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SMM Base Metals Market Daily Review (2014-10-24)
Oct 27,2014 10:37CST
price review forecast
The most active SHFE 1501 copper contract swung by less than RMB 200/mt during Thursday’s night session after starting at RMB 47,230/mt, and closed up RMB 210/mt at RMB 47,260/mt.

SHANGHAI, Oct. 27 (SMM) –

The most active SHFE 1501 copper contract swung by less than RMB 200/mt during Thursday’s night session after starting at RMB 47,230/mt, and closed up RMB 210/mt at RMB 47,260/mt. During the night session, trading volumes for the most active contract fell to some 90,000 lots, but positions gained by 11,868 lots.

On Friday, SHFE copper surged to RMB 47,500/mt during the afternoon trading session, and finished up RMB 340/mt, or 0.72%, at RMB 47,390/mt. Trading volumes for the SHFE 1501 copper contract decreased by 10,408 lots, while positions added by 3,298 lots.

Physical copper in Shanghai was quoted between a RMB 30/mt discount and a RMB 90/mt premium to the SHFE 1411 copper contract. Traded prices were RMB 47,900-48,050/mt for standard-quality copper and RMB 47,950-48,150/mt for high-quality copper.

As SHFE copper was subdued during the morning trading session, cargo holders ramped up sales of high-quality copper at lower premiums. Meanwhile, the prices of low-quality hydro-copper and standard-quality copper held firm due to tight supply, close to those of high-quality copper. A small number of speculative traders entered the market to buy low-priced goods subsequently after premiums for high-quality copper fell to only RMB 10-20/mt. Most middlemen were cautious in trading, while downstream producers were mostly buying only to need on Friday.

As SHFE copper rose further during the afternoon trading session, physical copper was quoted between a RMB 50/mt discount and a RMB 50/mt premium, and traded at RMB 47,950-48,200/mt. Guixi brand was quoted as low as a RMB 10/mt, while standard-quality copper was offered at a discount. SHFE copper inventories for the week ending October 24 decreased 2,134 mt to 95,101 mt.

Last Thursday night, SHFE 1412 aluminum contract crept higher to RMB 13,860/mt after starting at RMB 13,750/mt, and finished the night session at RMB 13,785/mt. Trading volumes totaled 18,060 lots, with positions down 1,798 lots to 97,978 lots.

Last Friday, the most active contract hovered below the daily moving average in the morning, but rose to RMB 13,800/mt in the afternoon as some short sellers closed positions. Finally, December aluminum on the SHFE closed at RMB 13,785/mt. Trading volumes totaled 22,552 lots, with positions down 1,836 lots to 96,142 lots.

Spot aluminum largely traded at RMB 13,580-13,600/mt in Shanghai last Friday, discounts of RMB 110-120/mt over SHFE 1411 aluminum contract, versus RMB 13,570-13,580/mt in Wuxi and RMB 13,590-13,600/mt in Hangzhou. Downstream producers entered the market after watching from the sidelines for a week as SHFE aluminum showed signs of rebounding. Traders also showed high buying interest for arbitrage on the SHFE. This allowed sellers to demand higher prices. In the afternoon, sellers raised offers further to RMB 13,600-13,610/mt, which cooled buying down.

Lead for December delivery on the Shanghai Futures Exchange, the most active contract, moved between RMB 13,635-13,675/mt during Thursday’s night session, and closed down RMB 5/mt at RMB 13,645/mt.

On Friday, SHFE lead found temporary support at the 5-day moving average, and ended up RMB 10/mt, or 0.07%, at RMB 13,660/mt. Trading volumes for the SHFE 1412 lead contract shrank 1,360 lots to 1,016 lots, and positions shed 178 lots to 9,078 lots.

Chihong Zn & Ge, Nanfang, and Humon brands in Shanghai traded last Friday at RMB 13,650-13,670/mt, on par with the most active SHFE 1412 lead contract. The market remained oversupplied even though lead smelters slowed sales. Traders moved goods actively, but downstream producers bought only to need in light volumes, leaving trading activity light. Traded prices were largely RMB 13,600-13,660/mt in Henan last Friday.

SHFE 1412 zinc contract prices opened at RMB 16,590/mt Thursday evening, then fluctuated between RMB 16,560-16,650/mt, and closed at RMB 16,625/mt, up RMB 165/mt or 1%. Trading volumes increased 7,518 to 182,842 lots, and total positions increased 4,314 to 158,582 lots. SHFE 1412 zinc contract prices opened at RMB 16,625/mt October 24, dipping to RMB 16,600/mt in the morning before inching up later on. SHFE 1412 zinc contract prices met resistance at the 60-day moving average. When combined with a large number of longs leaving the market, SHFE 1412 zinc contract prices lacked ability to rise, and closing at RMB 16,640/mt, up RMB 180/mt or 1.09%. Trading volumes decreased 137,966, to 288,262 lots, and total positions were down 9,620 lots to 144,648 lots. Resistance from the 60-day moving average will remain.

#0 zinc prices were between RMB 16,870-16,930/mt, with spot premiums of RMB 240-340/mt against SHFE 1412 zinc contract prices. #1 zinc prices were between RMB 16,830-16,850/mt. SHFE 1412 zinc contract prices were up RMB 200/mt from the previous trading day, with spot premiums down from RMB 290-340/mt to RMB 240-300/mt. Smelters increased sales on rising zinc prices. When combined with the month’s end factor, supply available was ample. But investors were unwilling to purchase on high spot premiums, which in turn drag down spot prices. Downstream buyers that had built stocks at lower prices early last week remained cautious on market pessimism, leaving overall trading muted. Shuangyan branded #0 zinc prices were RMB 16,920-16,930/mt, and prices for Yuguang and Qilin zinc were RMB 16,900-16,920/mt. Tiefeng and Baiyin zinc prices were RMB 16,870-16,900/mt. Belgian #0 zinc prices were RMB 16,840-16,870/mt. SHFE 1412 zinc contract prices hovered around RMB 16,640/mt in the afternoon, with spot premiums remaining largely unchanged.

In Shanghai spot tin market, downstream producers restocked at lows last Friday. Some traders cut offers to test the waters, which lured buyers in. Most deals closed between RMB 134,500-137,500/mt. Nanshan, Tianti, Yunxiang and Jinlong brand tin traded between RMB 134,500-135,000/mt, while goods from Yunnan Tin Group traded between RMB 136,500-137,500/mt.

SMM #1 nickel prices were between RMB 103,200-103,500/mt, level with the previous trading day. Quotes were RMB 200-100/mt below 1411 nickel contract prices on the Wuxi electronic trading, and Russian nickel prices were RMB 200-100/mt below Jinchuan nickel. Spot trading was modest despite significant price volatility in the morning, with traded prices were between RMB 103,200-103,500/mt. Spot prices fell with LME nickel prices in the afternoon, and traders mostly suspended operations at the week’s end. Jinchuan nickel prices were as low as RMB 102,800/mt, with transactions quiet.

Jinchuan lowered nickel prices RMB 400/mt to RMB 103,300/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. Stainless steel plants preferred NPI to refined nickel as NPI prices have dropped below RMB 1,000/mtu.

SHFE copper prices
SHFE aluminum prices
SHFE lead prices
SHFE zinc prices
Shanghai tin prices
Shanghai zinc prices

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