SMM Base Metals Market Daily Review (2015-2-10)

SHANGHAI, Feb. 11 (SMM) –

Copper
SHFE most-active copper contract opened at RMB 41,280/mt during night session this Monday, and moved higher to RMB 41,370/mt before finishing at RMB 41,360/mt, up RMB 50/mt. Trading volumes of the most active contract were around 150,000 lots, and positions decreased 986.

The April-delivery copper rose rapidly after starting on Tuesday, but met resistance at RMB 41,530/mt. The weak Chinese CPI and PPI reported later pushed prices down to RMB 41,330/mt before the midday. In the afternoon, the most active SHFE copper dipped to a low of RMB 41,230/mt and closed the daytime trading at RMB 41,320/mt, up RMB 10/mt. Positions fell by another 15,278 to 326,612, and trading volumes were down by 142,000 lots.

The SHFE 1502 copper contract expired today as the SHFE adjusted the delivery date for the Chinese New Year holiday. Settlement price of the February copper contract was RMB 41,300/mt and closing price was RMB 41,300/mt. Positions dropped 610 to 9,410.

Spot copper was offered between a discount of RMB 20/mt and a premium of RMB 60/mt to the SHFE 1502 copper contract in Shanghai early Tuesday. Prices were RMB 41,300-41,400/mt for standard-quality copper and RMB 41,330-41,450/mt for high-quality copper. Transactions were limited on the last trading day for SHFE 1502 copper contract, and price gap between SHFE 1502 and 1503 copper contracts widened in the morning. Most cargo holders quoted at discounts of RMB 100-180/mt to SHFE 1503 copper contract. Later, the discounts expanded to RMB 120-200/mt.

Some traders sourced goods at lows, and downstream buyers only bought on needs. Spot prices were RMB 41,220-41,360/mt in the afternoon. Spot discounts are likely to widen on ample copper supply and few trades.

Aluminum
On Monday night, SHFE 1504 aluminum contract dropped to RMB 13,205/mt after starting at RMB 13,250/mt, and finished the night session at RMB 13,245/mt. Trading volumes totaled 7,480 lots, with positions down 1,500 to 123,018.

On Tuesday, the most active contract dropped to 13,125/mt as economic data imply potential downturn in the Chinese economy. China’s CPI hit over 5-year low in January. The country’s PPI fell for 35 months in a row. Finally, SHFE 1504 aluminum contract ended at RMB 13,155/mt. Trading volumes totaled 30,268 lots, with positions down 5,674 to 118,844. Prices are on track for more losses as bearish sentiment is gathering steam.

Spot aluminum largely traded between RMB 13,000-13,010/mt in Shanghai on Tuesday, discounts of RMB 130-140/mt over SHFE 1502 aluminum contract, versus RMB 12,980-12,990/mt in Wuxi and RMB 12,990-13,000/mt in Hangzhou. Trading remained thin. In the afternoon, trading was subdued.

Lead
Lead for April delivery on the Shanghai Futures Exchange, the most active contract edged down RMB 5/mt in Monday’s night session, Trading volumes for the SHFE 1504 lead contract totaled 856 lots, while positions decreased 20 to 16,686.

China’s CPI rose only 0.8%, while PPI fell 4.3% in January, exacerbating deflationary risks. SHFE lead started at RMB 12,535/mt and then fell to RMB 12,520-12,530/mt before ending down RMB 20/mt at RMB 12,520/mt on Tuesday. Trading volumes for the most active contract totaled 1,662 lots, while positions shed 196 to 16,510.

Supplies from Chihong Zn & Ge, Chengyuan and Shuangyan traded at RMB 12,510-12,530/mt in Shanghai on Tuesday, on par with the most active SHFE 1504 lead contract. Traded prices were RMB 12,500-12,510/mt with few transactions reported. Some downstream producers continued to build input inventories, leading to high trading volumes for Chengyuan.

Zinc
SHFE 1504 zinc contract prices rose to RMB 16,400/mt Monday evening, then climbed to RMB 16,430/mt, and closed at RMB 16,395/mt, up RMB 35/mt or 0.21%. Trading volumes were down 19,328 to 35,340 lots, and total positions increased 186 to 125,336. SHFE 1504 zinc contract prices opened at RMB 16,400/mt on Tuesday. The growth of China’s January CPI unexpectedly dropped to 0.8%. SHFE 1504 zinc contract prices fell to as low as RMB 16,325/mt, and closing at RMB 16,355/mt, up RMB 5/mt or 0.03%. Trading volumes decreased 36,722 to 70,872 lots, and total positions decreased 4,900 to 120,250. SHFE 1504 zinc contract prices are expected to experience corrections this evening.

#0 zinc prices were between RMB 16,320-16,360/mt, with spot zinc prices ranging from RMB 40/mt below to RMB 10/mt above SHFE 1504 zinc contract prices. #1 zinc was traded between RMB 16,240-16,270/mt. SHFE 1504 zinc contract prices fell to RMB 16,340-16,360/mt after opening, up RMB 10-20/mt. Smelters mostly moved goods normally, but shipments decreased due to transportation problem. Traders retreated from the market, and cargo holders reduced supply. Downstream buyers mostly suspended production, leaving trading muted. Huize #0 zinc prices were RMB 16,350-16,360/mt, RMB 0-10/mt above SHFE 1504 zinc contract prices. Shuangyan #0 zinc prices were RMB 16,340-16,360/mt, RMB 0-10/mt above SHFE 1504 zinc contract prices. Yuguang #0 zinc prices were RMB 16,340-16,350/mt, with spot discounts of RMB 0-10/mt against SHFE 1504 zinc contract prices. Qinxin zinc prices were between RMB 16,320-16,340/mt, RMB 10/mt below SHFE 1504 zinc contract prices, or as low as RMB 40/mt below SHFE 1504 zinc contract prices in the morning. Baohui and Haolong #0 zinc prices were between RMB 16,260-16,270/mt, RMB 90-70/mt below SHFE 1504 zinc contract prices. SMC #0 zinc prices were between RMB 16,300-16,320/mt, RMB 40/mt below SHFE 1504 zinc contract prices. Netherlandish zinc prices were between RMB 16,250-16,260/mt, RMB 90/mt below SHFE 1504 zinc contract prices. SHFE 1504 zinc contract prices consolidated in the afternoon, with spot prices between RMB 16,320-16,360/mt and transactions brisk.

Tin
In Shanghai spot tin market, trading was subdued as the Chinese New Year holiday is approaching. Mainstream traded prices were RMB 125,000-127,500/mt. Nanshan, Yunxiang and Feidie brand tin traded between RMB 125,000-125,500/mt, while Yunxi and Yunheng brand tin traded between RMB 125,500-126,500/mt.

Nickel
SMM #1 nickel prices were between RMB 108,400-108,600/mt. Spot nickel prices fell slightly in the morning, and downstream buyers purchased modestly, with transactions muted. Traded prices were between RMB 108,000-108,600/mt. Spot prices dropped in the afternoon. Traders sold actively, while downstream buyers purchased limitedly, with trading improving and traded prices between RMB 107,700-108,300/mt.