SMM Daily Review (Nov. 20)

SHANGHAI, Nov. 23 (SMM) --

    Copper:

    SHFE copper prices stood above RMB 53,000/mt, with SHFE three-month contract copper prices soaring to RMB 53,759/mt, and with positions up further, while SHFE forward contract copper prices climbed to RMB 55,000/mt after standing firm at RMB 54,000/mt. The situation of weak soon-to-expire contract and strong forward contract indicates strong SHFE copper prices lead spot copper price rise.

    In spot copper market, although spot discounts were unchanged from yesterday levels, cargo-holders took a firmer attitude. Spot discounts for high-grade copper were RMB 300/mt, and discounts for "Guixi" brand were RMB 280/mt, while discounts for standard-grade copper were RMB 350/mt, with trading volumes growing significantly from yesterday levels. Copper prices have hit RMB 53,000/mt in the morning stimulated by optimistic market sentiment, making traded prices in the RMB 52,750-53,000/mt range. The low-end traded prices advanced to RMB 52,850/mt in the afternoon along with steady growth in SHFE copper prices.

    Aluminum:

    The National Development and Reform Commission (NDRC) lifted the power tariffs on November 19th, and today sources report that CHALCO will raise 2010 alumina prices, helping increase aluminum costs. In this context, SHFE aluminum prices advanced in response after fluctuated in the morning, with trading volumes and positions up. SHFE three-month contract aluminum prices climbed to RMB 15,760/mt, and closed at RMB 15,650/mt, while SHFE spot-month contract aluminum prices stood firm at RMB 15,200/mt, and climbed to RMB 15,320/mt, but closed at RMB 15,250/mt finally.

    In spot aluminum market, offers quoted by CHALCO were RMB 15,100/mt, while traders offered prices at RMB 15,050/mt, leaving traded prices in the RMB 15,050-15,070/mt range, with costs serving as major support for aluminum prices. Domestic aluminum prices will find solid support at RMB 15,000/mt in the coming week, and will move higher to RMB 15,100/mt. However, aluminum producers will have relatively ample profits when aluminum prices remain above RMB 15,000/mt, which will likely result in more sell-off activities to generate cash by the end of this year.

    Lead:

    LME lead prices dropped from high levels for two consecutive days, heavily depressing Shanghai lead market sentiment. Although SMM lead prices remained unchanged for four straight days, market transactions became worse, helping firm downstream views of possible further downward movement for lead prices. Smelters were unwilling to move goods at low prices, but the inventory and capital pressure by the end of this year left smelters in a dilemma, and lead prices fluctuated again with the absence of positive impact from US dollar and LME lead prices.  

    Zinc:

    SHFE zinc prices soared in the morning driven by significant growth in long positions, and SHFE three-month contract zinc prices jumped to RMB 18,120/mt, but later slipped due to profit-takings, and kept moving below daily moving average line, but still are expected to advance to RMB 18,000/mt. SHFE spot-month contract zinc prices tried to surge to RMB 17,650/mt after stabilized at RMB 17,500/mt. SHFE zinc prices will remain strong.

    In spot zinc market, #0 zinc prices stood firm at RMB 17,200-17,250/mt, generating incentives by cargo-holders to move goods, but consumers were cautious about zinc prices above RMB 17,000/mt. Transactions even became worse in the afternoon when SHFE zinc prices stabilized. Spot discounts were RMB 200-300/mt against spot-month contract zinc prices, and were RMB 800/mt against three-month contract zinc prices. However, traders failed to obtain profits in view of expanding profit margins in spot market. Spot zinc prices will continue to increase after stabilize at RMB 17,000/mt.

    Tin:

    Shanghai tin market showed a weaker performance, and offers for famous brands stabilized at RMB 116,000-116,500/mt reluctantly during weekend due to poor sales, while downstream inquiries were very limited, leaving lukewarm trading sentiment.

    Nickel:

    Although imported nickel or goods from Jinchuan Group were unavailable when nickel prices were below RMB 127,500/mt, transactions were also weak when nickel prices were RMB 128,000/mt. Inquiries increased, but actual transactions were very limited. The wait-and-see sentiment was dominating the Shanghai nickel market players due to a lack of confidence in upward movement for LME nickel prices.

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