SMM Metals Reports

SMM Base Metals Market Daily Review (2013-12-26)

SHANGHAI, Dec. 27 (SMM) – 
SHFE 1403 copper contract opened higher at RMB 52,330/mt at Wednesday’s night session. The most active contract jumped to RMB 52,770/mt as investors closed short positions before ending the night trading at RMB 52,570/mt, up RMB 560/mt or 1.08%. Trading volumes were 13,002 lots and positions soared 10,200 lots. The increase in SHFE copper, however, was blocked at RMB 52,620/mt and moved lower to RMB 52,000/mt during Thursday’s day session due to selloffs and a 1.4% decline in Chinese A-shares. SHFE copper for March delivery finished the day session RMB 200/mt or 0.38% higher at RMB 52,210/mt. Trading volumes and positions surged 10,846 lots and 63,532 lots, respectively. With LME market reopened, speculative activities in SHFE copper market may wane.  
Spot copper in Shanghai was quoted at a discount of RMB 150-270/mt over SHFE 1401 copper contract on Thursday. Traded prices were RMB 51,850-52,150/mt for standard-quality copper, and RMB 51,900-52,250/mt for high-quality copper. SHFE copper moved lower after a high opening. Discount over SHFE current-month copper contracts expanded further. Traders with stronger financial strength entered, while downstream producers shied away from higher prices. In the afternoon, spot copper was offered at discounts of RMB 160-250/mt against the SHFE current month copper contract, and traded prices were down slightly to RMB 51,800-52,000/mt, with trading muted. 
SHFE 1403 aluminum contract dipped to RMB 13,960/mt during Wednesday’s night session, with positions up 530 lots to 51,794 lots.  The light metal slipped further to RMB 13,910/mt during Thursday’s day session before closing flat at RMB 13,935/mt. 3,856 lots were traded. Positions added 530 lots to 51,794 lots. The RMB 14,000/mt mark will pose great resistance to the most active contract. 
Spot aluminum largely traded at 14,020-14,030/mt in Shanghai on Thursday, RMB 13,970-13,980/mt in Wuxi, and RMB 14,060-14,070/mt in Hangzhou. Tight price band deterred traders from entering. Downstream consumption was limited. Shanghai and Wuxi saw supply exceed demand. In the afternoon, traded prices remained little changed and trading was thin.         
During the night trading session, the most active SHFE lead prices opened at RMB 14,415/mt. Later on, investors shifted their attention from lead and zinc to copper for speculation since the State Reserve Bureau was rumored to purchase copper. SHFE lead prices fell to RMB 14,430/mt form the high of RMB 14,490/mt and finally ended up RMB 20/mt at RMB 14,415/mt. During the night session, trading volumes reached 1,166 lots, while positions gained 208 lots to 8,166 lots. In the morning trading on Thursday, SHFE lead prices started flat, but later extended weak performance to dip to RMB 14,285/mt. The metal closed the day down RMB 85/mt or 0.59% at RMB 14,310/mt. Transactions shrank 2,230 lots to 2,230 lots, while positions contracted 278 lots to 2,680 lots on Thursday.  
In Shanghai spot lead market, goods of Chihong Zn & Ge were initially offered between RMB 14,240-14,250/mt on Thursday. The brand, however, traded lower at RMB 14,210/mt, a discount of RMB 140/mt over the most active SHFE lead prices following declines in SHFE lead prices. Nanfang and Humon resources were sold at RMB 14,180/mt and RMB 14,160/mt, respectively. Lead smelters barely moved goods, while most traders intended to deplete inventories in a wait-and-see attitude. Quotations were little found in the market, while downstream producers were even more worried about losses in lead prices, leaving both supply and demand thin on Thursday.    

SHFE 1403 zinc contract opened at RMB 15,390/mt on Wednesday's night session, moving in a RMB 15,345-15,420/mt range. Trading volumes dropped 5,308 lots to 46,828 lots, while positions increased 1,992 lots to 131,088 lots. The most active contract opened Thursday at RMB 15,410/mt before sinking to RMB 15,180/mt during the 10:30 am-11:30 am session as investors bought short positions aggressively and closed long positions. SHFE zinc for March delivery slipped further to RMB 15,210/mt in the afternoon before ending the day session at RMB 15,220/mt, down RMB 145/mt or 0.94%. Trading volumes tumbled 41,996 lots to 82,610 lots, and positions also plunged 16,354 lots to 114,734 lots. With LME market reopened tomorrow, SHFE zinc will trail the movement of LME zinc on Friday.
Spot zinc prices in Shanghai surrendered gains on Thursday. #0 zinc largely traded at RMB 15,150-15,250/mt, a discount of RMB 20-100/mt over SHFE 1403 zinc contract. #1 zinc prices followed SHFE zinc down from RMB 15,170/mt to RMB 15,100/mt. The most active SHFE zinc contract slid to RMB 15,320/mt during the 9:00 am-10:15 am session, weighing spot zinc prices down. Mainstream traded prices were RMB 15,250-15,260/mt for #0 Shuangyan zinc, and RMB 15,220-15,230/mt for #0 Jiulong and Qinxin zinc. SHFE 1403 zinc contract dropped further to RMB 15,180/mt during the 10:30 am-11:30 am session as investors built up short positions and closed long positions, dragging spot zinc down further. Prices for #0 Shuangyan zinc slipped to RMB 15,180/mt, while those for Jiulong and Qinxin zinc sank to RMB 15,150-15,160/mt. Sharp declines in zinc prices drove downstream producers to the sidelines. Transactions were mainly contributed by traders.
Spot tin largely traded at RMB 141,500-143,000/mt in Shanghai on Thursday. Trading was decent in the morning as downstream producers entered the market. However, trading activity waned in the afternoon as falling Chinese A-share dampened market sentiment.  
In Shanghai, SMM #1 nickel prices were between RMB 95,600-96,600/mt. With the lack of directions from LME market, traders pushed up their quotes according to Jinchuan nickel prices, with mainstream prices within SMM price range. Jinchuan nickel prices for end-users were around RMB 96,600/mt.

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