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SMM Base Metals Market Daily Review (2015-4-10)
Apr 13,2015 17:40CST
price review forecast
SHFE 1506 copper contract opened higher at RMB 43,380/mt Thursday evening, and rose to RMB 43,450/mt before falling back to RMB 43,180/mt due to a stronger dollar.

SHANGHAI, Apr. 13 (SMM)--
SHFE 1506 copper contract opened higher at RMB 43,380/mt Thursday evening, and rose to RMB 43,450/mt before falling back to RMB 43,180/mt due to a stronger dollar. The prices closed the session up RMB 20/mt at RMB 43,300/mt. Positions grew 1,352 and trading volumes were only 100,000 lots. The anticipation for an upturn in copper consumption seemed to have failed to materialize thus far. But high premiums in spot market kept prices from falling sharply.

The most active SHFE copper contract extended the strong momentum and touched RMB 43,600/mt on Friday, and closed at RMB 43,530/mt, up RMB 250/mt. Positions in the most active contract declined 3,636, and trading volumes fell 3,328 lots. Positions in SHFE 1507 copper contract grew 5,438 with trading volumes also up 10,406 lots. SHFE reported a 5,881 mt decline in copper stocks to 240,775 mt last week, a reflection that downstream buyers started buying when copper prices fell.

Spot premiums in Shanghai copper market continued to expand Friday to RMB 60-100/mt to SHFE 1504 copper contract. Prices are RMB 43,550-43,610/mt for standard-quality copper and RMB 43,570-43,650/mt for high-quality copper. Traded prices increased to RMB 43,600-43,700/mt in the afternoon.

Cargo holders were unwilling to sell at lows, and some cheaper goods were soon purchased by traders. Price offers for standard-quality copper increased, helping lift prices of high-quality copper. However, transactions turned quiet after premiums for high-quality copper touched RMB 100/mt. Downstream buyers only purchased as needed.

On Thursday night, SHFE 1506 aluminum contract moved sideways after starting at RMB 13,245/mt, and closed the night session at RMB 13,240/mt. Trading volumes totaled 13,744 lots, with positions down 2,348 to 118,068.

China’s inflation data released on Friday met expectations. SHFE lead hit its daily upside limit, boosting investor sentiment. This allowed the most active SHFE aluminum contract to rise to RMB 13,275/mt before ending at RMB 13,265/mt. Trading volumes totaled 31,024 lots, with positions down 5,426 to 114,990.

Spot aluminum largely traded between RMB 13,130-13,150/mt in Shanghai on Friday, discounts of RMB 80-90/mt over SHFE 1504 aluminum contract, versus RMB 13,130-13,140/mt in Wuxi, and RMB 13,170-13,180/mt in Hangzhou. SHFE 1504 aluminum contract stopped falling, and downstream demand picked up, allowing prices to rally. In the afternoon, sellers raised offers after SHFE aluminum crawled up, with a few transactions reported.

SHFE 1506 zinc contract prices opened at RMB 16,215/mt Thursday evening, and lacked ability to rise and met resistance at RMB 16,300/mt, and closed the day at RMB 16,250/mt, up RMB 80/mt or 0.49%. Trading volumes were up 22,454 to 58,638 lots, and total positions increased 2,234 to 126,622. SHFE 1506 zinc contract prices lacked ability to rise today, and inched lower to RMB 16,200/mt after opening. In the afternoon, SHFE 1506 zinc contract prices broke through RMB 16,300/mt and closed at RMB 16,360/mt, up RMB 190/mt or 1.18%. Trading volumes surged 92,000 to 176,000 lots, and total positions grew 5,582 to 130,000.

#0 zinc prices were between RMB 16,120-16,170/mt, RMB 120-90/mt below SHFE 1506 zinc contract prices. #1 zinc was traded between RMB 16,050-16,060/mt. SHFE 1506 zinc contract prices fluctuated between RMB 16,260-16,280/mt during 9:00-10:15 AM, with spot discounts expanding to RMB 120-100/mt, and #0 zinc prices between RMB 16,150-16,170/mt. SHFE 1506 zinc contract prices dropped to RMB 16,200/mt during 10:30-11:30 AM, causing spot discounts of #0 zinc to narrow to RMB 100-90/mt. Traders increased purchases, causing trading to improve. Shuangyan and Yuguang #0 zinc prices were RMB 16,130-16,170/mt, RMB 110-90/mt below SHFE 1506 zinc contract prices. Qinxin and Qilin #0 zinc prices were RMB 16,120-16,160/mt, with spot discounts of RMB 120-100/mt against SHFE 1506 zinc contract prices. Indian #0 zinc prices were RMB 16,030-16,060/mt, with spot discounts of RMB 200-180/mt against SHFE 1506 zinc contract prices. SHFE 1506 zinc contract prices edged up in the afternoon, with spot discounts widening RMB 10-20/mt. Some traders entered the market.

The June delivery SHFE lead climbed on Friday aided by better-than-expected Chinese CPI and PPI data, and increased by the daily limit in the afternoon to close at RMB 13,270/mt, up RMB 510/mt. Trading volumes doubled to 13,692 lots, and positions rose by 2,134. But some long investors may book profits after the strong rally.

Spot lead prices surged, with Chengyuan’s goods offered at RMB 13,100/mt, and goods of Humon and Hanjiang quoted at RMB 13,000/mt. Later, Chengyuan and Nanfang’s lead was offered at discounts of RMB 0-10/mt to SHFE 1505 lead contract, with traded up further to RMB 13,200/mt. Smelters were more reluctant to sell, while downstream buyers refrained from buying for fear of a pullback in prices. Spot goods were offered at RMB 13,050-13,100/mt in Henan, and prices in Jiangxi were on par with SMM refined lead prices.

In Shanghai spot tin market, one large smelter continued to cut offers, turning market sentiment even more bearish. Downstream buyers stayed out of the market, waiting for prices to fall further. Mainstream traded prices fell to RMB 113,800-115,500/mt, but lower prices did not stoke buying interest. Nanshan and Jinlong brand tin traded between RMB 113,500-114,000/mt, RMB 114,000-114,500/mt for Yunxiang and Yunshan brand, and RMB 115,000-115,500/mt for Yunxi brand.

SMM #1 nickel prices were between RMB 93,700-95,600/mt. SHFE 1507 nickel contract prices closed at RMB 94,000/mt last Friday morning. Traders sold off goods as nickel prices dropped. Jinchuan lowered prices further, and downstream buying interest was weak, leaving transactions muted and with traded prices between RMB 93,600-95,300/mt. LME nickel prices rebounded in the afternoon, causing spot premiums to decrease further. Downstream buyers purchased as needed, with trading improving and traded prices between RMB 94,000-95,600/mt. Jinchuan lowered nickel prices by RMB 1,000/mt to RMB 95,500/mt.


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