SMM Daily Review (Oct. 20)

SHANGHAI, Oct. 21 (SMM) --

    Copper:

    SHFE copper prices soared by 2% stimulated by rising LME copper prices, and all contracts copper prices opened at much higher than RMB 50,000/mt with the exception of spot-month contract, and a lot of new long positions entered the market and opened positions in the morning upon optimistic market sentiment.

    However, SHFE copper prices slumped at noon negatively affected by falling A-share prices in stock market, and long positions closed positions hastily as a result. SHFE copper prices rebounded again in the afternoon driven up by stabilized LME copper prices at USD 6,400/mt, and closed at RMB 50,210/mt finally, with a daily growth rate of nearly 2%, but SHFE spot-month contract copper prices closed at RMB 50,250/mt, with a growth rate of only 1.66%.

    Today, the spot market was very different from futures market. Downstream consumers showed resistance when copper prices were above RMB 50,000/mt, and suppliers had to expand discounts to RMB 200-300/mt, but still faced difficulties in moving cargos. In addition, the slump in SHFE copper prices at noon further hampered the downstream consumption.

    Traded prices were around RMB 50,000/mt in the morning, and later fell to the range of RMB 49,700-49,950/mt. Cargo-holders dared not hold a substantial hedge amid jumping SHFE copper prices, and had to reduce prices constantly in an attempt to collect cash flow. Consumers preferred to stand on the sidelines with the absence of clear market direction. Although domestic copper prices underperformed LME copper prices, LME copper prices will likely continue to surge to USD 6,500/mt, and SHFE copper prices will rise rapidly as well if domestic copper prices succeed in stabilizing at RMB 50,000/mt.

    Aluminum:

    SHFE aluminum contracts opened above RMB 15,000/mt, but later slipped increasingly to below RMB 15,000/mt, an indication of strong SHFE aluminum prices and weak spot aluminum prices. In spot market, spot discounts expanded slightly, and cargo-holders sold off goods with discounts of RMB 20-30/mt. The lowest traded prices were RMB 14,900/mt. CHALCO moved goods in the morning at RMB 14,950/mt, helping set the highest aluminum prices. However, consumers remained quiet upon soaring aluminum prices, and cargo-holders were also in dilemma. 

    Lead:

    In Shanghai lead market, SMM lead prices increased by RMB 100/mt to the range of RMB 15,700-15,900/mt supported by rising LME lead prices, and traded prices moved around RMB 15,700/mt. Smelters kept offers firm, and downstream consumers remained neutral before the emergence of a new round of price hikes. Traded prices advanced slightly.

    Zinc:

    SHFE zinc prices opened at the highest prices, and SHFE three-month contract zinc prices surged to RMB 16,320/mt, but later slipped straightly, and even slumped at noon, with trading volume up markedly, indicating long positions closed positions rapidly after opened new positions today. SHFE zinc prices stabilized in the afternoon supported by A-share stock market, and positions of three-month contract increased by only 4,400 lots.

    In spot market, SMM #0 zinc prices increased by RMB 150/mt to the range of RMB 15,700-15,800/mt in the morning, and transactions were slim. In the afternoon, the increase in SHFE zinc prices helped smelters and cargo-holders keep offers firm, but consumers were very cautious about the important level of RMB 16,000/mt. The situation of strong SHFE zinc prices and weak spot zinc prices will continue.

    Tin:

    In Shanghai tin market, "YT" brand remained a major brand, and tin prices reported no significant changes, but transactions improved slightly stimulated by rising LME tin prices and soaring prices for other base metals, and low-end tin supply increased as well, hampering any upward movement for tin prices.

    Nickel:

    In Shanghai nickel market, offers for Jinchuan nickel were RMB 135,000/mt, while imported nickel suffered a loss of nearly RMB 20,000/mt. Russian nickel was traded at RMB 134,000/mt due to limited market supply. Only traders were brisk in the market given soft demand.

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