SMM Daily Review - 2010/5/11 Base Metals Market -Shanghai Metals Market

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SMM Daily Review - 2010/5/11 Base Metals Market

SMM Insight 10:35:00AM May 12, 2010 Source:SMM

SHANGHAI, May 12 (SMM) --

Copper
On Tuesday, SHFE copper market dropped after a high open. According to China's National Bureau of Statistics (NBS), China's CPI in April was up 2.8% on a yearly basis, and PPI was up 6.8%, adding to inflationary pressures, and further tightening steps are likely to be taken by the authorities. China's A-shares market opened high following jumping equities in the EU and US, but in later business plunged all the way, down below 2,700 points, falling as low as 2,638 points, a new one-year low. In this context, SHFE copper market dived. SHFE August delivery copper contract opened high at RMB 57,000/mt, but slid with falling stocks market after failing to move higher in the morning trade, with prices finally closing at RMB 55,720/mt after dropping as low as RMB 55,420/mt before the closing. A return of short positions limited any upward momentum for copper prices on the SHFE market, leaving SHFE copper prices at around 5-day moving average. 

In the spot market, premiums were reported between positive RMB 50-150/mt in the morning trade. Deals for standard-quality copper were done in the RMB 56,400-56,550/mt, and those for high-quality copper were between RMB 56,500-56,600/mt. As the SHFE/LME copper price ratio remains less than 8.0, suppliers of imported goods reduced sales volumes, and domestic goods dominated market supply. Downstream producers were wary of purchases, preferring to buy products on an as-needed basis. In the afternoon business, spot premiums gained slightly to positive RMB 100-180/mt, as SHFE copper prices dropped with plunging equities market. Traded prices fell to levels seen on Monday, with deals done between RMB 55,700-56,300/mt, and market trading sentiment was lackluster. In other news, premiums for imported copper rose to RMB 70-120/mt.

Aluminum
SHFE aluminum prices were weak yesterday (May 11th), and SHFE 1007 aluminum contract prices moved higher to a daily high of RMB 15,760/mt after opening at RMB 15,740/mt, but later fluctuated lower all day, with the lowest prices reported at RMB 15,635/mt. SHFE 1007 aluminum contract prices finally closed at RMB 15,670/mt, up RMB 25/mt compared with the previous trading day, or up 0.16%. Total positions declined by 5,772 lots to 287,236 lots, and trading volumes remained at 129,938 lots, with stronger pressure reported for SHFE 1007 aluminum contract prices at the 5-day moving average.  

Domestic spot markets were sluggish, and slight spot discounts for aluminum ingot re-appeared in east China, and the weak movements of aluminum prices depressed downstream buying interest, and overall transactions were lukewarm as a result. Macro economic environment changes significantly, and fluctuations in other base metals markets are growing as well, both helping increase the uncertainties with regard to future aluminum price trends.   


Lead
Prices in domestic lead markets rallied with rising LME lead prices, which advanced for two consecutive days. Offers in the Shanghai market were between RMB 15,250-15,400/mt. However, trading sentiment dropped significantly from a day earlier, as rising prices kept downstream producers, who bought products at around RMB 15,000/mt a week earlier, stand on the sidelines. In the afternoon business, traders lowered prices to around RMB 15,200/mt following price declines on the LME lead market. Some lead producers maintained prices firm between RMB 15,500-15,700/mt, with low interest in moving goods. 

Zinc
SHFE zinc prices fluctuated widely again yesterday (May 11th), but were weaker from a day earlier. SHFE zinc prices fluctuated after climbing slightly to the 5-day moving average in the morning, but dropped sharply in the afternoon dragged down by falling domestic A-shares market and strong short sentiment. SHFE 1008 zinc contract prices fell to as low as RMB 16,540/mt, a record low since November 2009, down 2.7%, with prices finally ending at RMB 16,705/mt, down RMB 295/mt compared with the previous trading day. Trading volumes were almost 900,000 lots, and positions increased by nearly 30,000 lots, with increases mainly short positions.

The weak performance of SHFE zinc prices hampered transactions in spot markets in the afternoon. #0 zinc was mainly traded around RMB 16,550/mt in the morning in Shanghai, with spot discounts between RMB 350-370/mt against SHFE 1007 zinc contract prices. Spot discounts narrowed to a range of RMB 320-330/mt in the afternoon, but deals made by downstream consumers were limited. The pessimism still dominates zinc market currently, and SMM predicts zinc prices will continue to test the low-end of price range.

