SMM Base Metals Market Daily Review (2014-10-23)

SHANGHAI, Oct. 24 (SMM) –

Copper
The most active SHFE 1501 copper contract started Wednesday’s night session at RMB 47,180/mt, and then sank to RMB 46,910/mt before ending down RMB 70/mt at RMB 47,040/mt. During the night session, trading volumes for the most active contract shrank to some 100,000 lots, but positions were barely changed.

On Thursday, SHFE copper dipped as low as RMB 46,870/mt before the morning trading session, but rebounded at the tail of the trading to RMB 47,100/mt subsequently. The price of the red metal finished up RMB 10/mt, or 0.02%, at RMB 47,120/mt. Trading volumes for the SHFE 1501 copper contract shed by 61,580 lots, and positions decreased by 8,880 lots.

Physical copper in Shanghai was quoted Thursday at a RMB 30-120/mt premium to the SHFE 1411 copper contract. Traded prices were RMB 47,860-47,940/mt for standard-quality copper and RMB 47,900-48,040/mt for high-quality copper. As SHFE copper leveled off, cargo holders ramped up sales at high prices, causing supply to grow. The market remained dominated by imported copper, with physical premiums down. Quotations for hydro-copper were still firm, close to those for standard-quality copper. Middlemen barely entered the market, while a small number of downstream producers went bargain-hunting, helping improve trading activity on Thursday.

As SHFE copper rebounded during the afternoon trading session, physical copper was quoted at a RMB 20-100/mt premium and traded lower at RMB 47,850-48,000/mt. Trading activity remained light during the session.

Aluminum
On Wednesday night, SHFE 1412 aluminum contract was range-bound after starting at RMB 13,785/mt, and finished the night session at RMB 13,790/mt. Trading volumes totaled 19,998 lots, with positions down 120 lots to 103,510 lots.

On Thursday, HSBC’s flash China manufacturing PMI for October was better than expected at 50.4. But sub-index hit 5-month low. This sent the most active contract down to RMB 13,725/mt. Prices rebounded to RMB 13,815/mt in the afternoon before closing at RMB 13,790/mt. Trading volumes totaled 34,440 lots, with positions down 3,734 lots to 99,776 lots.

Spot aluminum largely traded at RMB 13,580-13,590/mt in Shanghai and Wuxi on Thursday, discounts of RMB 110-120/mt over SHFE 1411 aluminum contract, versus RMB 13,600-13,610/mt in Hangzhou. Buyers generally stayed out of the market, sending prices down. In the afternoon, some raised offers slightly to RMB 13,600/mt after SHFE front-month contract moved higher. A few deals were completed.

Lead
Lead for December delivery on the Shanghai Futures Exchange, the most active contract, fluctuated between RMB 13,615-13,675/mt during Wednesday’s night session after opening at RMB 13,670/mt, and ended flat at RMB 13,635/mt.

SHFE lead hovered largely between the 5-day and 10-day moving averages on Thursday, with positions down by 626 lots. Total trading volumes shed by 1,352 lots.

Chihong Zn & Ge, Nanfang, Chengyuan, and Shuangyan brands in Shanghai traded Thursday at RMB 13,650-13,670/mt, a RMB 20/mt premium to the most active SHFE 1412 lead contract. Humon brand was sold at RMB 13,640-13,650/mt. Lead smelters rushed to sell at the end of October, but downstream producers were reluctant to buy with remaining stocks, leaving supply to grow. Trading activity was quiet on Thursday.

Zinc
SHFE 1412 zinc contract prices opened at RMB 16,400/mt Wednesday evening, then fluctuated between RMB 16,350-16,420/mt, and closed at RMB 16,390/mt, up RMB 80/mt or 0.49%. Trading volumes decreased 59,376 to 175,324 lots, and total positions increased 8,364 to 141,184 lots. SHFE 1412 zinc contract prices opened at RMB 16,390/mt October 23, then hovered between RMB 16,370-16,420/mt. Better-than-expected HSBC’s PMI for China gave little boost to the market, but SHFE 1412 zinc contract prices surged with LME zinc prices, rising as much as 2%, touching RMB 16,665/mt, and closing at RMB 16,615/mt, up RMB 305/mt or 1.87%. Trading volumes increased 79,422, to 426,228 lots, and total positions were up 21,448 lots to 154,268 lots. SHFE 1412 zinc contract prices are expected to outperform LME zinc in the near term.

#0 zinc prices were between RMB 16,690-16,770/mt, with spot premiums of RMB 310-360/mt against SHFE 1412 zinc contract prices. #1 zinc prices were between RMB 16,640-16,670/mt. SHFE 1412 zinc contract prices fluctuated between RMB 16,380-16,430/mt, and were up RMB 70/mt from the previous trading day. Smelters increased sales, but traders were holding prices firm, leaving supply available limited. A large amount of imported zinc flowed to domestic market. High premiums and traders busy settling, left trading muted. Shuangyan branded #0 zinc prices were RMB 16,720-16,760/mt, and prices for Yuguang zinc were RMB 16,700-16,750/mt. Tiefeng, Qilin, and Jiulong zinc prices were RMB 16,690-16,730/mt. Belgian #0 zinc prices were RMB 16,660-16,700/mt. As SHFE 1412 zinc contract prices inched up, spot premiums dropped to RMB 280/mt, allowing cargo holders to refrain from selling. Trading of Shuangyan #0 zinc was muted.

Tin
In Shanghai spot tin market, downstream producers went bargain hunting, but trading activity thinned compared with yesterday. Most deals closed between RMB 134,500-137,500/mt on Thursday, flat with a day earlier. Nanshan, Tianti, Yunxiang and Jinlong brand tin traded between RMB 134,500-135,000/mt, while goods from Yunnan Tin Group traded between RMB 137,000-137,500/mt.

Nickel
SMM #1 nickel prices were between RMB 103,200-103,400/mt. Russian nickel prices were RMB 200-100/mt below Jinchuan nickel, with trading among traders muted. Traded prices were between RMB 102,800-103,500/mt in the morning, while spot prices continued to rise in the afternoon, with Jinchuan nickel prices touching as high as RMB 103,500/mt. overall transactions were brisk as some electroplaters entered the market. But stainless steel plants’ buying interest remained low.