SMM Base Metals Market Daily Review (2015-2-25)

SHANGHAI, Feb. 26 (SMM) –

Copper
Strong LME copper during the Chinese New Year holiday allowed SHFE 1505 copper contract to open slightly higher at RMB 42,160/mt on the first day after the holiday. But the most active contract was dragged down by other base metals to RMB 41,900/mt, and closed the day down RMB 30/mt or 0.07% at RMB 41,900/mt. Trading volumes fell 28,320 lots, with positions up 20,336. Technically, the red metal is facing downward pressure.

Trading activity in Shanghai spot copper market was thin as most market players have yet to return from the week-long holiday. Spot copper was offered at discounts of RMB 100-180/mt over SHFE 1503 copper contract. Standard-quality copper traded between RMB 41,970-42,070/mt, and RMB 42,000-42,130/mt for high-quality copper. In the afternoon, traded prices slipped to RMB 41,950-42,080/mt.

Aluminum
SHFE 1504 aluminum contract shot up to RMB 13,145/mt early on Wednesday as bears withdrew, but immediately fell back to RMB 13,022/mt. The most active contract followed LME aluminum down further to RMB 12,975/mt in afternoon trade before ending at RMB 12,990/mt. Trading volumes fell 3,276 lots to 16,314 lots, with positions down 1,572 to 108,462. Trading was light as some investors have yet to return from the week-long holiday. April aluminum on the SHFE should test support at the 30-day moving average in the short term.

Spot aluminum largely traded between RMB 12,880-12,900/mt in Shanghai on Wednesday, discounts of RMB 60-80/mt over SHFE 1503 aluminum contract, versus RMB 12,870-12,900/mt in Wuxi and RMB 12,880-12,910/mt in Hangzhou. Aluminum stocks piled up due to large arrivals during the week-long holiday. Demand did not pick up immediately after the holiday, causing spot discounts to widen. In the afternoon, few deals were completed.

Lead
Lead for April delivery on the Shanghai Futures Exchange fell a total of USD 65.5/mt during the Chinese New Year holiday.

SHFE lead started lower at RMB 12,195/mt and then rose near to RMB 12,300/mt before ending down RMB 230/mt, or 1.84% at RMB 12,290/mt. Trading volumes for the most active contract added 652 lots to 2,286 lots, while positions added 178 to 15,042.

Supplies from Chihong, Nanfang and Chengyuan were quoted at a RMB 100/mt premium to the most active SHFE 1504 lead contract and a RMB 40-50/mt premium to the SHFE 1503 lead contract, and traded slightly at RMB 12,420-12,440/mt in Shanghai on Wednesday. Humon was offered at RMB 12,400/mt, but no transactions were reported. Few battery producers resumed production, while some smelters sold modestly. Traders remained closed.

Zinc
The most active SHFE 1505 zinc contract started sharply lower at RMB 16,055/mt and then fell further to RMB 15,980/mt on Wednesday. The price of the contract, however, rebounded above RMB 16,000/mt afterwards and closed down RMB 310/mt, or 1.89% at RMB 16,060/mt. Trading volumes for the most active contract tumbled 25,962 lots to 68,062 lots, while positions added 13,120 to 98,764.

#0 zinc ingot traded at RMB 16,190-16,220/mt, a RMB 100-120/mt premium to the most active SHFE 1504 zinc contract, while #1 zinc ingot sold for RMB 16,150-16,170/mt in Shanghai on Wednesday. Some traders returned to the market, but trading was muted in the first trading day after the end of the Chinese New Year holiday. Shuangyan branded #0 zinc prices were RMB 16,200-16,220/mt, a RMB 110-130/mt premium to the most active contract. Yuguang, Qilin and Qinxin branded #0 zinc was offered at about a RMB 100/mt premium. Quotations were at a RMB 60/mt premium for SMC and KZ branded #0 zinc, and on par with the most active contract for #0 zinc from Peru and the Netherlands.

Tin
On the Shanghai spot tin market, most traders remained closed on the first trading day following the end of the Chinese New Year holiday. Trading was muted, with few transactions reported. Yunxiang supplies were quoted at RMB 126,000/mt.

Nickel
In Shanghai spot nickel market, mainstream traded prices were RMB 105,900-106,300/mt on Wednesday. SMM #1 refined nickel was offered between RMB 105,800-106,300/mt, discount of RMB 300/mt over Jinchuan nickel. Many downstream producers remain closed for holiday, leaving trading muted. The most active nickel contract on the Wuxi electronic trading vacillated within a RMB 750/mt range, creating little room for arbitrage.