SMM Base Metals Market Daily Review (2015-5-4)

SHANGHAI, May 5 (SMM)--
Copper:
SHFE 1507 copper gapped higher on Monday at RMB 45,330/mt and moved up on increasing anticipation for further monetary easing in China. The red metal touched a high of RMB 45,800/mt and finally closed at RMB 45,710/mt, up RMB 1,640/mt. Positions in the most active copper contract dropped 8,994 and trading volumes fell by 49,174 lots. Despite the sharp rise, copper prices still lacked buying support to extend rebound.

Spot copper quoted at premiums of RMB 50-120/mt in Shanghai Monday morning. Standard-quality copper traded at RMB 45,720-45,820/mt, and high-quality copper sold for RMB 45,740-45,880/mt. Spot premiums were RMB 30-90/mt in the afternoon.

Spot premiums held relatively stable early on Monday and speculators increased supply later, narrowing spot premiums. Downstream producers only watched from sidelines.

Aluminum:
Negative HSBC’s China manufacturing PMI and a lack of guidance from LME aluminum prevented SHFE aluminum from rising sharply. SHFE 1507 aluminum contract rose to RMB 13,465/mt after opening at RMB 13,400/mt. But prices fell to RMB 13,390/mt later before ending Monday at RMB 13,420/mt. Trading volumes totaled 44,714 lots, and positions were up 1,454 to 147,352.

Spot aluminum largely traded between RMB 13,180-13,200/mt in Shanghai on Monday, discounts of RMB 160-170/mt over SHFE 1505 aluminum contract, versus RMB 13,160-13,170/mt in Wuxi, and RMB 13,200-13,220/mt in Hangzhou. Restocking activity after the three-day May Day holiday pushed prices up. In the afternoon, sellers held back after SHFE aluminum fell at the tail of the session, leaving trading muted.

Zinc:
SHFE 1507 zinc contract prices started at RMB 17,130/mt on Monday and briefly dipped to RMB 17,070/mt. Later, the prices fluctuated up to RMB 17,240/mt and closed at RMB 17,210/mt, up RMB 220/mt. Trading volumes grew 8,656 lots to 170,304 lots, and positions increased 7,858 to 162,700.

#0 zinc prices were between RMB 17,030-17,070/mt, RMB 160-110/mt below SHFE 1506 zinc contract prices. #1 zinc was traded between RMB 16,980-16,990/mt. SHFE 1507 zinc contract prices climbed to RMB 17,190/mt, and spot #0 zinc prices rose in response, with spot discounts expanding to RMB 160-110/mt. Smelters sold actively above RMB 17,000/mt, but traders mostly held back goods due to the lack of arbitrage opportunity. When combined with the entry of bargain hunters, supply decreased, keeping spot zinc prices firm. Downstream buyers purchased cautiously at high zinc prices, leaving transactions muted. Shuangyan #0 zinc prices were RMB 17,050-17,070/mt, RMB 120-110/mt below SHFE 1507 zinc contract prices. Yuguang and Huize #0 zinc prices were RMB 17,040-17,060/mt, RMB 140-120/mt below SHFE 1507 zinc contract prices. Qilin, Qinxin and Jiulong #0 zinc prices were RMB 17,030-17,050/mt, with spot discounts of RMB 160-140/mt against SHFE 1507 zinc contract prices. Baohui and Tongguan #0 zinc prices were RMB 17,000-17,020/mt, with spot discounts of RMB 200-170/mt against SHFE 1507 zinc contract prices. SMC and AZ #0 zinc prices were RMB 17,020-17,030/mt, with spot discounts of RMB 160-150/mt against SHFE 1507 zinc contract prices. Indian and Namibia’s #0 zinc prices were RMB 17,000-17,020/mt, with spot discounts of RMB 200-170/mt against SHFE 1507 zinc contract prices.

Lead:
The most active contract moved higher to RMB 13,895/mt as poor China manufacturing PMI added support to expectation for PBOC’s easing policy. The June-delivery lead ended the day at RMB 13,880/mt, up RMB 85/mt, gaining 0.62%. Trading volumes totaled 2,916 lots and positions dropped 50 to 13,845. SHFE lead is expected to increase further on strong bull.

In spot lead market, Nanfang’s goods traded at RMB 13,980/mt, and traded prices were Humon and Tongguan brands were RMB 13,950-13,990/mt. Shuangyan and Qinyuan lead quoted at RMB 13,920-13,930/mt. Old goods of Honglu brand were offered at discount of RMB 40/mt to SHFE 1506 lead contract. Goods availability was limited in Shanghai and traders were holding low inventories and thus quoted high. Downstream buyers watched from the sidelines against high prices. Quotations in Henan varied largely, with high-end prices offered at a RMB 200/mt premium to SMM #1 lead. However, transactions were few. SMM #1 lead prices have climbed more than 12% since April 1, from RMB 12,400/mt to RMB 13,900/mt.

Tin:
In Shanghai spot tin market, mainstream traded prices followed SHFE tin up to RMB 115,500-117,500/mt on Monday. Goods from Yunnan Tin Group were offered at RMB 119,000/mt, but traded prices were lower between RMB 116,500-117,000/mt.

Nickel:
SMM #1 nickel prices were between RMB 99,700-102,600/mt. The LME market was closed yesterday. Jinchuan Group hiked ex-works prices as SHFE nickel prices rose in the morning, with traded prices for Jinchuan nickel RMB 1,900/mt above the most actively traded contracts on the Wuxi electronic trading. Trading for Russian nickel was quiet on ample supply, with traded prices between RMB 100,000-102,700/mt. Spot nickel prices continued to rise in the afternoon, but Jinchuan Group was unwilling to sell, causing spot premiums of Jinchuan nickel against the most actively traded contracts on the Wuxi electronic trading to surge to RMB 2,400/mt. Spot discounts on Russian nickel, however, remained unchanged. Downstream buying interest improved, with traded prices between RMB 100,600-103,500/mt. Jinchuan Group raised nickel prices by RMB 2,200/mt to RMB 103,500/mt.