SMM Daily Review - 2010/3/12 Base Metals Market

SHANGHAI, Mar. 15 (SMM) --
Copper:
On Friday, SHFE June delivery copper contract opened higher at RMB 59,800/mt following a stronger LME copper market, but then fell back, with prices closing at RMB 59,590/mt, down RMB 130/mt or 0.22% from a day earlier. 

Spot copper discounts in the morning market narrowed to negative RMB 100-0/mt following the upcoming delivery data. During the major trading period, suppliers selling interest was depressed by falling copper prices, further narrowing spot discounts. Of those, discounts for high-quality copper were between negative RMB 30/mt to positive RMB 50/mt, with deals mainly done in the RMB 58,700-58,800/mt range. Discounts for standard-quality copper were at negative RMB 50-20/mt, and transactions were made between RMB 58,650-58,750/mt. Discounts for hydro-copper were at negative RMB 100-80/mt. Traders said mild trading sentiment in recent spot copper market, believing tighter credit flow was one of reasons behind low downstream buying interest, besides the fact that downstream producers were consuming their existing inventories.

In the short term, market players are still waiting for clear direction after the conclusion of the two legislative meetings in China. Presently, copper prices are hovering at high levels, and with low investment interest reported.

Aluminum:
On March 12th, SHFE aluminum prices opened slightly high, and SHFE 1006 aluminum contract prices opened at RMB 16,960/mt, but later slipped due to growing selling pressure after failing to break through the RMB 17,000/mt mark, with prices closing at RMB 16,840/mt at noon. SHFE 1006 aluminum contract prices recovered slightly in the afternoon, and closed at RMB 16,910/mt, with positions up 466 lots. Total positions declined by 1,988 lots. SHFE aluminum prices continued to fluctuate narrowly, with the range between 20-day and 60-day moving averages narrowing.

Spot aluminum prices were between RMB 16,260-16,290/mt in the Shanghai market, with spot discounts ranging from RMB 130/mt to RMB 100/mt, and aluminum prices were in the RMB 16,250-16,280/mt range in the Wuxi market. The lower SHFE aluminum prices caused spot aluminum transactions to fall, and limited traders reduced prices, but any downward room for aluminum prices to fall should be limited before the delivery date due to narrowing discounts.  

Lead:
Traded prices in the Shanghai market on Friday were in the RMB 15,600-15,700/mt range. Both downstream buying interest and middlemen selling interest was low. Market supply of well-known and unknown branded was sufficient. Some small-size lead producers stood on the sidelines, waiting for measures on elimination of inefficient capacity. 

In general, overall market trading sentiment was lackluster.

Zinc:
On March 12th, SHFE zinc prices moved around RMB 18,950/mt in the morning, but later plunged to RMB 18,850/mt at 10:50 am. The movement of SHFE zinc prices during the spot trading period heavily depressed spot trading sentiment, and downstream buying interest declined significantly as zinc prices continued to fluctuate widely. In this context, #0 zinc was traded between RMB 18,150-18,180/mt in the Shanghai market, while #1 zinc was traded in the RMB 18,100-18,140/mt range, and trading volumes were limited.

SHFE 1006 zinc contract prices soared from RMB 18,870/mt to RMB 19,020/mt at noon supported by short-covering, and some traders became reluctant to move goods. Traded prices for #0 zinc advanced to the range of RMB 18,220-18,280/mt in Shanghai, with most deals made by traders, and downstream producers only made limited purchases. Special attention should be paid to the possible positive news after the close of the NPC and CPPCC sessions, or SHFE zinc prices will face strong resistance above RMB 19,400/mt. 

Tin:
On March 11th, LME tin prices experienced weak performance, and fluctuated on downward track after opening flat at USD 17,650/mt. LME tin prices touched lowest level at USD 17,325/mt and closed at USD 17,450/mt, down USD 200/mt. On March 12th, LME tin prices still opened flat, and fluctuated narrowly between 5-day moving average line and 10-day moving average line.

In the domestic tin spot market, transactions were sluggish at the week end affected by declining LME tin price trend. Cargo-holders' confidence was depressed and their eagerness to move goods increased. Offers were lowered, but downstream consumers' purchasing interest didn't improve and downstream consumers still adopted a wait-and-see attitude. Low-priced offers of unknown brand tin depressed prices of major tin brand, and mainstream prices of tin from Yunnan Tin group, Yunnan Chengfeng Non-ferrous Metals Co., Ltd and Yunnan Gejiu Zili Metallurgy Co., Ltd were in the RMB 140,000-141,000/mt range. Upstream major brand tin producers had difficulty in keeping offers firm and sales of major brand tin were not optimistic.

Nickel:
On March 11th, LME nickel prices opened at USD 21,500/mt and closed at USD 21,335/mt, with highest level at USD 21,505/mt and lowest level at USD 20,990/mt. Daily trading volumes were 2,172 lots and positions were 107,436 lots.

On March 12th, LME nickel prices opened at USD 21,350/mt and fluctuated narrowly on downward track later. In the afternoon session, LME nickel prices fell to test USD 21,215/mt. However, the falling range failed to meet most market players' expectation.

In the Shanghai nickel spot market, overall transactions remained moderate. Jinchuan Group cut ex-works nickel prices by RMB 6,000/mt to RMB 160,000/mt which is still slightly higher than spot nickel prices. Supply of goods was ample, and traded prices of imported nickel were at RMB 156,000/mt and traded prices of nickel from Jinchuan Group were in the RMB 156,500-157,000/mt range. Some inventories stored in Wenzhou gradually entered market. According to downstream producers in Wenzhou, supply of these nickels was sufficient, and prices of these nickels were much lower than those in Shanghai spot market. Traders in Wenzhou also told that 2/3 of the inventories have already sold out after profit-taking. This explains why there were almost no purchases in the Shanghai nickel spot market. In addition, supply of nickel that excluding taxes also exerted sales pressure on Shanghai nickel spot market.

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

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