SMM Base Metals Market Daily Review (2014-10-29)

SHANGHAI, Oct. 30 (SMM) –

Copper
The most active SHFE 1501 copper contract hovered narrowly around RMB 47,650/mt during Tuesday’s night session after starting at RMB 47,710/mt. The price of the red metal confronted resistance at RMB 47,730/mt subsequently, and finished up RMB 260/mt at RMB 47,670/mt. During the night session, trading volumes for the most active contract totaled some 90,000 lots, and positions added by 10,328 lots.

On Wednesday, SHFE copper initially lacked impetus to rise, but surged to an intraday high of RMB 47,780/mt at the tail of the trading before closing up RMB 360/mt, or 0.76%, at RMB 47,770/mt. Trading volumes decreased by 11,220 lots, and positions shrank by 7,288 lots.

Physical copper in Shanghai was quoted Wednesday between a RMB 50/mt discount and a RMB 30/mt premium to the SHFE 1411 copper contract. Traded prices were RMB 48,150-48,200/mt for standard-quality copper and RMB 48,200-48,280/mt for high-quality copper.

As SHFE copper leveled off on Wednesday, the falling SHFE/LME copper price ratio prevented imported copper prices from falling further. Hydro-copper prices held firm due to tight supply. A small number of middlemen entered the market to buy low-priced high-quality copper, while downstream producers bought only to need.

As SHFE copper leveled out during the afternoon trading session, physical copper was quoted mostly between a RMB 50/mt discount and a RMB 30/mt premium, and traded higher at RMB 48,250-48,400/mt. Trading activity remained light on Wednesday.

Aluminium
On Tuesday night, SHFE 1501 aluminum contract started at RMB 13,850/mt, and finished the night session at RMB 13,870/mt. Trading volumes totaled 17,052 lots, with positions up 1,900 lots to 139,258 lots.

On Wednesday, SHFE 1501 aluminum contract dipped to RMB 13,800/mt, but the rebounded to end the day at RMB 13,845/mt. Trading volumes totaled 30,438 lots, with positions down 2,216 lots to 137,042 lots.

Spot aluminum largely traded at RMB 13,620-13,630/mt in Shanghai and Wuxi on Wednesday, discounts of RMB 80-90/mt over SHFE 1411 aluminum contract, versus RMB 13,640-13,650/mt in Hangzhou. Buyers pushed for lower prices, but sellers refused to cut offers, leaving trading muted. In the afternoon, market turned even quieter.

Lead
Lead for December delivery on the Shanghai Futures Exchange, the most active contract, opened Tuesday’s night session at RMB 13,645/mt, and then climbed to RMB 13,710/mt before closing up RMB 50/mt at RMB 13,695/mt.

On Wednesday, SHFE lead initially retreated to RMB 13,650/mt as longs headed for the exit, and then leveled out to hover at RMB 13,650-13,660/mt before ending up RMB 35/mt at RMB 13,680/mt. Trading volumes for the SHFE 1412 lead contract totaled 1,916 lots, and positions shed 412 lots to 8,908 lots.

Chihong Zn & Ge, Yuguang, and Humon brands in Shanghai traded Wednesday at RMB 13,640-13,650/mt, a RMB 10-20/mt discount to the most active SHFE 1412 lead contract. Warehouse receipts of Yubei brand were quoted at a RMB 70/mt premium to the SHFE 1411 lead contract. Supply was sufficient on Wednesday, but downstream producers remained reluctant to buy due to shortages of cash flows at the end of October.

Zinc
SHFE 1501 zinc contract prices opened higher at RMB 16,530/mt on Tuesday evening, then climbed to RMB 16,565-16,595/mt, and closing at RMB 16,565/mt, up RMB 35/mt or 0.21%. Trading volumes were 61,360 lots, and total positions rose 7,900 to 136,796 lots. SHFE 1501 zinc contract prices opened at RMB 16,565/mt, plunging with LME zinc prices, dipping to as low as RMB 16,440/mt, but clawing back early gains in the afternoon, and closing at RMB 16,565/mt, up RMB 35/mt or 0.21%. Trading volumes were up 61,854 to 157,320 lots, and total positions increased 10,322 lots to 132,880 lots. SHFE 1412 zinc contract prices are expected to remain weak.

#0 zinc prices were between RMB 16,780-16,840/mt, with spot premiums of RMB 270-320/mt against SHFE 1412 zinc contract prices. #1 zinc prices were between RMB 16,720-16,750/mt. SHFE 1412 zinc contract prices plummeted to RMB 16,510/mt after opening, down nearly RMB 100/mt from the previous trading day, with spot premiums widening RMB 10/mt. Smelters sold normally, while cargo holders moved goods actively to generate cash, leaving supply sufficient. SHFE zinc prices fell, and traders believe spot premiums will fall but were unwilling to purchase on expanding spot premiums yesterday. Downstream buyers purchased as needed at RMB 16,800/mt, leaving overall trading muted. Shuangyan branded #0 zinc prices were RMB 16,830-16,840/mt, and prices for Yuguang zinc were RMB 16,810-16,820/mt. Jiulong, Qinxin, Qilin, Tiefeng and Baiyin zinc prices were RMB 16,780-16,810/mt, with RMB 16,760-16,790/mt for Belgian #0 zinc. SHFE 1412 zinc contract prices touched RMB 16,615/mt in the afternoon, causing spot premiums to fall RMB 20/mt, to RMB 250-300/mt. Overall transactions did not improve.

Tin
In Shanghai spot tin market, mainstream traded prices rose RMB 500/mt to RMB 135,000-137,500/mt on Wednesday, lifted by rising LME tin. Nanshan brand tin traded at RMB 135,200/mt, while goods from Yunnan traded higher between RMB 135,500-137,000/mt due to tight availability.

Nickel
SMM #1 nickel prices were between RMB 105,300-105,600/mt. As LME nickel prices soared initially before falling, spot prices lost early gains, with traded prices between RMB 105,000-105,500/mt. Russian nickel were quoted RMB 200/mt below Jinchuan nickel, but traded RMB 500/mt below Jinchuan nickel. A large number of bargain hunters snapped up goods. Trading improved in the afternoon due to higher spot prices, with traded prices RMB 500-200/mt below 1411 nickel contract prices on the Wuxi electronic trading, between RMB 105,500-106,200/mt. Downstream buying interest improved. Jinchuan raised nickel prices RMB 4,500/mt to RMB 105,500/mt.