SHANGHAI, Jul. 9 (SMM)--

Copper:

SHFE 1509 copper opened lower at RMB 39,510/mt Tuesday night and fell by the daily limit to RMB 37,960/mt before ending at RMB 39,030/mt, down RMB 1,360/mt or 3.37%.

The most active contract moved around RMB 38,800/mt during Wednesday trading session and fell to daily limit at RMB 37,960/mt, to finally end at RMB 38,070/mt, falling RMB 2,320/mt or 5.74%. Trading volumes of SHFE 1509 copper surged 743,000 lots and positions rose 14,530. Total trading volumes for copper futures grew 1,104,000 lots with positions up 24,676.

Cargo holders quoted copper prices at high to avoid systematic risk in Shanghai after copper prices tumbled. As a result, spot premiums increased to RMB 250-300/mt over SHFE 1507 copper early Wednesday, but narrowed slightly to RMB 190-290/mt later.

Mainstream prices were RMB 39,550-39,700/mt for standard-quality copper and RMB 39,570-39,720/mt for high-quality copper Wednesday in Shanghai.

Strong pessimistic sentiment prevailed markets. Producers held that copper prices will fall further. Downstream buyers watched from the sidelines. Speculators remained cautious. Copper availability grew while demand remained weak. Few deals were made today.

Aluminum:

On Wednesday, SHFE 1509 aluminum contract hit its daily downside limit, and rebounded slightly at the tail of the day before ending at RMB 12,045/mt. Trading volumes totaled 178,144 lots, and positions were down 1,942 lots to 133,002 lots. 

The slump in SHFE 1507 aluminum contract prices weighed down spot prices in east China. Spot aluminum largely traded between RMB 12,050-12,070/mt in Shanghai, Wuxi and Hangzhou on Wednesday, discounts of RMB 40-60/mt over SHFE 1507 aluminum contract. The price slump left sellers unwilling to sell. Processors were cautious about buying, wondering if prices would continue falling. In the afternoon, hedged goods flooded in after SHFE 1507 aluminum contract hit daily downside limit. A few processors went bargain hunting. 

Zinc:

SHFE 1509 zinc contract prices opened at RMB 15,200/mt Tuesday evening, then fell to RMB 14,505/mt, and closed at RMB 14,875/mt, down RMB 390/mt or 2.55%. SHFE 1509 zinc contract prices slumped after opening on Wednesday, and once dropped to RMB 14,500/mt, down by daily limit, and closed at RMB 14,560/mt, down RMB 705/mt or 4.62%. Trading volumes increased 317,422 to 454,494 lots, and total positions decreased 5,520 to 138,530. SHFE 1509 zinc contract prices will look for price floor this evening.

#0 zinc prices were between RMB 14,840-14,920/mt, RMB 100-200/mt above SHFE 1509 zinc contract prices. #1 zinc prices were RMB 14,790-14,810/mt. SHFE 1509 zinc contract prices fluctuated between RMB 14,680-14,740/mt, with spot premiums of RMB 150-200/mt against the first, but falling to RMB 100-170/mt later due to soft demand. Smelters were unwilling to sell on falling zinc prices, leading to tight supply of some brands. But some traders released goods on expanding spot premiums, with price spreads expanding. Traders remained cautious on high spot premiums, and downstream buying interest was also weak, leaving overall transactions quiet.  SHFE 1509 zinc contract prices fell further in the afternoon and dropped by daily limit to RMB 14,500/mt, with both supply and demand anemic.

Lead:

SHFE 1509 lead turned to the most active contract, to open Tuesday evening session at RMB 12,570/mt. The contract touched a low of RMB 12,200/mt and then grew slightly due to falling shorts, to close at RMB 12,530/mt, down RMB 255/mt.

China’s A-shares immediately dropped 8% after starting Wednesday trading session. SHFE nickel was closed for all day at daily downward limit price and iron ore futures dropped to daily limit. Pessimistic sentiment prevailed markets. SHFE 1509 lead declined to RMB 12,360-12,400/mt during morning session Wednesday, to end at RMB 12,150/mt, losing RMB 510/mt.

Low price of SHFE lead at RMB 12,020/mt is last seen in January 2015, which may not support SHFE 1509 lead prices. Thus, further fall in the contract should be warned.

Nanfang and Chenyuan brands were offerd RMB 600/mt higher than SHFE 1509 lead at RMB 13,000 in Shanghai, compared with RMB 12,930/mt for Jiangtong brand.

Lead prices plunged due to systematic risk. Smelters held back sales. Pre-sale goods from Guangxi Chengyuan Mining & Smelting flowed into market. Downstream producers showed little buying interest for fear of a further price fall. Thus, few trades were made July 8.

Tin:

LME tin opened at USD 13,685/mt on Wednesday. The metal touched day’s high of USD 14,230/mt and day’s low of USD 13,500/mt before closing up USD 385/mt at USD 14,185/mt. Trading volumes were up 128 lots to 376 lots, and positions were down 364 to 19,777. Inventories fell 230 mt to 7,345 mt. Exit of shorts and a softer US dollar allowed LME tin to rebound overnight. Panic sentiment eased a little as authorities in China unleashed a series of measures to cope with plunging stock market. However, uncertainty over the Greek debt crisis will keep investors cautious. LME tin should hover around USD 14,000/mt on Thursday. 

SHFE 1509 tin contract fell after opening lower during Tuesday’s night session. The contract ended the night session down RMB 2,890/mt or 2.70% at RMB 104,190/mt. SHFE 1509 tin contract should move at RMB 104,000-108,000/mt on Thursday. In Shanghai spot market, supply will remain tight. But weak demand will prevent prices from rising. Mainstream traded prices are expected at RMB 110,000-112,500/mt. 

Nickel:

SMM #1 nickel prices were between RMB 80,500-82,300/mt. Premiums of Jinchuan nickel against the most actively traded contracts on the Wuxi electronic trading were RMB 1,700/mt in the morning. Short momentum dominated the market as commodity prices slumped across the board. Trading was muted, with prices between RMB 80,100-81,900/mt. Some downstream buyers purchased in the afternoon as nickel prices fell, and some traders also replenished stocks, causing trading to improve, with prices between RMB 79,100-81,000/mt. Jinchuan Group lowered prices by RMB 4,300/mt to RMB 83,000/mt, which is still much higher than market price.