SMM Metals Reports

SHFE Zinc Prices Finish with Gains (Aug. 19, 2014)

SHANGHAI, Aug. 19 (SMM) – SHFE 1410 zinc contract prices opened at RMB 16,380/mt last Friday evening, then touching RMB 16,465/mt with rising LME zinc prices, and closing at RMB 16,465/mt, up RMB 30/mt or 0.18%. Trading volumes decreased by 115,332 to 218,632 lots, and total positions grew by 1,782 to 239,676 lots.
SHFE 1410 zinc contract prices opened at RMB 16,540/mt on Tuesday, and dipped to RMB 16,470/mt, but rallying to the opening prices due to a strong long momentum, and closing at RMB 16,555/mt, up RMB 115/mt or 0.7%. Trading volumes increased by 37,176 lots, to 438,488 lots, and total positions decreased by 3,222 lots to 230,312 lots. LME zinc prices have closed with gains for three days in a row, which should boost SHFE zinc prices. But SHFE 1410 zinc contract prices are expected to struggle between the 30 and 40-day moving average as investors remain cautious.

Nickel Ore Inventories at China Five Ports Grow to 15.20 Million tonnes, with Inventory Clean-up Required

SHANGHAI, Aug. 18 (SMM) – Nickel ore inventories at China’s five major ports – Tianjin, Rizhao, Lanshan, Lianyungnag, and Jingtang – increased to 15.20 million tonnes last week, up by 200,000 tonnes, Shanghai Metals Market data showed. 
Nickel ore stocks at the Port of Tianjin changed little last week. NPI producers worried that stocks at the port, which had been shipped there long ago, may be mixed with low-quality goods, and were thus unwilling to buy at the port. Inner Mongolian NPI plants preferred to purchase goods for future delivery. In other news, Tianjin’s port office has ordered inventories outside the port to be cleared. 
Stocks at the Port of Rizhao fell by 30,000 tonnes, with daily sales at 6,000 tonnes. Two ships of nickelore ordered by traders, primarily high Fe/low Ni ore, are expected to arrive at the port before Aug. 22.
Inventories at the Port of Lanshan grew by 80,000 tonnes, and about 17,000 tonnes of ore were sold per day last week. Three ships of nickel ore imported by Sunyon Group, Xinhai Technology, and China National Minerals, arrived at the port last week, with another ship owned by China National Minerals expected this week. Port authority also required goods stocked outside the port to be cleared up, but the stocks outside this port were limited. Hence, total inventories of nickel ore at this port will be little affected, SMM foresees. 
At the Port of Lianyungang, nickel ore stocks rose by 150,000 tonnes last week. Seven ships carrying nickel ore arrived at the port, with daily trading reaching 47,000 tonnes, outperforming other ports. Another 8 ships are scheduled to arrive at the port before Aug. 18.
Trading at the Port of Jingtang remained muted, leaving little changes in inventories at the port.  

Chinese Copper Tube/Pipe Makers Divided on Copper Price Outlook

SHANGHAI, Aug. 18 (SMM) – 30% of Chinese copper tube/pipe producers expect LME copper prices to remain around $7,000 per tonne for the foreseeable future, the latest SMM survey reveals.
These enterprises argue that bullish bets in copper still exceed short ones despite an increase in short positions, which will limit the moving range for copper prices.
20% of these enterprises believe copper pieces will fall to $6,800 per tonne or even dip lower, citing unimproved liquidity conditions at enterprises which hurt their profitability. Although the PBOC tends to push for lower mortgage rates, loans issued to housing markets are unlikely to increase sharply given rising bad debt ratio at commercial banks. In this context, property sector will remain bleak.
In copper markets, as supply tightness has eased noticeably, with bonded stocks flowing into Chinese markets and SHFE copper stocks on the upswing, spot copper was offered at discounts against SHFE front-month copper prices. This, combined with a lack of positive reports, will drag down copper prices.
15% of producers are still optimistic and predict LME copper will rise to $7,200 per tonne. China’s July lending data fell to the lowest since November 2009 and total financing dropped to a low never seen since October 2008 as well. Other credit data also presented slower growth, an indication that activities of shadowing banks were declining, which may take a toll on housing markets. Besides, the negative releases were also a sign that pro-growth measures failed to deliver significant results and that Chinese economy is still facing downside risk. This, in turn, raised hope for interest rate cut. On the other hand, copper consumption is expected to pick up after August, which will bode well for copper prices.
The remaining 35% of producers see no clear outlook for copper prices

Platinum outperforms Palladium despite Russian sanctions

Despite an increase in sanctions against Russia, the world’s largest palladium supplier, palladium was the worst performing precious metal last week, said ETF Securities.
It appears that investors have already priced in potential supply disruptions from Russia, or do not expect any more widespread sanctions.
Indeed, palladium positioning remains elevated and is giving some investors pause for thought as the upward price momentum has faded.
While the fundamentals for both platinum and palladium remain robust, ETF Securities expects platinum to outperform palladium in coming months, after the ratio of the two metals reached the lowest levels in over a decade.

SMM Copper Market Morning Review (2014-8-18)

SHANGHAI, Aug. 18 (SMM) – LME three-month copper leveled out last Friday due to short-covering and closed at USD 6,873/mt, up USD 46/mt. Prices remained under resistance at the 5-day moving average, though.
Data from the US turned out mixed last Friday, with July’s industrial output edging higher while consumer confidence index down to its lowest since last November. Besides, both China and Japan cut holdings in US Treasury bonds, fueling caution in the market.
The tension between Russia and Ukraine intensified, driving a 1.9% rebound in crude oil. US stocks were a mixed bag, with the Dow falling 0.3%.
SHFE 1410 copper contract prices opened at RMB 48,850/mt for the night session last Friday, and moved higher to close at RMB 49,050/mt, up RMB 220/mt. Traded volumes for the most active SHFE copper contract fell to 90,000 lots, and positions rose by 3,180 lots.
On August 18, SHFE 1410 copper contract is expected trade at RMB 48,800-49,200/mt. In physical market, copper may be offered at premiums of RMB 50-100/mt against SHFE 1409 copper contract prices.