Editorial

SHFE zinc outperforms other base metals

Date Dec 07 2018 16:44:30Source:SHMET

SHANGHAI, Dec 7 (SHMET) – Cargo holders were active sales. Imported AZ brand zinc ingots had slightly increased prices and downstream producers made active inquiries. Cargo holders lowered their premiums during the second trading hours. Market trades were moderate.

Spot zinc ingots edged up on December 7. SHFE zinc rose strongly and outperforms other base metals in the afternoon. SHFE zinc ingots inventory continued to fall. The closed import window stopped the imported zinc ingots flowing into domestic market. Eyes should be on the changes of zinc ingots inventory in recent days.

Spot zinc prices were offered at 21,730-21,830 yuan/mt, up 60 yuan/mt from the previous trading day, and at a premium of 350-450 yuan/mt compared with SHFE zinc 1901 contract. 1# zinc was offered at 21,610-21,710 yuan/mt, up 60 yuan/mt from a day earlier, and at a premium of 290-390 yuan/mt compared with SHFE zinc 1901 contract. Shuangyan brand zinc ingots were offered at a premium of 480 yuan/mt against 1812 contract. Bailing brand zinc ingots were offered at a premium of 80-100 yuan/mt against 1812 contract. For imported brands, AZ brand zinc ingots were offered at a premium of 100-110 yuan/mt against 1812 contract. Belgian and Indian zinc ingots were offered at a premium of 10 -20 yuan/mt against 1812 contract. Spanish zinc ingots were offered flat against 1812 contract.

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Bearish news suppress nickel price

Date Dec 07 2018 16:43:56Source:SHMET

SHANGHAI, Dec 7 (SHMET) – Spot nickel was offered at 88,900-97,100 yuan/mt on Friday, down 1,450 yuan/mt. Jinchuan nickel was quoted at a premium of 8,000 yuan/mt over Wuxi 1812 nickel contract, and 7,750 yuan/mt over SHFE 1901 nickel. Russian nickel was offered at a discount of 200 yuan/mt over Wuxi 1812 nickel contract and at a discount of 450 yuan/mt over SHFE 1901 nickel.

It is estimated that nickel price would continue to decline and trading of nickel at weekend was not as good as expected. Impacted by bearish news, SHFE nickel plunged on December 7. Spot nickel price also dropped. Discount of Russian nickel narrowed, and it was said that some traders quoted discount at less than 250 yuan/mt. Nickel pressure increased and downstream plants purchased as required. Considering a weak demand, traders would like to sell at a depressed price as long as the price was not too low.

In the NPI market, offers for Ni 8-12% NPI were at 945-975 yuan/mtu, and 940-960 yuan/mtu for Ni 7-10% NPI, down 10 yuan/mtu.

Price of NPI dropped further today, and bearish sentiment would remain in the market in the short term. The overall trading of NPI was not ideal amid sufficient supply. For the downstream stainless-steel market, the trading was not active due to weak demand. Besides, pessimism in steel market increased as nickel price plunged. Some companies chose to stay aside to shy away from risks.

On the macro side, US dollar declined as the market expected that the pace of rate rises by Fed would slow down. However, the arrest of an executive of China’s tech giant and the potential extradition would trigger market concerns on escalation of China-US trade frictions. Sell-off happened in global stock markets and risk aversion was rife. As of 16:00, the market focus turned to the US Non-Farm Payroll Report due to be released tonight.

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Copper smelters decrease exports

Date Dec 07 2018 16:23:10Source:SHMET

SHANGHAI, Dec 7 (SHMET) – Trades in domestic spot copper market were low on Friday December 7. SX-EW copper had a large consumption.  Standard-quality copper prices were stable, with a few trades. Tight supplies of high-quality copper drove up the copper price.  

Domestic trade of high-quality copper hit a record high this week as domestic smelters sent cargoes to abroad at the opening of export window and Chilean high-quality copper flowed into domestic market. Some long-delivery contracts clients were forced to purchase at a higher price. High price is not caused by consumption, but short term mismatch of cargoes

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Falling SHFE aluminum persists

Date Dec 07 2018 16:04:53Source:SHMET

SHANGHAI, Dec 7 (SHMET) – SHFE aluminum would continue to run in shock in the near term. Trading of aluminum on December 7 was thin, as traders were moderate in purchase.

SHFE aluminum rose modestly after falling to a two-year new low yesterday night. LME aluminum was also back to weak pattern, and fluctuated around $1,950/mt in today’s Asian trading session. SHFE/LME aluminum ratio was below 7, which encouraged exports of China’s domestic aluminum products.

In the Shanghai spot market, aluminum was quoted at 13,480 yuan/mt to 13,520 yuan/mt today, down 60 yuan/mt. Spot aluminum traded at a discount of 20 yuan/mt to a premium of 20 yuan/mt against SHFE 1812 aluminum contract.

In addition, the US Non-Farm Payroll Report and preliminary data on China’s imports and exports in November shall be focused on.

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Zinc import losses remain heavy

Date Dec 07 2018 15:41:36Source:SHMET

SHANGHAI, Dec 7 (SHMET) – Import ratio in the current month was flat from November 6, but that in the forward month increased. Import loss for zinc ingots deceased by around 100 yuan/mt from November 6. The whole losses, however, remained large. Premiums for B/L Shanghai stood at $140-160/mt cif and those for warrants in Shanghai bonded warehouse quoted at $160-180/mt, unchanged from December 6.

LME cash zinc had a backwardation of $1/mt against LME 3M zinc. For brands not exempted from customs tariff, the SHFE/LME cash price ratio came in at 7.98, and at 8.01 for duty-free Australia, South Korea brand zinc ingots. For brands not exempted from customs tariff, spot import losses stood at 1,485 yuan/mt, and 1,163 yuan/mt in forward import. For duty-free Australia, South Korea brand products, spot import losses registered at 1,317 yuan/mt, and 1,104 yuan/mt in forward import. 

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