SMM Base Metals Market Daily Review (2014-10-28)

SHANGHAI, Oct. 29 (SMM) –

Copper
The most active SHFE 1501 copper contract started Monday’s night session at RMB 47,450/mt, and then slid to end up RMB 120/mt at RMB 47,310/mt. During the night session, trading volumes for the most active contract totaled some 110,000 lots, and positions gained by 6,354 lots.

On Tuesday, SHFE copper initially hovered around RMB 47,470/mt, and advanced to an intraday high of RMB 47,580/mt at the tail of the trading before finishing up RMB 350/mt at RMB 47,540/mt. Trading volumes for the SHFE 1501 copper contract shed by 4,656 lots, and positions added by 1,550 lots.

Physical copper in Shanghai was quoted Tuesday at a RMB 20-100/mt discount to the SHFE 1411 copper contract. Traded prices were RMB 48,100-48,160/mt for standard-quality copper and RMB 48,140-48,200/mt for high-quality copper.

As SHFE copper rose sharply on Tuesday, cargo holders stepped up selling to increase cash flows. High-quality copper was sold at a broader discount, and standard-quality and hydro-copper followed suit. Trading activity, however, remained light since market participants considered the price rebound short-lived. Middlemen stayed largely out of the market due to liquidity shortfalls, while downstream producers were reluctant to buy in late October.

As SHFE copper rose further during the afternoon trading session, physical copper was quoted at a RMB 20-70/mt discount and traded at RMB 48,150-48,250/mt. Trading activity was light on Tuesday, with only a small number of middlemen buying high-quality copper at low prices.

Aluminium
SHFE 1501 aluminum contract, the most active one, fell to RMB 13,790/mt on Tuesday, despite positive economic data, which showed profits at large-scale industrial enterprises in China rose 0.4% YoY in September. Finally, the contract ended at RMB 13,825/mt. Trading volumes totaled 44,412 lots, with positions up 1,408 lots to 137,358 lots.

Spot aluminum largely traded at RMB 13,630-13,640/mt in Shanghai on Tuesday, discounts of RMB 80-90/mt over SHFE 1411 aluminum contract, versus RMB 13,620-13,630/mt in Wuxi and RMB 13,640-13,650/mt in Hangzhou. Rising aluminum prices in Guangdong allowed sellers in east China to demand higher prices. Trading was brisk in the morning. In the afternoon, offers were unchanged, with sparse transactions reported.

Lead
Lead for December delivery on the Shanghai Futures Exchange, the most active contract, swung between RMB 13,650-13,690/mt after opening Monday’s night session at RMB 13,655/mt, and finished up RMB 60/mt at RMB 13,670/mt.

On Tuesday, SHFE lead initially retreated to RMB 13,545/mt, but rebounded to RMB 13,650-13,660/mt subsequently before closing down RMB 10/mt at RMB 13,600/mt. Trading volumes for the SHFE 1412 lead contract reached 2,704 lots, and positions expanded 236 lots to 9,320 lots.

Chihong Zn & Ge brand in Shanghai traded Tuesday at RMB 13,660-13,670/mt, a RMB 10-20/mt premium to the most active SHFE 1412 lead contract. Traded prices were RMB 13,650/mt for Humon and Hanjiang brands. Lead smelters of these brands moved goods normally, but no sales of other brands were reported. Traders were disinclined to sell since physical premiums remained essentially unchanged from last week, while downstream producers bought at a slow pace on Tuesday.

Zinc
SHFE 1412 zinc contract prices opened at RMB 16,615/mt on Monday, then falling to RMB 16,565-16,600/mt, and closing at RMB 16,560/mt, down RMB 25/mt or 0.15%. Trading volumes were down 79,382 to 64,176 lots, and total positions rose 528 to 133,356 lots. SHFE 1501 zinc contract became the most actively traded contract Tuesday, opening at RMB 16,535/mt, then touching as high as RMB 16,595/mt. But as LME zinc prices inched down, SHFE 1501 zinc contract prices weakened below RMB 16,500/mt in the afternoon, and closing at RMB 16,485/mt, down RMB 60/mt or 0.36%. Trading volumes decreased 51,398, to 95,466 lots, and total positions were up 314 lots to 128,896 lots. SHFE 1412 zinc contract prices are expected to follow a downward track.

#0 zinc prices were between RMB 16,850-16,910/mt, with spot premiums of RMB 260-310/mt against SHFE 1412 zinc contract prices. #1 zinc prices were between RMB 16,820-16,830/mt. SHFE 1412 zinc contract prices were flat with the previous trading day, with spot premiums narrowing. Smelters sold actively on rising zinc prices, while traders also liquidated inventories to generate cash. Spot premiums are expected to narrow further due to additional inflows of imported zinc. Purchase by traders was modest. Downstream buying interest was also weak due to cash flow tightness at the month’s end, leaving overall trading muted. Shuangyan branded #0 zinc prices were RMB 16,900-16,910/mt, and prices for Yuguang zinc were RMB 16,870-16,900/mt. Jiulong and Qinxin zinc prices were RMB 16,870-16,880/mt, with RMB 16,850-16,860/mt for Mengzi, Baiyin and Qilin zinc. Belgian #0 zinc prices were RMB 16,840-16,850/mt. SHFE 1412 zinc contract prices fell RMB 50/mt in the afternoon, with spot premiums between RMB 250-310/mt. purchase for Shuangyan zinc was sluggish due to firm prices, but some bargain hunters purchased Baiyin and Qilin zinc on lower prices from growing supply. But overall transactions did not improve. Spot #0 zinc prices were RMB 16,770-16,850/mt.

Tin
In Shanghai spot tin market, most deals closed between RMB 134,500-137,000/mt on Tuesday, flat with a day earlier. Traders held back goods as LME tin showed signs of rally, tightening market availability. Nanshan brand tin traded at RMB 134,500/mt in the morning, but prices rose to RMB 134,800/mt in the afternoon. Yunxiang brand tin traded between RMB 135,000-137,000/mt.

Nickel
SMM #1 nickel prices were between RMB 99,400-99,600/mt. Quotes were RMB 200-100/mt below 1411 nickel contract prices on the Wuxi electronic trading, and Russian nickel prices were RMB 200/mt below Jinchuan nickel. Traded prices were between RMB 99,400-99,600/mt in the morning, and trading was muted. But as prices inched up in the afternoon, trading improved, with prices between RMB 99,900-100,500/mt. Some stainless steel plants purchased nickel at lower prices now that NPI producers withheld from selling after bid invitation prices dropped to RMB 930/mtu. Jinchuan left nickel prices at RMB 101,000/mt.