Editorial

Rising tin price last or not

Date Nov 14 2018 17:35:32Source:SHMET

SHANGHAI, Nov 14 (SHMET) – SHFE 1901 tin contract in November rose 4.5% from previous month, and spot tin was quoted at 151,000 yuan/mt on November 14, up 4.32% from beginning of the month. Why can tin have such a surge? Will the upward trend continue?

Based on information gathered, SHMET believed that the main reasons for a rising tin price were the tight supply and hot money speculation.

First, tin concentrates supply decreased. On the one hand, China’s tin imports reduced given the tin depletion in Myanmar. And China relied heavily on imports for its tin concentrates. On the other hand, China’s strict environmental inspection had an impact on the tin concentrates output, as the treatment of low grade tin could cause pollution.

Second, tin refineries were under maintenance at a same period of time. Tin price rose above 150,000 yuan/mt amid speculative hot money. It was reported that Inner Mongolia Dajingzi Tin was under maintenance in September, refineries of Yunnan Shengfeng Non-ferrous Metals and plants in Laibin of China Tin were under maintenance in early October. Yunnan Tin began maintenance on November 11 for 50 days, and the annual output was expected to reduce 7000-8000mt. Zili Metallurgical Mining will repair smelting furnaces between November 16 and December 5.

SHMET noticed that tin market could be bullish, up rushing 155,000 yuan/mt, in the short term, considering supply support, after conducting a survey with some industry insiders. However, tin price could also be constrained by other factors, such as whether small-scale refineries could sell collectively when considerable profits are generated amid rising price. Also, market expectation on rising price could fade when refineries gradually resume production. In addition, high inventory could also weigh on tin price.

Currently, trading of tin was thin, as downstream plants prefer to stand on sidelines amid high price.

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Zinc price remains under pressure

Date Nov 14 2018 16:47:01Source:SHMET

SHANGHAI, Nov 14 (SHMET) – Zinc price edged down on November 14. Monthly spread between current month contract (November) and next month contract (December) continued to narrow. Cargo holders were active in sales and lowered their premiums on November 14’s morning trading session. Zinc price remains under pressure.

Spot zinc prices were offered at 21,690-21,790 yuan/mt, down 50 yuan/mt from the previous trading day, and at a premium of 230-330 yuan/mt compared with SHFE zinc 1812 contract. 1# zinc was offered at 21,630-21,730 yuan/mt, down 50 yuan/mt from a day earlier, and at a premium of 170-270 yuan/mt compared with SHFE zinc 1812 contract. For imported brands, YP zinc ingots were offered at a premium of 260 yuan/mt against 1812 contract. Spanish, Namibian and Mexican zinc ingots were offered at a premium of around 100 yuan/mt against SHFE zinc 1812 contract.

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Short side dominates nickel market

Date Nov 14 2018 16:38:58Source:SHMET

SHANGHAI, Nov 14 (SHMET) – Spot nickel prices were offered at 94,500-105,800 yuan/mt on Wednesday November 14 with drop of 300 yuan/mt. Spot premium for Jinchuan nickel came to 11,400 yuan/mt compared with Wuxi 1811 contract, and 11,390 yuan/mt compared with SHFE nickel three-month contract. Russian nickel saw premium of 100 yuan/mt compared with Wuxi 1811 contract, and was at a premium of 90 yuan/mt over with SHFE nickel 1901 contract.

SHFE nickel remained at low level in the morning trading. Given weak fundamentals, nickel price was expected to remain sluggish in short term. Russian nickel premium extended its drop, while Jinchuan nickel premium was above 10,000 yuan/mt. More buyers stood in cautious line.

On macro side, China and US negotiation may see new progress, easing recent pessimistic sentiment. But nickel fundamentals remained weak and nickel price could hardly pick up. Currently, LME nickel ran weakly in a range bound.  

Many traders tried to keep selling as nickel price’s drop extending. Some downstream buyers remained stable purchasing, while some others just made inquiries, inhibiting overall transaction volume. In addition, premium of Jinchuan nickel held high with tight resource.

NPI (8-12%) was offered at 1030-1060 yuan/Ni, NPI (7-10%) was offered at 1025-1035 yuan/Ni, flat from previous trading day, based on spot offers at SHMET. Expectation of higher production stayed unchanged. Besides, its price advantage was weakened as refined nickel price kept stepping down. At stainless steel market, spot offers inched down with insipid demand. Plus, worries of rising inventory swelled and impacted nickel price at the same time. What’s more, consumption tends to be weaker by the end of the year. Some producers cut prices for sales. Under such circumstances, the insipid situation will continue.

To sum up, nickel price could seek no support without substantial improvements at fundamental side. Where will the market go? It still needs verification.

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Low-priced lead trades rise

Date Nov 14 2018 16:37:26Source:SHMET

SHANGHAI, Nov 14 (SHMET) – SHFE zinc remained stable on November 14.Some traders were unwilling to lower their premiums due to lower spot lead supplies. Downstream battery enterprises chose to purchase low-priced cargoes on demand.

Smelters made normal sales, but their inventories were low. Premium for spot lead edged down. Imported lead trades were higher than domestic cargoes. 

Mainstream offers in Shanghai spot lead market were at 18,450-18,590 yuan/mt on November 13, down 85 yuan/mt from the previous trading day, which had a premium of around 60- 200 yuan/mt compared with 1812 contract. Jinsha brand lead ingots were offered at a premium of 200-300 yuan/mt against 1812 contract. Baiyin lead ingots were offered at a premium of 60 yuan/mt against 1812 contract.

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Aluminum price extends downward trend

Date Nov 14 2018 15:43:16Source:SHMET

SHANGHAI, Nov 14 (SHMET) – Aluminum price continues to be low in the short term and trading of aluminum was thin, given weak demand and ample supply. Destocking is on-going, but remains at historically high levels.

Domestic smelters continued to lose money amid rising alumina price, and news of output cut came out now and then.

The latest data from the National Bureau of Statistics showed that China's primary aluminum production in October was 2.72 million mt, down from the previous month, and the year-on-year growth rate continued to decline.

LME aluminum fluctuated around $1,940/mt in Asian trading session today. SHFE aluminum closed down 0.36% today.

In the Shanghai spot market, aluminum was quoted at 13,710 yuan/mt to 13,750 yuan/mt today, up 10 yuan/mt. Spot aluminum traded at 0 yuan/mt to a premium of 40 yuan/mt against SHFE 1811 aluminum contract.

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