Tin
Stimulated by the EU emergency rescue plan, LME tin prices advanced after a low open around 5-day moving average at USD 17,700/mt and finally closed at USD 17,825/mt, up USD 223/mt, with prices reaching the highest level at USD 18,100/mt. Daily trading volumes were 391 lots and positions were 19,485 lots. LME tin prices were relatively quiet on May 11th as LME copper prices declined after surging, with prices reaching as high as USD 17,850/mt but falling to USD 17,700/mt later, causing panic sentiment to expand in the market again.

In the Shanghai tin spot market, cargo-holders slightly lifted offers due to the increased trading volumes on May 10th, with prices of major brand tin between RMB 143,500-144,500/mt and prices of unknown brand tin which had limited trading volumes around RMB 143,000/mt. Downstream consumers still made purchases on an as-needed basis, with moderately trading volumes reported. Major economic indexes in April released on May 11th by the National Bureau of Statistics reflected the speeding up of inflation, dampening market confidence again. However, any room for tin prices to fall significantly is small as most upstream producers showed unwillingness to move goods at lower prices due to high raw material costs.

Nickel
LME nickel prices opened at USD 22,500/mt and climbed all the way to USD 23,650/mt, with prices touching the lowest level at USD 22,351/mt. As market still doubted that whether or not rescue mechanism by the EU can solve the debt problem in the euro zone, LME nickel prices fell slight and ended at USD 22,950/mt, up USD 649/mt from a day earlier. Daily trading volumes were 2,868 lots and positions were 95,026 lots. On May 11th, LME nickel prices continued to advance in the morning session, but prices fell quickly by USD 500/mt to USD 22,450/mt in the afternoon session, reflecting that the unstable market sentiment resulted in weak price performance.
 
In the Shanghai nickel spot market, consumption was quiet. Low-priced goods held by traders were limited, and there were many purchasers to replenish stocks in the morning session. Purchasers had difficulty in buying Jinchuan nickel with prices below RMB 178,000/mt and supply of nickel from Russia was few in the market. However, as LME nickel prices gradually fell, cargo-holders' willingness to move goods increased, and offers began to slip, with most traded prices between RMB 177,000-177,500/mt. Trading volumes declined, and purchasing interest from downstream purchases was still low.

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

 

Copyright © SMM. All Rights Reserved

None of this material may be used for any commercial or public use in any forms or means, without the prior written consent of SMM. For reproduction issue, please contact us by email: service.en@smm.cn

Key Words:  base metal  LME market  SHFE market 

SMM Daily Review - 2010/5/11 Base Metals Market

SMM Insight 10:35:00AM May 12, 2010 Source:SMM

SHANGHAI, May 12 (SMM) --

Copper
On Tuesday, SHFE copper market dropped after a high open. According to China's National Bureau of Statistics (NBS), China's CPI in April was up 2.8% on a yearly basis, and PPI was up 6.8%, adding to inflationary pressures, and further tightening steps are likely to be taken by the authorities. China's A-shares market opened high following jumping equities in the EU and US, but in later business plunged all the way, down below 2,700 points, falling as low as 2,638 points, a new one-year low. In this context, SHFE copper market dived. SHFE August delivery copper contract opened high at RMB 57,000/mt, but slid with falling stocks market after failing to move higher in the morning trade, with prices finally closing at RMB 55,720/mt after dropping as low as RMB 55,420/mt before the closing. A return of short positions limited any upward momentum for copper prices on the SHFE market, leaving SHFE copper prices at around 5-day moving average. 

In the spot market, premiums were reported between positive RMB 50-150/mt in the morning trade. Deals for standard-quality copper were done in the RMB 56,400-56,550/mt, and those for high-quality copper were between RMB 56,500-56,600/mt. As the SHFE/LME copper price ratio remains less than 8.0, suppliers of imported goods reduced sales volumes, and domestic goods dominated market supply. Downstream producers were wary of purchases, preferring to buy products on an as-needed basis. In the afternoon business, spot premiums gained slightly to positive RMB 100-180/mt, as SHFE copper prices dropped with plunging equities market. Traded prices fell to levels seen on Monday, with deals done between RMB 55,700-56,300/mt, and market trading sentiment was lackluster. In other news, premiums for imported copper rose to RMB 70-120/mt.

Aluminum
SHFE aluminum prices were weak yesterday (May 11th), and SHFE 1007 aluminum contract prices moved higher to a daily high of RMB 15,760/mt after opening at RMB 15,740/mt, but later fluctuated lower all day, with the lowest prices reported at RMB 15,635/mt. SHFE 1007 aluminum contract prices finally closed at RMB 15,670/mt, up RMB 25/mt compared with the previous trading day, or up 0.16%. Total positions declined by 5,772 lots to 287,236 lots, and trading volumes remained at 129,938 lots, with stronger pressure reported for SHFE 1007 aluminum contract prices at the 5-day moving average.  

