SMM Daily Review - 2010/6/25 Base Metals Market

SHANGHAI, June 28 (SMM) --
Copper:
SHFE copper market opened low on Friday, with prices moving around the daily average in the morning session. SHFE copper for September delivery, the most active copper contract opened at RMB 53,640/mt, and fell back to the range of RMB 53,500-53,600/mt after briefly reaching RMB 53,800/mt. SHFE September delivery copper contract dived at noon due to plunging stocks market, and fell as low as RMB 52,930/mt in the afternoon business. Brisk bargain hunting helped SHFE September delivery copper get back previous losses, with prices closing at RMB 53,180/mt. Positions for SHFE September delivery copper contract were down 11,648 lots, as speculators greatly reduced positions at the weekend for risk aversion. As July approaches, positions for SHFE October delivery contract are gradually growing.

Spot premiums were in the positive RMB 150-230/mt range in the morning trade, trading between RMB 53,900~54,100/mt. Supply of imported goods increased slightly, as the SHFE/LME copper price ratio improved above 8.05 on Friday, with premiums mainly around positive RMB 200/mt. Offers for domestic goods, especially goods from Jiangxi Copper were firm, and sales of domestic standard-quality copper were limited, as domestic producers became more reluctant to move goods due to concerns over production from supply tightness of scrap copper. In the morning business, downstream producers were active in inquiries, as trading sentiment is generally moderate at the weekend. Spot prices dropped to RMB 53,500-53,800/mt in the afternoon trade due to diving copper prices on the SHFE market. Supply of domestic goods was sparse, while transactions of imported copper were brisk, and bargain hunters increased.

According to data from Shanghai Futures Exchange (SHFE), copper stocks were down 12,005 mt, with total stocks at 123,939 mt. Declines in inventories were due to activity of goods deliveries, and sustained consumption from downstream producers as well. SMM believes spot copper prices still show a lack of upward momentum to break out RMB 54,000/mt.

Aluminum:
SHFE 1009 aluminum contract prices opened slightly low at RMB 14,890/mt, and later fluctuated lower after failing to edge higher, and then slipped following plunging stock markets. SHFE 1009 aluminum contract prices mainly moved below the 5-day moving average in the afternoon, and dipped to as low as RMB 14,790/mt, and finally closed at RMB 14,830/mt, down RMB 75/mt compared with the previous trading day, or down 0.5%. Positions of SHFE 1009 aluminum contract declined by 2,254 lots. A lack of speculative funds caused SHFE 1009 aluminum contract prices to face stronger resistance to break the RMB 15,000/mt mark, with any upward momentum and upward room expected to be limited.

In the spot market, downstream buying interest was relatively high before the weekend, and traders kept offers firm in the morning session. Spot aluminum prices edged lower after SHFE aluminum prices slipped, with spot discounts narrowing against SHFE 1007 aluminum contract prices, and inquiries were up, and overall trading sentiment was bullish. However, spot transactions were stagnant in the afternoon amid tumbling SHFE aluminum prices, and market players stood on the sidelines, and aluminum prices kept moving in a narrow band as a result. 

Lead:
Domestic lead prices on Friday were little changed from a day earlier. However, a strong wait-and-see attitude dominated the market on the last trading day of the week, after LME lead prices closed in negative territory. Transactions in the Shanghai market were generally made in the RMB 14,800-14,850/mt range. Transactions of low-priced unknown branded lead were brisk occasionally, suggesting that downstream producers preferred to purchase low-priced goods as existing prices approached RMB 15,000/mt.

Zinc:
SHFE 1009 zinc contract prices climbed strongly after opening marginally higher at RMB 15,170/mt, and then advanced rapidly to RMB 15,460/mt, but later fluctuated around RMB 15,335/mt all day due to a lack of speculative funds, as large amounts of long positions exited from the market at higher prices. SHFE 1009 zinc contract prices faced strong pressure at RMB 15,400/mt, and finally closed at RMB 15,345/mt, and positions declined by 36,540 lots to 238,190 lots.

Spot zinc market was sluggish on the last trading day of last week given falling SHFE zinc prices. #0 zinc was traded between RMB 15,000-15,050/mt in the Shanghai market, with spot discounts moving around RMB 150/mt against SHFE 1009 zinc contract prices, while #1 zinc was traded around RMB 15,000/mt, with supply of goods still limited. Deals were even made at RMB 14,900/mt for #0 zinc in Shanghai in the afternoon, but trading volumes were very limited. 

Tin:
LME tin prices opened at USD 17,889/mt and closed at USD 18,100/mt on June 24th, up USD 211/mt from a day earlier, with the highest price at USD 18,150/mt and the lowest price at USD 17,889/mt. Daily trading volumes were 142 lots and positions were 17,549 lots. As the newly-released economic data from the US were better than expected, base metal prices climbed across the board. On June 25th, LME tin prices opened at USD 18,150/mt and fluctuated narrowly above USD 18,000/mt.

In the Shanghai tin spot market, mainstream traded prices of major brand tin were between RMB 139,000-140,500/mt and mainstream traded prices of unknown brand tin were between RMB 138,500-139,000/mt. Since transactions were sluggish, some traders lowered offers to attract buying, still failing to boost transactions. Downstream companies still remained cautiously and made purchases on an as-needed basis, and their acceptance towards high-priced goods was low, resulting in the fact that domestic spot prices have difficulties in climbing up.

Nickel:
LME nickel prices opened at USD 19,344/mt and closed at USD 19,600/mt on June 24th, up USD 320/mt from a day earlier, with the highest price at USD 19,689/mt and the lowest price at USD 19,280/mt. Daily trading volumes were 1,077 lots and positions were 87,149 lots. On June 25th, LME nickel prices opened at USD 19,500/mt, reaching the highest level at USD 19,580/mt and touching the lowest level at USD 19,300/mt. LME nickel prices continued its narrow fluctuation trend and slipped slightly, having resistance to make any breakthrough.

In the Shanghai nickel spot market, prices were still stable and transactions were moderate. Traded prices of nickel from Jinchuan Group were between RMB 154,000-155,500/mt and traded prices of imported nickel were between RMB 153,000-154,000/mt, with prices slipping slightly in the afternoon trading session. Downstream consumers still remained cautiously to make purchase, and trading sentiment was soft in the market.

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

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