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SMM Daily Review - 2010/2/10 Base Metals Market
Feb 11,2010 09:50CST
smm insight

SHANGHAI, Feb. 11 (SMM) --

SHFE 1006 copper contract prices opened at RMB 54,000/mt driven up by rising LME copper prices, and fluctuated higher in the morning session. SHFE copper prices remained on an upward track in the afternoon, and hit the highest level of RMB 54,920/mt before closing, with prices ending at RMB 54,800/mt finally.

Spot premiums remained unchanged in the spot market after transitioning into a new contract month, and domestic smelters kept offers firm, with limited interest in moving goods, and market supply of imported copper was ample. Spot premiums for standard-grade copper were RMB 0-100/mt in the morning, while premiums for high-grade copper were RMB 100-150/t, with traded prices moving in the RMB 54,000-54,350/mt range, and spot discounts for hydro-copper were RMB 50/mt.

Yesterday, copper prices increased by more than RMB 1,000/mt compared with a day earlier, limiting downstream purchasing interest. In addition, current inventories at downstream producers were enough for their production needs after stock replenishment during previous days, and their demand declined as a result, and traded prices dropped sharply compared with yesterday in response. SHFE copper prices remained strong in the afternoon, with premiums down slightly. Premiums for standard-grade copper were RMB 0-50/mt, and premiums for high-grade copper were RMB 50-100/mt, with traded prices moving in the RMB 54,200-54,400/mt range. Thursday and Friday are the last two trading day before the Chinese New Year holiday, and traders and smelters almost finished their work, and downstream producers also shut down for holiday gradually. In this context, overall trading sentiment will become neutral. 

SHFE aluminum prices opened high and fluctuated all day. SHFE aluminum three-month contract prices opened at RMB 16,610/mt, and closed at RMB 16,620/mt, up RMB 240/mt compared with the previous trading day, or up 1.47%, with the highest and lowest level at RMB 16,685/mt and RMB 16,520/mt, respectively. Total positions declined by 23,076 lots, and trading volumes fell to 100,000 lots due to the withdrawal of speculative funds before the Chinese New Year holiday. Technically, SHFE aluminum prices stood above 5-day moving average line, with any downward room expected to be limited in the short term. Trading sentiment was neutral in the spot market currently.

Trading volumes declined significantly in domestic lead market, and both traders and downstream lead-acid battery producers have shut down for the holiday, with market supply decreasing as a result. Offers were above RMB 15,700/mt, with offers for brand name lead heard at RMB 16,000/mt in the morning. Both suppliers and buyers believe domestic lead prices will experience no marked changes on the last two trading days before the holiday, resulting in low interest in transactions, and limited inquiries will also disappear in the coming two days.  

SHFE zinc prices opened high and moved higher, with strong pressure at RMB 17,800/mt. Market sentiment waned with the approach of the Chinese New Year holiday, and both trading volumes and positions declined significantly. SHFE three-month contract zinc prices closed at RMB 17,685/mt finally, up 2.67%.

Spot market was neutral due to zinc price increases and trader low interest in trades on the last work day before the holiday. #0 zinc was traded at RMB 17,250/mt, and #1 zinc was traded at RMB 17,200/mt in the Shanghai market, with trading volumes limited. Technically, all technical indicators for zinc prices were positive, but zinc market will become lukewarm as the holiday nears, and SMM predicts zinc prices will fluctuate narrowly on the last two trading days before the holiday.

US dollar further declined as panic sentiment from debt crisis in Euro zone gradually waned. On Tuesday (February 9th), LME tin prices climbed slightly and closed at USD 15,650/mt. On Wednesday, LME tin prices fluctuated narrowly above 5-day moving average and KDJ indexes showed upward price trend. LME tin prices will get support from temporarily declined US dollar.

On Wednesday, overall trading sentiment was sluggish in the Shanghai tin market, as downstream consumers have almost completed stock replenishment with the approach of Chinese New Year Holiday. Trading sentiment will be more sluggish tomorrow. Prices were pulled down due to low-priced offer from some traders, with tin from Yunnan Tin group mainly dominated market transactions at price of RMB 133,500/mt.

On Tuesday (February 9th), LME nickel prices opened at USD 17,300/mt and closed at USD 17,630/mt, with lowest level at USD 17,050/mt and highest level at USD 17,800/mt. US dollar gradually declined as panic sentiment from debt crisis in Euro zone gradually waned. Nickel prices rebounded along with downward track of boll, but trading volumes were down, indicating instability of current price rebound. On Wednesday, LME nickel prices opened at USD 17,640/mt, but prices fluctuated widely. Prices firstly climbed at USD 17,790/mt and later felling to test USD 17,550/mt with increased trading volumes, showing that prices still received support at USD 17,550/mt. It is expected that LME nickel prices will fluctuate at USD 17,550/mt.

In the Shanghai nickel market, there were almost no offers in the market. Goods supplied in the market were mainly from Jinchuan Group, with traded prices at RMB 142,000/mt, and few imported nickels from Russia were also traded at RMB 142,000/mt. Trading volumes declined as there were only few traders in the market. Market trading sentiment will continue to be sluggish in the following two days.

To contact the writer on this report: angelawang@smm.cn


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