SMM Base Metals Market Daily Review (2015-2-26)

SHANGHAI, Feb. 27 (SMM) – 

 

SHFE 1505 copper contract opened Wednesday night session at RMB 41,940/mt. The most active contract hit a ceiling at RMB 42,050/mt before ending RMB 90/mt higher at RMB 42,010/mt. Trading volumes were less than 100,000 lots, with positions up 12,360.

 

On Thursday, the most active contract hovered around RMB 42,050/mt in morning trade, but shot up near lunchtime, boosted by buying and rising stock market. The red metal hit an intraday high of RMB 42,610/mt at the tail of the session before ending up RMB 590/mt or 1.41% at RMB 42,510/mt. Trading volumes of SHFE 1505 copper contract soared 198,000 lots, with positions up 42,240. Trading volumes of SHFE 1506 copper contract surged 61,728 lots, with positions up 18,088. The most active contract should challenge resistance at RMB 43,000/mt.  

 

Trading activity in Shanghai spot copper market picked up slightly on the second day after the Chinese New Year holiday. Spot copper was offered at discounts of RMB 120-230/mt over SHFE 1503 copper contract. Standard-quality copper traded between RMB 42,060-42,360/mt, and RMB 42,100-42,440/mt for high-quality copper. Sellers rushed to sell at above RMB 42,000/mt, causing spot discounts to widen. SHFE copper gained almost RMB 300/mt near lunch time, leaving market players in physical market divergent over price outlook. The price gap between standard-quality and high-quality copper expanded, luring some processors in. In the afternoon, SHFE copper rose further, leaving sellers in physical market unwilling to sell at large discounts. A few offered goods at discounts of RMB 130-220/mt. Some traders entered the market to make purchases, with traded prices reported between RMB 42,300-42,550/mt.

 

Aluminum      

SHFE 1504 aluminum contract started Wednesday night session lower at RMB 12,920/mt. Investors closed long positions aggressively, turning SHFE 1505 aluminum contract into the most active one. May aluminum on the SHFE ranged RMB 12,905-12,980/mt before closing at RMB 12,935/mt.  

 

On Thursday, the most active contract opened lower at RMB 13,000/mt, but rebounded in afternoon trade due to entry of bulls before ending at RMB 13,025/mt. Trading volumes totaled 27,288 lots, with positions up 8,040 to 111,168.

 

Spot aluminum largely traded between RMB 12,800-12,820/mt in Shanghai and Hangzhou on Thursday, discounts of RMB 70-90/mt over SHFE 1503 aluminum contract, versus RMB 12,790-12,810/mt in Wuxi. Trading activity picked up slightly as traders entered the market. But downstream consumption remained sluggish. In the afternoon, cargo holders held offers unchanged, but trading was muted.  

 

Lead for April delivery on the Shanghai Futures Exchange, the most active contract, finished down RMB 65/mt at RMB 12,240/mt in Wednesday’s night session. SHFE lead hovered largely between RMB 12,220-12,270/mt and ended down RMB 45/mt, or 0.37% at RMB 12,260/mt on Thursday. Trading volumes for the most active contract added 1,896 lots to 4,182 lots, while positions gained 512 to 15,554.

 

Supplies from Jinsha, Chengyuan, Nanfang and Humon were quoted at a RMB 90-100/mt premium to the most active SHFE 1503 lead contract in Shanghai on Thursday. Quotations for most of these brands were initially RMB 12,370/mt, but later fell to RMB 12,350/mt and as low as RMB 12,320/mt. Shuangyan traded at RMB 12,320/mt, while Qinxin was offered at a RMB 50/mt premium to the most active contract. More traders entered the market, while some battery producers increased purchases slightly. Leading brands in Henan were quoted on par with the average SMM #1 lead price, with transactions reported. 

 

Zinc for May delivery on the Shanghai Futures Exchange, the most active contract, started at RMB 16,010/mt and then slid to close down RMB 100/mt, or 0.62% at RMB 15,955/mt in Wednesday’s night session. Trading volumes for the most active contract rose to over 40,000 lots, while positions surged more than 10,000 to 112,900.

 

SHFE zinc opened at RMB 15,960/mt and met resistance at RMB 16,075/mt afterwards before closing down RMB 30/mt, or 0.19% at RMB 16,025/mt. Trading volumes for the most active contract added 6,550 lots to 74,612 lots, while positions increased 29,364 to 128,128.

 

#0 zinc ingot traded at RMB 16,120-16,160/mt in Shanghai on Thursday, a RMB 80-120/mt premium to the SHFE 1504 zinc contract. #1 zinc ingot sold for RMB 16,070-16,080/mt. The SHFE 1504 zinc contract rose to RMB 16,020-16,040/mt, some RMB 100/mt below Wednesday, and rose sharply to around RMB 16,080/mt afterwards. Some smelters were reluctant to sell at low prices, but most rushed to sell. Many traders have returned to the market, with trading improving slightly. Only a small number of downstream producers replenished stocks since most of them remained closed. Huize and Shuangyan branded #0 zinc traded at RMB 16,150-16,160/mt, a RMB 110-120/mt premium. Yuguang branded #0 zinc traded at RMB 16,140-16,150/mt, a RMB 100-110/mt premium. Qinxin and Qilin branded #0 zinc traded at RMB 16,120-16,140/mt, a RMB 80-100/mt premium. SMC and KZ branded #0 zinc traded at RMB 16,070-16,080/mt, a RMB 40-50/mt premium. #0 zinc from Namibia, Peru and India traded at RMB 16,050-16,060/mt, a RMB 10-20/mt premium. 

 

On the Shanghai spot tin market, traded prices hovered steadily between RMB 124,500-127,500/mt on Thursday. Some traders remained closed despite the end of the Chinese New Year holiday, leaving trading muted. Spot tin was in tight supply, with traders rushing to buy. Leading brands Yunxiang and Yunxi were quoted at RMB 126,500/mt and RMB 128,500/mt, respectively. Markets expect spot tin prices to rebound further given constrained supply and a rise in LME tin. 

 

In Shanghai spot nickel market, SMM #1 refined nickel was offered between RMB 105,500-105,900/mt on Thursday. Mainstream traded prices rose to RMB 105,400-106,000/mt in the morning, supported by strong LME nickel. Prices rose further to RMB 106,000-106,300/mt in the afternoon, but higher prices cooled buying. Spot nickel traded at large premiums over April nickel on the Wuxi electronic trading, as Jinchuan Group held back goods and since traders remain on holiday. However, premiums are expected to narrow as supply begins to grow.