SMM Base Metals Market Daily Review (2015-5-20)

SHANGHAI, May 21 (SMM) –

Copper
SHFE 1507 copper contract prices gapped lower at RMB 45,320/mt for night session Tuesday, and dropped to RMB 44,710/mt before closing the session at RMB 44,810/mt, down by RMB 1,000/mt.

The most active SHFE copper contract hovered near RMB 44,950/mt early Wednesday and dipped to a low RMB 44,610/mt in the afternoon before ending at RMB 44,760/mt, down RMB 1,050/mt. SHFE 1507 copper contract positions declined 12,882, and trading volumes grew 15,100 lots. Positions of SHFE 1508 copper contract rose 18,712.

Spot copper was still offered at premiums of RMB 70-130/mt to SHFE 1506 copper contract in Shanghai Wednesday morning. Standard-quality copper traded at RMB 45,060-45,140/mt, and high-quality copper sold for RMB 45,100-45,180/mt. Traded prices fell to RMB 44,880-45,080/mt in the afternoon.

Hedged goods entered the market after SHFE copper slumped, fueling oversupply pressure and causing cargo holders to cut premiums. However, hydro-copper prices held firm against tight supply. Some traders sold futures and bought in spot markets. Downstream buyers were bearish toward copper prices and rarely entered the market.

Aluminum
On Wednesday, SHFE 1507 aluminum contract climbed to RMB 13,220/mt in early morning session. But prices fell back on a stronger US dollar in the afternoon to close at RMB 13,170/mt. Trading volumes totaled 30,172 lots, and positions were down 6,774 to 116,398.

Spot aluminum largely traded between RMB 13,030-13,040/mt in Shanghai on Wednesday, discounts of RMB 130-140/mt over SHFE 1506 aluminum contract, versus RMB 13,010-13,040/mt in Wuxi, and RMB 13,040-13,050/mt in Hangzhou. Suppliers were eager to sell, but buyers showed little interest out of pessimism, sending prices down. In the afternoon, some cut offers to RMB 13,020/mt after SHFE aluminum pulled back, but trading was subdued.

Lead
The July-delivery lead contract price in SHFE climbed to RMB 13,280/mt on Wednesday morning as short positions closed. But in the midday business, the contract tumbled on growing US dollar, to touch day’s low of RMB 13,170/mt. The metal finally ended down RMB 205/mt at RMB 13,180/mt.

In spot market, Tongguan brand was offered a RMB 600/mt premium over SHFE 1507 lead at RMB 13,850/mt. Shuangyan (packed in iron) brand traded at RMB 13,690/mt and Honglu brand RMB 13,350/mt. Few branded lead entered market and lead smelters have received some orders with modest stocks. Shuangyan (packed in iron) and Honglu brands filled cargo holders’ inventories. High price and tight supply dampened downstream purchase. Branded lead traded at RMB 13,800/mt in Henan, versus RMB 13,400/mt in Guangdong. Some news reported that big price gap between Shanghai and Guangdong market has caused some goods to shift from Guangdong to Shanghai.

Zinc
SHFE 1507 zinc contract prices opened at RMB 16,770/mt Tuesday evening, then fluctuated around RMB 16,650/mt, and closed at RMB 16665/mt, down RMB 170/mt or 1.01%. Trading volumes increased 49,406 to 78,528 lots, and total positions fell 7,516 to 98,092. SHFE 1507 zinc contract prices opened at RMB 16,650/mt on Wednesday, then rebounded to RMB 16,705/mt. But as commodity prices plunged, SHFE 1507 zinc contract prices dropped below RMB 16,600/mt, and closed at RMB 16,630/mt, down RMB 205/mt or 1.22%. Trading volumes increased 96,038 to 242,832 lots, and total positions fell 15,706 to 89,902. SHFE 1507 zinc contract prices are expected to test RMB 16,500/mt this evening.

#0 zinc prices were between RMB 16,570-16,610/mt, RMB 110-80/mt below SHFE 1507 zinc contract prices. #1 zinc was traded between RMB 16,540-16,560/mt. SHFE 1507 zinc contract prices fluctuated between RMB 16,670-16,700/mt, with spot discounts narrowing to RMB 110-80/mt. Some smelters were holding back goods, but traders were selling actively, leading to ample supply. Regular brands supply decreased, though, due to the fulfilling of term contract, with price spread with Shuangyan zinc narrowing. Some traders that are optimistic purchased at lower prices, and downstream buyers purchased as needed, leaving overall transactions lackluster. Huize #0 zinc prices were RMB 16,610-16,630/mt, RMB 80-60/mt below SHFE 1507 zinc contract prices. Shuangyan #0 zinc prices were RMB 16,590-16,610/mt, RMB 100-80/mt below SHFE 1507 zinc contract prices. Yuguang #0 zinc prices were RMB 16,580-16,600/mt, RMB 110-90/mt below SHFE 1507 zinc contract prices. Qilin, Feilong and Qinxin #0 zinc prices were RMB 16,570-16,590/mt, with spot discounts of RMB 110-100/mt against SHFE 1507 zinc contract prices. SMC, Baohui and Tongguan #0 zinc prices were RMB 16,530-16,550/mt, with spot discounts of RMB 150-140/mt against SHFE 1507 zinc contract prices. Indian #0 zinc prices were RMB 16,520-16,540/mt, with spot discounts of RMB 160-150/mt against SHFE 1507 zinc contract prices. SHFE 1507 zinc contract prices fell to RMB 16,580/mt in the afternoon, with spot discounts contracting to RMB 100-80/mt, and trading muted.

Tin
Prices in Shanghai spot market followed SHFE tin down on Wednesday. Most deals closed between RMB 115,500-118,000/mt. Lower prices lured some buyers in, but most sat tight, waiting for prices to fall further.

Nickel
SMM #1 nickel prices were between RMB 95,400-99,300/mt. SHFE nickel prices plunged, causing spot premiums to increase. Premiums of Jinchuan nickel held stable, while Russian nickel rose to RMB 400/mt above prices for the most actively traded contracts on the Wuxi electronic trading. Both traders and downstream buyers replenished stocks, with traded prices between RMB 95,700-99,500/mt. Nickel prices stabilized in the afternoon, and traders sold actively, but downstream buyers turned cautious, with trading muted and traded prices between RMB 95,800-99,600/mt. Jinchuan Group lowered nickel prices by RMB 6,000/mt to RMB 102,000/mt.