SHANGHAI, Aug. 27 (SMM) –
With the lack of guidance from LME copper, SHFE copper hovered in narrow ranges during Monday’s night session. Copper for October delivery, the most active contract on the Shanghai Futures Exchange, dipped to RMB 50,640/mt after starting at RMB 50,810/mt, and closed flat at RMB 50,730/mt. During the night session, trading volumes for the SHFE 1410 copper contract dwindled to around 50,000 lots, and positions increased by 2,050 lots.
On Tuesday, SHFE copper sank to a low of RMB 50,450/mt during the afternoon trading session, and finished down RMB 120/mt, or 0.24%, at RMB 50,610/mt. Trading volumes for the SHFE 1410 copper contract decreased by 105,000 lots, and positions fell by 958 lots. The price of the red metal looks set to rebound for the near term with positive technical indicators.
In the Shanghai physical market, copper was offered Tuesday at a RMB 130-300/mt premium over the SHFE 1410 copper contract. Traded prices were RMB 50,930-51,070/mt for standard-quality copper and RMB 51,050-51,250/mt for high-quality copper. Most cargo holders rushed to convert inventories into cash at high prices due to tight liquidity at the end of August, leaving copper supply ample in the market. As a result, physical premiums fell by more than RMB 100/mt. Middlemen barely entered the market with limited profit margins, while downstream producers mostly were buying only to need. Copper supply significantly outstripped demand on Tuesday.
As SHFE copper drifted lower during the afternoon trading session, copper was offered at a RMB 120-280/mt premium and traded slightly lower at RMB 50,900-51,150/mt. Trading activity slowed during the session, but spot copper still was sold at a premium over the SHFE 1409 copper contract.
On Monday night, SHFE 1410 aluminum contract turned back into the most active contract, which started at RMB 14,310/mt. The contract moved sideways during the night session before finishing at RMB 14,330/mt. Trading volumes totaled 26,756 lots, with positions up 2,150 lots to 125,076 lots.
On Tuesday, November aluminum on the SHFE became the most active contract again as positions surged. The contract closed at a session high of RMB 14,400/mt. Trading volumes totaled 35,982 lots, with positions up 6,620 lots to 129,980 lots. Further gains are expected as bullish sentiment is growing.
Spot aluminum largely traded at RMB 14,260-14,270/mt in Shanghai on Tuesday, a discount of RMB 30-50/mt over SHFE 1409 aluminum contract, versus RMB 14,280-14,290/mt in Wuxi and Hangzhou. Sellers demanded higher prices after SHFE aluminum prices rose. Prices in Wuxi led the gains due to tighter supply there. Traders showed high buying interest, while downstream producers turned away. In the afternoon, sellers held back goods out of bullishness, leaving trading muted.
Lead for October delivery, the most active contract on the Shanghai Futures Exchange, started Monday’s night session at RMB 14,485/mt, and then hovered between RMB 14,470-14,540/mt. The price of the soft metal closed down RMB 90/mt at RMB 14,485/mt, with trading volumes at 4,426 lots and positions up 260 lots at 28,372 lots.
On Tuesday, SHFE lead rose to as high as RMB 14,590/mt during the afternoon trading session, breaking above the 5-day and 10-day moving averages, and ended up RMB 15/mt, or 0.1%, at RMB 14,590/mt. Trading volumes added 1,220 lots to 8,704 lots, and positions shed 932 lots to 27,180 lots. The price of the soft metal has found solid support at the 40-day moving average.
In the Shanghai physical lead market, goods from Chihong Zn & Ge were offered Tuesday at RMB 14,370/mt, a RMB 130/mt discount over the most active SHFE 1410 lead contract. Traded prices were RMB 14,350-14,360/mt for Tongguan and Hanjiang brands. Traders were moving goods actively, but downstream producers were markedly reluctant to buy following a fall in SHFE lead prices.
SHFE 1410 zinc contract prices opened at RMB 16,770/mt Monday evening, then fell to RMB 16,710/mt as a large number of shorts entered the market, but found support at the 30-day moving average before fluctuating between RMB 16,730-16,750/mt, and closing at RMB 16,745/mt, down RMB 5/mt or 0.03%. Trading volumes decreased by 152,054 to 86,396 lots, and total positions grew by 1,354 to 200,908 lots. SHFE 1411 zinc contracts became the most actively traded contracts this afternoon. SHFE 1410 zinc contract prices opened at RMB 16,765/mt, then weakened to as low as RMB 16,700/mt. But as LME zinc prices leveled off, a large number of longs entered the market, pushing up SHFE three-month zinc contract prices, and closing at RMB 16,970/mt, up RMB 195/mt or 1.16%. Trading volumes decreased by 16,974 lots, to 171,266 lots, and total positions increased by 22,328 lots to 171,266 lots. SHFE three-month zinc contract prices are expected to test support from RMB 17,000/mt.
#0 zinc prices were between RMB 16,740-16,780/mt, with spot premiums between RMB 30-60/mt against SHFE 1410 zinc contract prices, and spot premiums against SHFE 1411 zinc contract prices were RMB 10-40/mt. #1 zinc prices were between RMB 16,660-16,690/mt. SHFE 1411 zinc contract prices remained largely unchanged, with spot premiums down slightly. Some brands were still in short supply, with the price spread between different brands narrowing. This left speculative activities muted, and downstream demand remained soft, keeping transactions quiet. Trading was mainly made among traders. Shuangyan branded #0 zinc prices were RMB 16,760-16,780/mt, with RMB 16,740-16,760/mt for Yuguang, Qinxin, Qilin and Hongye zinc. Undeliverable #0 zinc prices were 16,710-16,720/mt. AZ zinc prices were RMB 16,710/mt, and RMB 16,680-16,710/mt for other imported zinc. SHFE 1411 zinc contract prices pointed toward RMB 17,000/mt, and cargo holders were held back goods due to the lack of arbitrage opportunities, and kept prices firm. Downstream buyers also took a wait-and-see attitude, leaving trades muted.
In Shanghai spot tin market, the low-end price lost RMB 500/mt, bringing mainstream traded prices down to RMB 139,500-141,500/mt on Tuesday. Persistently weak demand forced sellers to cut offers. Supply from Yunnan Tin Group remained tight.
SMM #1 nickel prices were between RMB 130,000-130,300/mt. Transactions on the LME market were muted during Asian trading hours, keeping prices on the Wuxi electronic trading stable. This left little arbitrage opportunities for traders, and kept transactions muted, with traded price between RMB 130,000-130,300/mt. Prices of 1409 nickel contracts on the Wuxi electronic trading rose in the afternoon, causing transactions among traders to improve, with prices between RMB 130,100-130,400/mt. But downstream buyers still purchased modestly.