SMM Base Metals Market Daily Review (2015-2-6)

SHANGHAI, Feb. 9 (SMM) –

Copper
SHFE most-active copper contract opened slightly lower at RMB 40,870/mt during night session on Thursday, but met resistance at RMB 41,600/mt, and finished the session up RMB 290/mt at RMB 41,480/mt. Trading volumes of the most active contract were around 290,000 lots, and positions decreased 3,928.

During the daytime on Friday, SHFE copper moved higher but met resistance at RMB 41,700/mt, and closed at RMB 41,670/mt, up RMB 480/mt, or 1.17%. Volumes and positions of the most active SHFE copper contract declined 51,096 lots and 23,726 respectively. Short-covering before the Chinese New Year holiday may lend some support to copper prices.

Early last Friday, spot copper was quoted at discounts of RMB 0-80/mt to the SHFE 1502 copper contract in Shanghai. Standard- and high-quality copper sold for RMB 41,160-41,720/mt and RMB 41,640-41,800/mt, respectively.

Cargo holders supplied goods normally, and spot discounts were reported on ample supply. Price gap between high-quality and standard-quality copper expanded. Trading turned brisk around midday as dealers bought goods in the market, but trading activities reduced later.

In the afternoon, spot discounts narrowed to RMB 0-50/mt, with traded prices at RMB 41,630-41,730/mt. A few cargo holders quoted at premiums of RMB 0-10/mt to SHFE 1503 copper contract.

Aluminum
Last Thursday night, SHFE 1504 aluminum contract moved sideways after starting at RMB 13,200/mt, and finished the night session at RMB 13,250/mt. Trading volumes totaled 10,290 lots, with positions down 488 to 134,688.

Last Friday, the most active contract rose to 13,375/mt as bears exited before ending at RMB 13,360/mt. Trading volumes totaled 46,732 lots, with positions down 3,886 to 131,290.

Spot aluminum largely traded between RMB 13,110-13,120/mt in Shanghai last Friday, discounts of RMB 110-120/mt over SHFE 1502 aluminum contract, versus RMB 13,100-13,120/mt in Wuxi and RMB 13,120-13,130/mt in Hangzhou. Rising prices scared downstream producers away. But traders were actively buying for hedging. In the afternoon, trading was muted.

Lead
Lead for April delivery on the Shanghai Futures Exchange, the most active contract, opened at RMB 12,520/mt and then edged down to RMB 12,490/mt before finishing up RMB 15/mt at RMB 12,560/mt in Wednesday’s night session. Trading volumes for the SHFE 1504 lead contract totaled 1,190 lots in the night session.

On Thursday, SHFE lead closed down RMB 40/mt at RMB 12,505/mt. Trading volumes for the most active contract amounted to 2,978 lots, while positions added 546 to 15,758.

Supplies from Chihong Zn & Ge traded at RMB 12,530-12,540/mt in Shanghai last Friday, a RMB 30/mt discount to the the most active SHFE 1504 lead contract. Nanfang and Chengyuan were offered at RMB 12,540-12,560/mt, while Humon traded at RMB 12,530/mt. Sluggish demand from downstream producers resulted in slow quotations by cargo holders. Large downstream producers still in production bought largely under term contracts. Spot lead sold for RMB 12,420-12,500/mt in Henan.

Zinc
SHFE 1504 zinc contract prices opened at RMB 16,225/mt Thursday evening, then edged up to RMB 16,300/mt, and closed at RMB 16,330/mt, up RMB 40/mt or 0.25%. SHFE 1504 zinc contract prices opened at RMB 16,330/mt on Friday, then edged up but failed to break through the 60-day moving average, and closing at RMB 16,390/mt, up RMB 100/mt or 0.61%. Trading volumes decreased 2,580 to 117,942 lots, and total positions increased 1,650 to 136,548. Total positions of SHFE 1503 zinc contracts decreased over 4,000 as most investors turned to SHFE 1504 and 1505 zinc contracts, with total positions increasing over 8,000. SHFE 1504 zinc contract prices are expected to stabilize around RMB 16,200/mt this evening.

#0 zinc prices were between RMB 16,290-16,340/mt, with discounts of RMB 0-50/mt against SHFE 1504 zinc contract prices. #1 zinc was traded modestly were RMB 16,230/mt. SHFE 1504 zinc contract prices edged up to RMB 16,340/mt after opening, with spot discounts between RMB 0-50/mt. Smelters mostly moved goods actively to generate cash, while some traders left the market, causing supply to decrease and keeping spot discounts stable. Downstream buyers mostly have suspended production and completed stock-building, leaving transactions muted. SHFE 1504 zinc contract prices rose to RMB 16,400/mt in the afternoon, with spot #0 zinc prices between RMB 16,300-16,360/mt against SHFE 1504 zinc contract prices, with trading quiet.

Tin
In Shanghai spot tin market, many traders exited the market early for the Chinese New Year holiday. This helped push mainstream traded prices up by RMB 500/mt to RMB 125,000-127,000/mt last Friday. Trading was thin.

Nickel
SMM #1 nickel prices were between RMB 108,300-108,600/mt. Spot nickel prices rose slightly in the morning as some downstream buyers that remained in production purchased modestly. Traded prices were between RMB 108,100-108,600/mt. LME nickel prices rebounded in the afternoon, but spot prices remained steady, with trading quiet and traded prices between RMB 108,100-108,600/mt. Jinchuan lowered raised prices by RMB 500/mt to RMB 108,500/mt.