SMM Daily Review (Oct. 16)

SHANGHAI, Oct. 19 (SMM) --

    Copper:

    SHFE copper price trends are similar to yesterday. SHFE copper prices opened high and fluctuated lower, and SHFE three-month contract copper prices opened at RMB 49,200-49,300/mt, and later moved below daily average lines, with positions down more than 8,000 lots.

    Today is the onset of a new contract month, and SHFE spot-month contract copper prices dipped to RMB 48,700/mt. Based on fluctuating KDJ indicator after the holiday, copper prices find some support at RMB 48,000/mt, but the pressure level slipped from RMB 50,000/mt to RMB 49,000/mt gradually, testing the confidence of long positions in this level.

    In spot market, Traders advanced the spot trading time amid ample supply and weak demand, and made quotations at 9:30. Spot discounts for "Jiangtong" and "Jinchuan" high-purity goods were RMB 100/mt, and later a number of domestic parity copper was quoted with discounts of RMB 150/mt, and discounts for imported copper were RMB 100/mt reluctantly, and discounts for hydro-copper expanded to RMB 250/mt. Traded prices dropped to RMB 48,700-48,800/mt in the afternoon from morning level of RMB 48,800-48,950/mt.

    The initiative and flexibility of imported copper were worse than domestic copper due to loss. The ample supply of domestic copper in the market reflects weak copper consumption in other regions. For example, "Yuntong", "Lufang" in Shandong and other brands, mainly consumed in local markets, increased in Shanghai market recently, suggesting greater supply pressure.

    Aluminum:

    SHFE aluminum prices opened high, and kept moving below daily average lines, with fluctuation range down gradually. Today is the onset of a new contract month, and SHFE spot-month contract aluminum prices dipped to RMB 14,870/mt at noon, with positions and trading volume down constantly. Technical indicators weakened as well.

    In spot market, large volume of sell-offs continued to exert negative impact on the market. smelters were eager to move goods at discounts in order to obtain cash flow after the delivery, making the end of spot premiums from September 10th, and spot discounts were RMB 50/mt, with traded prices at RMB 14,850/mt.

    CHALCO continued to sell off goods in an effort to reduce inventory pressure after the holiday, generating the market concerns with regard to the support level of RMB 15,000/mt. Supply surplus still existed in automobile market despite of brisk market sentiment. Major companies will be engaged in the year-end earnings settlement and the assessment of sales completion during 4Q, and the credit ahs been gradually withdrawn from market as well, so companies will prefer to move goods for cash flow and reduce inventory pressure. Although aluminum price trend will be not optimistic, aluminum prices will find stronger support if crude oil prices continue to climb. 

    Lead:

    In Shanghai lead market, SMM lead prices remained unchanged. However, traded prices fell slightly, and a lower price of RMB 15,600/mt also appeared in the market due to a lack of trader confidence. Market players held very different views on market outlook, but buyers remained in a stronger position in the market.

    Zinc:

    SHFE zinc price trends are similar to yesterday. SHFE three-month contract zinc prices opened at RMB 16,020/mt, but later slipped rapidly after a short-term surge. Positions continued to decline, and transactions of short positions were brisk, and market players continued to focus on arbitrage. However, margins of calendar spread arbitrage and cross-market arbitrage have become thinner, and #0 zinc was traded at RMB 15,550/mt, with transactions becoming worse along with falling SHFE zinc prices. Spot zinc demand was weary.

    Tin:

    In Shanghai tin market, major factories kept offers unchanged, and traders were also cautious. Traded prices remained at RMB 117,000/mt despite of weak transactions.

    Nickel:

    In Shanghai nickel market, offers picked up slightly positively affected by rising LME nickel prices. offers for domestic Jinchuan nickel were RMB 134,000/mt, but traders held low interest in moving goods due to shortages of profit margins. Rusal with quotation of RMB 133,000/mt was also in dilemma. Both demand and supply remained neutral. 

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