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SMM Daily Review - 2010/2/11 Base Metals Market
Feb 12,2010 10:33CST
SMM Insight

SHANGHAI, Feb. 12 (SMM) --


SHFE 1006 copper contract prices opened high at RMB 55,280/mt driven up by LEM copper prices, and fluctuated narrowly. Later SHFE 1006 copper contract advanced due to positive economic data from China, and prices gradually declined later in the afternoon session, with prices closing at RMB 55,390/mt.

Spot discounts were RMB 100 or zero in the morning session as purchasers from downstream consumers were gradually sluggish given the significantly increased copper prices before the Chinese New Year Holiday, and discounts expanded during the peak transaction period. Discounts for high-grade copper were RMB 100/mt, with mainstream traded prices in the RMB 55,300-55,450/mt range, and discounts of standard copper were in the RMB 100-150/mt range, with traded prices in the RMB 55,200-55,300/mt. Discounts of hydro-copper were RMB 250/mt, and trading sentiment was gradually sluggish as traders were gradually closed and downstream companies were off on holiday.

LME three month copper prices recently rebounded to sensitive level at USD 6,730/mt, and US dollar index didn’t fell below 79.547, limiting rising room of base metal prices. Recently, close attention should be paid to debt crisis in Euro zone as well as performance of US dollar, as they will affect copper price trend in the short term.


SHFE aluminum prices advanced slightly with other base metal prices, and fluctuated on upward track. SHFE 1005 aluminum contract once climbed to RMB 16,795/mt and touched 60-day moving average, but buying interest was weak before closing, with close prices at RMB 16,640/mt. The close price was up RMB 45, or 0.27% from a day earlier, which is far less than SHFE zinc growth rate of 2%. Technical indicators showed that SHFE 1005 aluminum prices moved above 5-day moving average and 10-day moving average, but met strong resistance at 60-day moving average. Once SHFE 1005 aluminum prices break through this level driven by LME aluminum prices, prices will meet resistant level at 20-day moving average. MACD was at low levels and showed slight upward trend, and it still takes time for prices to climb. RSI was neutral at 51, KD was on upward track at 63.

In the spot market, downstream companies have almost completed stock replenishment. Traders were gradually off on holiday, and there were almost no transactions in the market.


Domestic lead market was almost closed. There were few transactions from downstream companies in the first half of this week, but inquires and purchases were rarely seen in the market on Thursday. Traders were also gradually closed for holiday. In addition, transportation for goods was extremely tight, and cargo-holders were also unwilling to move goods, with low trading interest both from suppliers and consumers. Few transactions of major brand lead were heard in the market at RMB 15,800/mt.


National Bureau of Statistics released on Thursday that CPI advanced by 1.5% in January 2010, which is lower compared the level of 1.9% in December 2009. However, PPI climbed significantly by 3% due to low level at the beginning of 2009 given the bad impact of economic crisis. The data showed that inflation rate was controlled to certain extend, and market concern over interest hike and tight liquid was eased. In this context, SHFE 1005 zinc contract experienced relatively strong performance, with prices successfully surpassing RMB 18,000, and touching the highest level at RMB 18,145. Prices almost fluctuated above moving averages all day and finally closed at RMB 18,075/mt.  Technical indicators showed positive price trend, KD indicator was at 49 and was prone to climb. Momentum from long positions gradually strengthened in the short term.

However, trading sentiment was sluggish in spot market, with limited trading volume of #0 zinc at prices of RMB 17,600-17,650/mt and with limited trading volume of #1 zinc at prices of RMB 17,550-17,600/mt. Trading sentiment will be more sluggish on Friday.


Tin On Wednesday (February 10th), LME tin prices touched highest level at USD 15,975/mt, and closed at high level of USD 15,800/mt. On Thursday, LME tin prices moved above 5-day moving average. KDJ indicator was on upward track, and prices gradually rebounded and were above lower band of boll, indicating obviously stable climbing price trend. Debt crisis from Greece gradually waned, and US dollar experienced weak performance again. LME tin prices are expected to stably climb up further.

On Thursday, trading sentiment was sluggish in the Shanghai tin market. More and more traders were off on holidays, and few tin from Yunnan Tin group was traded at RMB 134,000/mt. It is expected that transactions will be more sluggish on Friday.


On Wednesday night (February 10th), LME nickel prices opened at USD 17,640/mt and closed at USD 17,890/mt, with highest level at USD 18,180/mt and lowest level at USD 17,525/mt. Prices didn't become weak despite of temporarily strong performance of US dollar, showing obviously stable price trend. On Thursday, LME nickel prices opened at USD 17,875/mt and climbed all the way to USD 18,160/mt, but prices later declined, showing that prices still meet relative strong pressure at USD 18,000/mt.

In the Shanghai nickel market, inquiries increased but actual transactions were few. Jinchuan Group raised nickel prices by RMB 3,000 to RMB 143,000/mt, driving up prices higher in the spot market. Low-priced supply of goods was rarely seen in the market, and offers of imported nickel were flat with goods from Jinchuan Group due to tight supply. Mainstream traded prices were in the RMB 144,000/mt.

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


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