day moving average to RMB 14,075/mt before bouncing back to end at RMB 14,105/mt. Trading volumes totaled 43,326 lots, with positions down 7,612 lots to 136,480 lots. SHFE 1410 aluminum contract wiped out all the gains made for the week and is on track to test support at the 20-day moving averages. November aluminum on the SHFE is likely to become the most active contract in the near term.
Spot aluminum largely traded at RMB 13,980-14,000/mt in Shanghai on Thursday, a discount of RMB 30-50/mt over SHFE 1408 aluminum contract, versus RMB 13,990-14,000/mt in Wuxi and RMB 14,000-14,010/mt in Hangzhou. Sellers cut offers due to anemic demand. Trading was active at below RMB 14,000/mt. In the afternoon, suppliers raised offers to RMB 14,010/mt, with a few deals reported.
SHFE 1410 zinc contract prices opened lower at RMB 16,545/mt Wednesday evening, dipping to as low as RMB 16,430/mt, and closing at RMB 16,455/mt, down RMB 230/mt or 1.38%. Trading volumes increased by 54,048 to 300,830 lots, and total positions grew by 2,772 to 249,856 lots. SHFE 1410 zinc contract prices opened at RMB 16,455/mt on Thursday, dipping to a one-month low of RMB 16,335/mt in the morning, dragged down by LME zinc prices. But since LME zinc prices dropped more slowly later the day, SHFE 1410 zinc contract prices closed at RMB 16,440/mt, down RMB 245/mt or 1.47%. Trading volumes increased by 23,796 lots, to 606,510 lots, and total positions decreased by 9,316 lots to 240,540 lots. SHFE 1410 zinc contract prices are faced with downward pressure this evening since Germany's Q2 GDP shrank for the first time in two years, and since euro zone GDP data is also pessimistic.
#0 zinc prices were between RMB 16,430-16,490/mt, with spot premiums between RMB 30-80/mt above SHFE 1410 zinc contract prices. #1 zinc prices were between RMB 16,410-16,430/mt. SHFE 1410 zinc contract prices inched down to RMB 16,380/mt during the first trading session, allowing spot premiums to expand to RMB 50-80/mt, and prompting cargo holders to sell. But speculators showed little interest in buying. SHFE 1410 zinc contract prices rallied to RMB 16,430/mt during the second trading session, causing spot premiums to narrow to RMB 30-50/mt. Downstream buying interest was low due to market pessimism, and speculators also stood on the sidelines, with transactions mainly made among traders and trading muted. Shuangyan branded #0 zinc prices were RMB 16,450-16,490/mt, with RMB 16,420-16,450/mt for Yuguang, Qinxin, Qilin and Jiulong zinc. AZ #0 zinc was traded between RMB 16,400-16,440/mt. SHFE 1410 zinc contract prices fluctuated between RMB 16,420-16,520/mt in the afternoon, and spot premiums narrowed to RMB 20/mt against SHFE 1410 zinc contract prices given sluggish purchases from speculators and traders.
The most active SHFE 1410 lead contract dipped to as low as RMB 14,535/mt after starting Wednesday's night session at RMB 14,655/mt, dampened by negative economic data from China, European countries and the US.
The price of the soft metal closed the night session down RMB 175/mt at RMB 14,560/mt. Trading volumes for the most active contract rebounded to 30,188 lots, and positions gained by 1,982 lots. Investors held a more bearish stance after SHFE lead prices fell below the RMB 14,600-14,850/mt range, with a higher percentage of new short positions.
On Thursday, SHFE lead prices initially sank to a trough of RMB 14,390/mt, finding support at RMB 14,400/mt, and bounced back during the afternoon trading session to end down RMB 240/mt at RMB 14,495/mt. Trading volumes for the SHFE 1410 lead contract were 50,194 lots, and positions were off 658 lots to 32,598 lots.
In the Shanghai physical lead market, goods from Chihong Zn & Ge, Nanfang, and Chengyuan were offered at a RMB 100/mt discount over the SHFE 1410 lead contract and a RMB 50/mt discount over the SHFE 1409 lead contract. These lead brands were sold at RMB 14,340-14,350/mt. Humon resources were initially quoted at RMB 14,370/mt, but traded lower at RMB 14,360/mt. Shenqian and Mulun lead brands were sold at RMB 14,300/mt.
Only Humon moved goods among lead smelters, and most of supply was from traders. A narrower price gap between SHFE lead and physical lead gave an incentive to traders to move goods, but a sharp fall in SHFE lead prices left downstream producers on the sidelines. Trading activity remained light on Thursday even as some entered the market to hunt for bargains.
In Shanghai spot tin market, mainstream traded prices gained RMB 500/mt to RMB 140,000-142,000/mt on Thursday. Limited supply allowed traders to ask for higher prices. Downstream producers entered the market out of bullishness.
SMM #1 nickel prices were between RMB 129,600-129,900/mt. Spot prices were firm, but trading was muted, with traded prices between RMB 129,600-130,200/mt in the morning. Prices of 1409 nickel contract on the Wuxi electronic trading slumped with LME nickel prices, but rebounded after dipping to RMB 129,800/mt in the afternoon, causing trading to improve. Trading volumes were mostly made below 100 mt, with prices between RMB 129,500-129,800/mt. End-user demand did not improve noticeably.