Domestic spot markets were sluggish, and slight spot discounts for aluminum ingot re-appeared in east China, and the weak movements of aluminum prices depressed downstream buying interest, and overall transactions were lukewarm as a result. Macro economic environment changes significantly, and fluctuations in other base metals markets are growing as well, both helping increase the uncertainties with regard to future aluminum price trends.   


Lead
Prices in domestic lead markets rallied with rising LME lead prices, which advanced for two consecutive days. Offers in the Shanghai market were between RMB 15,250-15,400/mt. However, trading sentiment dropped significantly from a day earlier, as rising prices kept downstream producers, who bought products at around RMB 15,000/mt a week earlier, stand on the sidelines. In the afternoon business, traders lowered prices to around RMB 15,200/mt following price declines on the LME lead market. Some lead producers maintained prices firm between RMB 15,500-15,700/mt, with low interest in moving goods. 

Zinc
SHFE zinc prices fluctuated widely again yesterday (May 11th), but were weaker from a day earlier. SHFE zinc prices fluctuated after climbing slightly to the 5-day moving average in the morning, but dropped sharply in the afternoon dragged down by falling domestic A-shares market and strong short sentiment. SHFE 1008 zinc contract prices fell to as low as RMB 16,540/mt, a record low since November 2009, down 2.7%, with prices finally ending at RMB 16,705/mt, down RMB 295/mt compared with the previous trading day. Trading volumes were almost 900,000 lots, and positions increased by nearly 30,000 lots, with increases mainly short positions.

The weak performance of SHFE zinc prices hampered transactions in spot markets in the afternoon. #0 zinc was mainly traded around RMB 16,550/mt in the morning in Shanghai, with spot discounts between RMB 350-370/mt against SHFE 1007 zinc contract prices. Spot discounts narrowed to a range of RMB 320-330/mt in the afternoon, but deals made by downstream consumers were limited. The pessimism still dominates zinc market currently, and SMM predicts zinc prices will continue to test the low-end of price range.

Tin
Stimulated by the EU emergency rescue plan, LME tin prices advanced after a low open around 5-day moving average at USD 17,700/mt and finally closed at USD 17,825/mt, up USD 223/mt, with prices reaching the highest level at USD 18,100/mt. Daily trading volumes were 391 lots and positions were 19,485 lots. LME tin prices were relatively quiet on May 11th as LME copper prices declined after surging, with prices reaching as high as USD 17,850/mt but falling to USD 17,700/mt later, causing panic sentiment to expand in the market again.

In the Shanghai tin spot market, cargo-holders slightly lifted offers due to the increased trading volumes on May 10th, with prices of major brand tin between RMB 143,500-144,500/mt and prices of unknown brand tin which had limited trading volumes around RMB 143,000/mt. Downstream consumers still made purchases on an as-needed basis, with moderately trading volumes reported. Major economic indexes in April released on May 11th by the National Bureau of Statistics reflected the speeding up of inflation, dampening market confidence again. However, any room for tin prices to fall significantly is small as most upstream producers showed unwillingness to move goods at lower prices due to high raw material costs.

Nickel
LME nickel prices opened at USD 22,500/mt and climbed all the way to USD 23,650/mt, with prices touching the lowest level at USD 22,351/mt. As market still doubted that whether or not rescue mechanism by the EU can solve the debt problem in the euro zone, LME nickel prices fell slight and ended at USD 22,950/mt, up USD 649/mt from a day earlier. Daily trading volumes were 2,868 lots and positions were 95,026 lots. On May 11th, LME nickel prices continued to advance in the morning session, but prices fell quickly by USD 500/mt to USD 22,450/mt in the afternoon session, reflecting that the unstable market sentiment resulted in weak price performance.
 
In the Shanghai nickel spot market, consumption was quiet. Low-priced goods held by traders were limited, and there were many purchasers to replenish stocks in the morning session. Purchasers had difficulty in buying Jinchuan nickel with prices below RMB 178,000/mt and supply of nickel from Russia was few in the market. However, as LME nickel prices gradually fell, cargo-holders' willingness to move goods increased, and offers began to slip, with most traded prices between RMB 177,000-177,500/mt. Trading volumes declined, and purchasing interest from downstream purchases was still low.

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

 

Copyright © SMM. All Rights Reserved

None of this material may be used for any commercial or public use in any forms or means, without the prior written consent of SMM. For reproduction issue, please contact us by email: service.en@smm.cn

Key Words:  base metal  LME market  SHFE market