SMM Daily Review - 2010/4/13 Base Metals Market

SHANGHAI, Apr. 14 (SMM) --

Copper

The LME copper market overnight closed down at USD 7,850/mt after falling back from a high. On Tuesday, SHFE copper market fluctuated after a lower open. SHFE July delivery copper contract opened at RMB 62,420/mt, and ended at RMB 62,480/mt, down RMB 780/mt of 1.23% from a day earlier. 

SHFE copper market in the morning trade moved higher after a low open, but was dragged down by plunging A-shares market after 11:00 am. In this context, discounts and premiums for high-quality copper were between RMB 0/mt and positive RMB 50/mt, with deals made in the RMB 61,400-61,600/mt range; Discounts for standard-quality copper were at negative RMB 50-0/mt, dealing between RMB 61,300-61,500/mt; discounts for hydro-copper were between negative RMB 100-50/mt. In the afternoon business, spot copper prices moved in the RMB 61,300-61,400/mt range. 

Recently, there is no a stream of positive macro economic data available, providing little support for LME copper prices to test USD 8,000/mt. SMM believes LME copper prices will fluctuate between USD 7,800-8,000/mt in the short term, to wait for further market direction. 

Aluminum

SHFE aluminum prices experienced significant changes yesterday. SHFE aluminum prices lacked upward momentum after opening low in the morning, but later moved higher driven up by increasing purchases after LME aluminum prices got support at USD 2,400/mt. However, SHFE aluminum prices slipped later following falling domestic A-shares market, but rebounded again in the afternoon after domestic A-shares market recovered, and finally dipped again before closing due to profit-taking. SHFE 1007 aluminum contract prices soared to as high as RMB 17,190/mt, and dipped to as low as RMB 16,960/mt, with prices finally ending at RMB 17,045/mt. Transactions were brisk, and positions of SHFE 1007 aluminum contract increased by 16,152 lots, with the turnover exceeding RMB 24.5 billion.

LME aluminum prices continued to fluctuate around USD 2,400/mt, and although SHFE aluminum prices remained relatively weak, prices have stood above 60-day moving average, and will continue to test the support at this level. SHFE 1007 aluminum contract prices will also fluctuate between RMB 17,000-17,200/mt.

Yesterday, traded prices for spot aluminum fluctuated wildly in Shanghai, especially when SHFE aluminum prices moved widely during the spot trading period. Spot aluminum offers advanced gradually from RMB 16,320/mt to RMB 16,350/mt before 11:00 following steady increases in SHFE aluminum prices, leaving market confidence bullish. However, spot aluminum prices fell below RMB 16,300/mt as SHFE aluminum prices plunged due to falling stock markets, and market players stayed out of the market as a result. In the afternoon, the recovering stock markets boosted aluminum market sentiment, and suppliers kept offers firm at RMB 16,300/mt. Although market consumption remained neutral, the optimism was gaining in aluminum market. However, it is worth noting that suppliers’ willingness of moving goods will increase when aluminum prices move above RMB 16,300/mt. 

Lead

In domestic lead market, downstream buying interest remained sluggish at prices of RMB 15,900/mt, causing mainstream traded prices on Tuesday to fall below RMB 15,900/mt. Coupled with depressed LME lead prices in Asian trading hours, a wait-and-see attitude was prevailing among downstream producers. The depressed market transactions weighed down market outlook, with great pressure expected at RMB 16,000/mt in the short term.

Zinc

SHFE zinc prices opened low, showing weak performance all day. SHFE three-month zinc contract prices closed at RMB 19,350/mt, down 1.23%. Domestic A-shares markets rebounded at noon, giving support to metals markets. SHFE three-month zinc contract prices hit the lowest level of RMB 19,255/mt. The cautious sentiment was emerging in the market in view of the upcoming delivery date and fluctuating SHFE zinc prices along with domestic A-shares markets. Yesterday, Shanghai #0 zinc was traded around RMB 18,500/mt, with offers for limited brands moving between RMB 18,420-18,450/mt, but the high spot discounts failed to stimulate downstream purchasing interest. Market players were waiting for the possible declines in zinc prices over the next two days in view of current wide spread between SHFE zinc prices and spot zinc prices, with the wait-and-see sentiment emerging as a result.

Tin

LME tin prices closed at USD 18,660/mt on April 12th, down USD 90/mt from a day earlier, with highest price at USD 18,800/mt and lowest price at USD 18,660/mt. Trading volumes were 264 lots and positions were 21,643 lots. The US dollar index still showed weak performance and was depressed below all moving averages in the near term in view that debt crisis in Greece weakened and US dollar index has fallen significantly, which will lend support for base metal prices to rise up.

In the Shanghai spot market, spot prices remained flat from a day earlier. Goods from Yunnan Tin group and Yunnan Gejiu Zili Metallurgy dominated market transactions with traded prices between RMB 143,300-144,000/mt, while supply of unknown brand tin was relatively few. Overall trading sentiment was moderate, while long position sentiment was strong in the market and traders told that some downstream consumers made their purchases in advance. There were not many cargo held by traders at present, and it was heard that some goods will arrive in the Shanghai tin spot market this week.

Nickel

LME nickel prices opened at USD 25,300/mt and closed at USD 25,680/mt on April 12th, with highest price at USD 25,800/mt and lowest price at USD 25,250/mt. Daily trading volumes were 2,131 lots and positions were 103,866 lots. On April 13th, LME nickel prices opened at USD 25,650/mt, and were around USD 25,450/mt at 13:30, down USD 230/mt, experiencing a slight corrections. However, US dollar has been weakening recently and upward momentum for LME nickel prices haven't changed.

In the Shanghai nickel spot market, traded prices were between RMB 175,000-176,000/mt in the morning trading session, but pries rose to RMB 177,000/mt in the afternoon session affected by the rumor that Jinchuan Group would tight its supply. Overall trading sentiment was moderate, and transactions were mainly made with goods from Jinchuan Group. Supply of imported nickel was mainly from Norway. Deals were mainly done between traders, and there were few end-users in the market.

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

 
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