SMM Base Metals Market Daily Review (2015-1-27)

SHANGHAI, Jan. 28 (SMM)--
Copper:
Copper for April delivery on the Shanghai Futures Exchange, the most active contract, started at RMB 39,730/mt and then hovered narrowly around RMB 40,400/mt before ending up RMB 750/mt at RMB 40,410/mt in Monday's night session. Trading volumes for the SHFE 1504 copper contract surged to 410,000 lots, while positions increased 1,284.

On Tuesday, SHFE copper initially sank to around RMB 40,200/mt and moved below major moving averages in the afternoon trading session before closing up RMB 600/mt, or 1.51% at RMB 40,260/mt. Trading volumes for the most active contract shed 111,000 lots, while positions added 14,294. Trading volumes for all SHFE copper contracts decreased 273,000 lots, while positions fell 256.

Spot copper traded between a RMB 60/mt discount and a RMB 20/mt premium to the SHFE 1502 copper contract in Shanghai on Tuesday. Standard- and high-quality copper sold for RMB 40,570-40,680/mt and RMB 40,600-40,750/mt, respectively.

As SHFE copper lacked impetus to rise, cargo holders rushed to cut premiums to boost sales early on Tuesday. Hydro-copper prices were firm due to tight supply, on par with standard-quality copper prices. Some middlemen went bargain-hunting by the midday, while downstream producers bought only as needed on Tuesday. As SHFE copper stayed range-bound in the afternoon trading session, spot copper was quoted at a RMB 50/mt discount and traded at RMB 40,570-40,700/mt.
   
Aluminum:
On Monday night, SHFE 1504 aluminum contract climbed to RMB 12,960/mt after starting at RMB 12,840/mt, and finished the night session at RMB 12,940/mt. Trading volumes totaled 14,578 lots, with positions up 2,032 to 125,464.
 
On Tuesday, the most active contract gave back some of gains made overnight due to profit-booking at high, and ended at RMB 12,900/mt. Trading volumes totaled 39,026 lots, with positions up 7,728 to 131,160.  
 
Spot aluminum largely traded between RMB 12,720-12,730/mt in Shanghai and Wuxi on Tuesday, discounts of RMB 50-60/mt over SHFE 1502 aluminum contract, versus RMB 12,710-12,720/mt in Hangzhou. Sellers were keen to sell at highs out of fear that prices might fall back and since cash flows is tightening at the month's end. Buyers showed little interest. In the afternoon, some cut offers to RMB 12,720/mt, but trading remained subdued.
    
Zinc:
SHFE 1503 zinc contract prices clawed back early gains Monday evening, jumping above RMB 16,300/mt, and closing at RMB 16,375/mt, up RMB 280/mt or 1.74%. Trading volumes were up 17,110 to 90,366 lots, and total positions increased 25,590 to 139,200. SHFE 1504 zinc contract prices opened at RMB 16,345/mt on Tuesday, and rose to RMB 16,395/mt in the morning, but met resistance at the 60-day moving average due to falling LME zinc prices, and closing at RMB 16,275/mt, up RMB 230/mt or 1.43%. Trading volumes decreased 8,290 to 178,778 lots. Total positions were up 31,374 to 144,984. SHFE 1504 zinc contract prices are expected to move between the 10 and 60-day moving average this evening.

#0 zinc prices were between RMB 16,440-16,520/mt, with spot premiums of RMB 120-180/mt against SHFE 1503 zinc contract prices. #1 zinc prices were RMB 16,360-16,390/mt. SHFE 1504 zinc contract prices fluctuated between RMB 16,310-16,350/mt, and spot premiums narrowed RMB 60/mt. Smelters sold actively on rising zinc prices, causing Yuguang and Bailing zinc supply to increase noticeably. When combined with high lower-priced imported zinc inventories, spot premiums on #0 zinc fell. Traders expected spot premiums to narrow in the near term due to additional inflows of imported zinc and purchased modestly. Downstream buyers purchased as needed, with overall transactions muted. Shuangyan #0 zinc prices were RMB 16,500-16,520/mt, RMB 180/mt above SHFE 1503 zinc contract prices. Yuguang #0 zinc prices were RMB 16,490-16,500/mt, RMB 160/mt above SHFE 1503 zinc contract prices. Qilin and Qinxin zinc prices were between RMB 16,450-16,480/mt, RMB 130-150/mt above SHFE 1503 zinc contract prices. Mengzi, Tiefeng and Bailing zinc prices were between RMB 16,440-16,470/mt, RMB 120-140/mt above SHFE 1503 zinc contract prices. SMC #0 zinc prices were between RMB 16,370-16,380/mt, RMB 40-50/mt above SHFE 1503 zinc contract prices. Indian and Peruvian #0 zinc prices were RMB 16,330-16,350/mt, ranging from RMB 10/mt below to RMB 20/mt above SHFE 1503 zinc contract prices. SHFE 1504 zinc contract prices consolidated in the afternoon. Trading for domestic zinc was muted due to sluggish downstream buying interest and since imported zinc was quoted from RMB 20/mt below to RMB 30/mt above SHFE 1503 zinc contract prices, causing spot premiums to fall to RMB 90-170/mt.
  
Lead:
Lead for March delivery on the Shanghai Futures Exchange, the most active contract, fluctuated at RMB 12,500-12,580/mt and finished up RMB 155/mt at RMB 12,565/mt in Monday's night session.

On Tuesday, SHFE lead initially hovered narrowly above RMB 12,500/mt and closed up RMB 75/mt at RMB 12,485/mt. Trading volumes for the most active contract totaled 5,816 lots, while positions shed 1,660 to 14,378.

Supplies from Chihong Zn & Ge were initially offered at RMB 12,600/mt, but traded lower at RMB 12,560/mt in Shanghai on Tuesday, a RMB 30/mt premium to the most active SHFE 1503 lead contract. Traded prices were RMB 12,560/mt for Nanfang and Humon, and RMB 12,540/mt for Shuangyan wrapped with plastic.

Spot lead supply grew on Tuesday as Nanfang ramped up sales and as traders scrambled to sell against the month-end liquidity crunch. After lead prices rose, downstream producers stayed out of the market as a result of two factors. First, some downstream producers plan to close for the Chinese New Year holiday ahead of schedule and thus are reluctant to build up input inventories. Second, large producers enjoy steady term orders and are operating at low capacity. Leading brands began to trade at a RMB 50/mt discount to the most active contract in contrast with a premium earlier in Guangdong.
      
Tin:
In Shanghai spot tin market, trading activity was brisk, allowing mainstream traded prices to gain RMB 500/mt to RMB 126,500-128,500/mt. Some traders stockpiled goods out of bullishness, while some processors also built up stocks for the week-long holiday in February. Nanshan and Jinlong brand tin traded around RMB 126,500/mt, versus RMB 126,800-127,500/mt for goods from Yunnan. 
          
Nickel:
SMM #1 nickel prices were between RMB 106,600-107,100/mt. Jinchuan began to sell as spot nickel prices rose in the morning. Traders also moved goods, but downstream buyers stayed on the sidelines, leaving overall transactions muted, and traded prices between RMB 106,400-107,100/mt. Spot nickel prices remained steady in the afternoon, with transactions quiet, and traded prices between RMB 106,400-107,100/mt. Jinchuan lowered nickel prices by RMB 2,300/mt to RMB 107,000/mt.