SMM Base Metals Market Daily Review (2015-7-9)

SHANGHAI, Jul. 10 (SMM)--

Copper:

SHFE 1509 copper rose to RMB 40,790/mt after opening Wednesday night at RMB 38,650/mt. The contract stayed above RMB 39,780/mt later and closed up RMB 1,410/mt or 3.66% at RMB 39,960/mt. Trading volumes were 490,000 lots and positions fell 31,966. 

Panic sentiment in China’s stock market eased some. The most traded SHFE copper contract reached RMB 40,800/mt with shorts leaving market during Thursday morning session. In the afternoon, SHFE 1509 copper contract extended gains and ended at RMB 40,470/mt, up RMB 1,920/mt or 4.98%. Positions of SHFE 1509 copper declined 53,152 and trading volumes fell 368,000 lots.

Spot copper was offered at a premium of RMB 180-230/mt in Shanghai early Thursday. Standard-quality copper traded at RMB 41,000-41,350/mt and RMB 41,020-41,400/mt for high-quality copper. Spot premiums narrowed to RMB 170-200/mt in the afternoon.

Speculators rushed to move goods out, driving spot supply up. In response, spot premiums continued to narrow. Some traders hunted goods at lows while downstream buyers stayed cautious. 

Aluminum:

China’s CPI rose in June, but its PPI continued falling, suggesting sluggishness in the economy. This caused SHFE 1509 aluminum contract to fall to RMB 12,205/mt on Thursday. However, the light metal rebounded to RMB 12,435/mt as soaring Chinese stock market boosted market sentiment. Finally, the contract ended at RMB 12,390/mt. Trading volumes totaled 88,724 lots, and positions were down 10,004 lots to 122,998 lots. 

SHFE 1507 aluminum contract rebounded on Thursday, allowing spot prices in east China to rally as well. Prices were RMB 12,110-12,130/mt in Shanghai, discounts of RMB 40-60/mt over July aluminum on the SHFE, RMB 12,140-12,150/mt in Wuxi and RMB 12,120-12,130/mt in Hangzhou. Sellers held back goods out of bullishness. Higher prices cooled buying interest of downstream producers and traders. In the afternoon, most sellers held back goods out of bullishness.  

 Zinc:

SHFE 1509 zinc contract prices opened at RMB 14,750/mt Wednesday evening, then rallied to fluctuate between RMB 14,900-15,000/mt, and closed at RMB 14,985/mt, up RMB 225/mt. SHFE 1509 zinc contract prices rose on Thursday, and once touched RMB 15,335/mt, and closed at RMB 15,195/mt, up RMB 425/mt or 2.95%. Trading volumes decreased 249,260 lots, and total positions decreased 17,510 to 121,020. SHFE 1509 zinc contract prices are expected to point toward RMB 15,200/mt this evening.

 #0 zinc prices were between RMB 15,170-15,260/mt, RMB 60-100/mt above SHFE 1509 zinc contract prices. #1 zinc prices were RMB 15,100-15,160/mt. SHFE 1509 zinc contract prices rose to RMB 15,080-15,180/mt, with spot premiums at RMB 100-120/mt against the first, but falling to RMB 60-100/mt later due to soft demand. Smelters were unwilling to sell despite rising zinc prices, and supply from some traders was also modest, leading to tight supply of some brands and firm quotes. Traders refrained from buying higher-priced goods, and downstream buying interest was also weak, leaving overall transactions quiet.  

Lead:

SHFE 1509 lead rebounded a lot during Wednesday evening session. The contract started at RMB 12,300/mt and closed at RMB 12,700/mt, growing RMB 365/mt.

China’s three major stocks hit daily upside limit, strengthening market confidence. SHFE 1509 lead rose to daily limit at RMB 12,825/mt on Thursday and them moved around RMB 12,800/mt, to finish up RMB 475/mt at RMB 12,810/mt. Trading volumes totaled 9,282 lots and positions fell 106 to 12,502.

SHFE lead followed China’s A-shares up to daily limit. Consequently, spot lead prices also jumped. Nanfang brand was offered RMB 400/mt higher than SHFE 1509 lead at RMB 13,200/m. Humon Smelting quoted price at RMB 13,140-13,150/mt and Nanfang and Shuangyan brands (packed in iron) were offered at RMB 12,980-13,050/mt.

The first shipment from Humon Smelting arrived to Shanghai after it completed maintenance last month. But lead availability in market was not sufficient. Downstream buyers still watched from the sidelines but a small number of buyers purchased on need.

Tin:

In Shanghai spot tin market, spot prices followed SHFE tin up to RMB 110,500-112,500/mt on July 9. Goods from Yunnan Tin Group traded at RMB 112,500-113,000/mt. Downstream buyers entered the market now that prices have stopped falling. However, buying cooled in the afternoon. 

Nickel:

SMM #1 nickel prices were between RMB 82,400-84,000/mt. Premiums of Jinchuan nickel against the most actively traded contracts on the Wuxi electronic trading fell to RMB 1,200-1,300/mt in the morning. Traders replenished stocks more proactively as nickel prices stabilized, causing trading to improve, with prices between RMB 82,200-83,500/mt. Nickel prices continued to rise in the afternoon, with quotes mixed. Both traders and downstream buyers increased purchases, with overall transactions brisk and prices between RMB 83,000-84,700/mt. Jinchuan Group hiked prices by RMB 500/mt to RMB 83,500/mt.