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

SHANGHAI, May 6 (SMM)--
Copper:
The July delivery SHFE copper touched a low of RMB 45,550/mt during daytime trading Tuesday, due to falling Chinese stocks, lower LME copper and longs closing positions. The red metal ended at RMB 45,730/mt. Trading volumes of the most active copper contract fell by 33,940 lots and positions dropped 17,356.

Spot copper quoted at premiums of RMB 0-90/mt in Shanghai Tuesday morning. Standard-quality copper traded at RMB 45,750-45,920/mt, and high-quality copper sold for RMB 45,800-45,980/mt.

Cargo holders rushed to sell at highs after SHFE copper dropped, highlighting oversupply pressure in spot market. Some standard-quality copper was offered on par with SHFE July-delivery copper near midday. Some hydro-copper brands quoted at discounts. Downstream buyers rarely entered the market.

Aluminum:
SHFE 1507 aluminum contract fell to RMB 13,350/mt on Tuesday as falling LME aluminum triggered bearishness. The contract stopped falling in the afternoon before ending at RMB 13,370/mt. Trading volumes totaled 35,878 lots, and positions were down 2,426 to 144,926.

Spot aluminum largely traded between RMB 13,130-13,150/mt in Shanghai on Tuesday, discounts of RMB 150-160/mt over SHFE 1505 aluminum contract, versus RMB 13,110-13,130/mt in Wuxi, and RMB 13,150-13,170/mt in Hangzhou. Hedged goods flowed into spot market after SHFE aluminum drifted lower. This exacerbated oversupply, causing prices to fall. In the afternoon, some sellers cut offers to RMB 13,120-13,130/mt, and a few traders went bargain hunting.

Zinc:
SHFE 1507 zinc contract prices opened at RMB 17,210/mt Monday evening, then dipped to RMB 17,115/mt, and fluctuated around RMB 17,115/mt, and closed at RMB 17,170/mt, down RMB 10/mt or 0.06%. SHFE 1507 zinc contract prices opened at RMB 17,155/mt on Tuesday, then fell to RMB 17,015/mt at one point, and rallied in the afternoon, and closed at RMB 17,070/mt, down RMB 110/mt or 0.64%. Trading volumes decreased 23,404 to 146,900 lots, and total positions decreased 808 to 161,892. SHFE 1507 zinc contract prices are expected to stay high this evening.
#0 zinc prices were between RMB 16,960-17,010/mt, RMB 140-100/mt below SHFE 1507 zinc contract prices. #1 zinc was traded between RMB 16,900-16,930/mt. SHFE 1507 zinc contract prices fell all the way after opening, causing spot discounts to narrow RMB 20/mt. Prices spread between Shuangyan and other zinc brands contracted slightly. SHFE 1507 zinc contract prices dipped to RMB 17,020/mt at one point at the end of trading, with spot discounts narrowing to RMB 100/mt at one point. Smelters sold actively in the morning, and some cargo holders also moved goods proactively due to narrowing spot discounts, leading to ample supply. Trading between traders was brisk, but downstream buyers purchased as needed, leaving overall transactions lackluster. Shuangyan #0 zinc prices were RMB 16,990-17,010/mt, RMB 120-100/mt below SHFE 1507 zinc contract prices. Yuguang and Huize #0 zinc prices were RMB 16,970-16,990/mt, RMB 140-120/mt below SHFE 1507 zinc contract prices. Qilin, Qinxin and Jiulong #0 zinc prices were RMB 16,960-16,980/mt, with spot discounts of RMB 140-130/mt against SHFE 1507 zinc contract prices. Baohui, SMC and Tongguan #0 zinc prices were RMB 16,960-16,970/mt, with spot discounts of RMB 150/mt against SHFE 1507 zinc contract prices. Namibia’s #0 zinc prices were RMB 16,920-16,930/mt, with spot discounts of RMB 200/mt against SHFE 1507 zinc contract prices. SHFE 1507 zinc contract prices fluctuated around RMB 17,070/mt in the afternoon, with spot discounts narrowing to RMB 120-100/mt.

Lead:
The June-delivery lead moved between RMB 13,780-13,850/mt Tuesday and ended the day at RMB 13,800/mt, down RMB 45/mt, off 0.33%. Trading volumes totaled 4,712 lots and positions dropped 262 to 12,918. SHFE 1506 lead is expected to test the 5-day moving average.

In spot lead market, prices remained largely stable. Chengyuan and Nanfang quoted at RMB 13,950-13,980/mt, and Tongguan brand was offered at RMB 13,940-13,950/mt. Some goods of Shuangyan (packed in iron) quoted at RMB 13,930/mt and old goods of Qinyuan brand quoted at a RMB 20/mt premium to SHFE 1506 lead contract, Goods of Honglu brand stored previously were offered at a RMB 40/mt discount to SHFE 1506 lead contract. Wait-and-see sentiment loomed, and downstream buyers only bought on needs, waiting for a pullback in prices. Goods from Gejiu region traded at RMB 13,640-13,700/mt in Guangdong. Warehouse warrants were offered at discounts of RMB 110/mt to June-delivery lead.

Tin:
In Shanghai spot tin market, supply was limited and some speculators entered the market to stockpile goods for hedging on the SHFE. This helped mainstream traded prices rise to RMB 116,000-117,500/mt on Tuesday. Goods from Yunnan Tin Group traded at RMB 117,500/mt. However, buying cooled after SHFE 1507 tin contract dived.

Nickel:
SMM #1 nickel prices were between RMB 101,400-104,900/mt. Jinchuan Group hiked ex-works prices further in the morning. Jinchuan nickel supply was tight while Russian nickel supply was sufficient. But downstream buyers were depressed after the price hike, leaving overall transactions quiet and traded prices between RMB 102,000-104,600/mt. Nickel prices were low in the afternoon, but premiums on Jinchuan nickel expanded to RMB 3,000/mt on tight supply. Downstream buying interest was weak, with traded prices between RMB 101,500-104,500/mt. Jinchuan raised nickel prices by RMB 2,000/mt to RMB 105,500/mt.