Metals News
SMM Daily Review (Nov. 18)
smm insight
Dec 7,2009

SHANGHAI, Nov. 19 (SMM) --


    SHFE three-month contract copper prices climbed to RMB 53,800/mt, but later slipped, and then inched up driven by LME copper prices, and finally closed at RMB 53,940/mt, with positions up slightly. SHFE spot-month contract copper prices showed weak performance and moved below RMB 53,000/mt in the morning, but advanced in the afternoon, and closed at RMB 53,450/mt, with the phenomenon of weak soon-to-expire contract and strong forward contract remaining in the market.

    In spot market, copper prices remained in the RMB 52,550-52,650/mt range in the morning. Spot discounts for high-grade copper widened slightly to RMB 300/mt, while discounts for domestic standard-grade copper were firm at RMB 350/mt, and discounts for imported copper from India and Australia were more than RMB 400/mt. The growth in SHFE copper prices in the afternoon helped drive up cargo-holder optimistic sentiment. Spot discounts for high-grade copper remained unchanged, and limited traders with optimistic outlook even narrowed discounts to RMB 250/mt, although SHFE spot-month contract copper prices increased by more than RMB 400/mt in the afternoon. Deals were mainly made by traders, with limited downstream consumers involved in transactions.


    SHFE aluminum prices opened high but slipped. SHFE spot-month contract aluminum prices came to a standstill, but still received support at RMB 15,100/mt, while SHFE three-month contract aluminum prices climbed to RMB 15,500/mt, and SHFE forward contract aluminum prices have risen to RMB 16,000/mt, with strong performance remaining in the market.

    In spot market, cargo-holders were firm with their offers at RMB 15,000/mt in the morning. CHALCO moved goods at RMB 15,000/mt, while prices for imported aluminum from India dropped to RMB 14,960/mt, and prices for domestic aluminum were RMB 14,980-14,990/mt, with discounts narrowed to RMB 150/mt, but transactions remained limited.

    The sell-off activities when aluminum prices are above RMB 15,000/mt and cautious consumption remain two major reasons to curb any upward movement for aluminum prices. Both SHFE and LME aluminum prices reported significant growth in the afternoon, and the upward trends for aluminum prices will continue tomorrow, and the growth in SHFE aluminum prices may help spot aluminum prices stand firm at RMB 15,000/mt.


    The struggles between suppliers and buyers intensified today. Lead producers offered prices at RMB 15,700/mt from optimistic outlook, hoping to lift prices steadily, while buyers showed resistance towards prices close to RMB 16,000/mt, resulting in low interest in higher prices. Supply of low-priced goods was unavailable, and few traders entered the market in the morning, and LME lead prices climbed to USD 2,450/mt, up USD 75/mt in the afternoon. SMM believes downstream buying sentiment and buyers with interest only in low-priced goods will be hampered by rising LME lead prices. 


    SHFE zinc prices fluctuated in the morning, but advanced in the afternoon along with rising LME zinc prices, and transactions were brisk, with trading volumes and prices up; SHFE three-month contract zinc prices stabilized at RMB 17,800/mt, with positions up more than 18,000 lots, while zinc futures for March delivery stood above RMB 18,000/mt. SHFE forward contract zinc prices have risen above RMB 19,000/mt, while SHFE spot-month contract zinc prices advanced to RMB 17,500/mt.

    In spot market, the slip in SHFE zinc prices in the morning restricted traded prices for spot zinc to RMB 17,000/mt, with a wait-and-see attitude dominating downstream consumers, and traders were also cautious about purchases. Spot discounts against spot-month contract zinc prices were above RMB 200/mt in the afternoon, signaling spot zinc prices will try to test RMB 17,000/mt tomorrow, or discounts will widen further. The price gap between futures and spot markets will leave profits to arbitrageurs, which will help improve trading sentiment. 


    Tin prices in Shanghai market were less optimistic than LME tin prices, and major brands holders reduced prices to move goods under capital pressure at the end of this year, leaving mainstream traded prices in the RMB 115,500-116,500/mt range. In this context, the price spread between well-known brands and less well-known brands narrowed gradually. 


    In Shanghai nickel market, offers remained in the RMB 127,000-128,000/mt range in the morning, with pessimistic sentiment prevailing among market players, and resulting in low interest in higher prices. Prices for goods from Jinchuan Group are expected to advance, as LME nickel prices jumped in the afternoon. Special attention should be paid to ex-works price adjustment by Jinchuan Group.


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