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SMM Daily Review - 2010/9/9 Base Metals Market
Sep 10,2010 10:00CST
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Source:SMM
SHFE LME base metal price spot price

SHANGHAI, Sept. 10 (SMM) --

Copper

Supported by rising LME copper prices, SHFE cooper market opened slightly higher at RMB 60,060/mt. However, panic from market rumors later sent SHFE base metals market lower across the board. The December delivery copper contract plunged to USD 57,170/mt, down as much as 3%. Buying activity was available at lower levels, which helped the most actively-traded copper prices rally above RMB 58,000/mt, but SHFE December delivery copper contract still came under pressure at the daily moving average, with prices fluctuating at RMB 58,500/mt. Finally, SHFE December delivery copper contract closed at RMB 58,590/mt, down RMB 1,040/mt, or a loss of 1.74%. Positions for SHFE December delivery copper contract were down 5,886 lots to 190,000 lots. Sharp declines in the SHFE copper market on Thursday sent SHFE copper prices below the 30-day moving average, with downward room available from technical indicators. However, SMM believes that SHFE copper prices will stabilize after marked declines, if no significant changes happen in market fundamentals and macro-economic aspect. But, any room of price rebounds will be overshadowed by plunging prices on Thursday.

In the spot market, market players were stunned by plummeting SHFE copper prices to do nothing. After 10:30 am, imported high-quality copper was quoted at spot discounts of RMB 20-30/mt, and “Guixi” brand copper was offered at spot discounts of RMB 0/mt. SHFE copper market lacked rising momentum, but purchasing interest returned the market as declines in the SHFE copper market stopped. Downstream producers showed strong buying interest at lower prices, with deals made between RMB 58,600-58,700/mt. Offers of some domestic standard-quality copper were close to those of high-quality copper, with strong unwillingness to move goods. Spot discounts for standard-quality copper were only at around RMB 50/mt. In marked contrast to panic sentiment in the SHFE copper market, players in the spot market represented calm response, entering the market for purchases in preparations for production during a peak demand period. This activity helped support copper prices.

Aluminum

SHFE 1012 aluminum contract prices climbed to as high as RMB 15,870/mt after opening slightly higher at RMB 15,825/mt, but later base metal markets faced heavy pressure before the opening of Shanghai Stock Exchange composite index. As a result, a large number of long investors exited the market after profit-taking, causing SHFE base metals prices to plummet. SHFE 1012 aluminum contract prices dipped to as low as RMB 15,000/mt, but buying at lower prices helped support SHFE 1012 aluminum contract prices to rebound slightly. Later, trading sentiment remained lackluster, and SHFE 1012 aluminum contract prices moved steadily, and finally closed at RMB 15,580/mt. Positions of SHFE 1012 aluminum contract declined by over 20,000 lots, and investors took a more cautious attitude. Downstream consumers were not pessimistic toward future aluminum prices based on trading sentiment in spot markets, and special attention should be paid to LME aluminum price trends and China’s trade data for August.

The significant declines in aluminum prices attracted downstream fabricators to enter the market, and trading sentiment improved significantly as a result. Traded prices were between RMB 15,170-15,200/mt in Shanghai, with spot discounts narrowing to RMB 50-80/mt. Traders moved goods actively, and trading sentiment was brisk.

Lead

Strong performance in the LME lead market overnight improved market outlook, and so domestic lead producers offered high prices, and kept prices firm in view of limited goods held by traders, with reluctance to move goods. Downstream producers made brisk inquiries, as they believed it was an opportunity for them to make purchases when prices experienced downward corrections. However, buying activity was restricted by high costs, bringing market transactions into a stalemate. Transactions in the Shanghai market were done in the RMB 16,200-16,350/mt range on Thursday.

Zinc

SHFE base metals prices plummeted in the morning session affected by a report that Chinese regulators are investigating positions in rubber futures, with SHFE 1012 zinc contract prices even plunging to RMB 17,190/mt. SHFE 1012 zinc contract prices still moved below the daily moving average, and finally closed at RMB 17,680/mt, with declines larger than SHFE copper and aluminum prices, down 2.29%. Trading volumes of SHFE 1012 zinc contract increased by more than 180,000 lots to 1.33 million lots, while positions declined by more than 50,000 lots to 200,000 lots. SHFE 1101 zinc contract prices tracked SHFE 1012 zinc contract price trends, with trading volumes reaching 1.2 million lots and positions increasing to 210,000 lots, and with the turnover rate of 600%. According to the list of trading volumes and positions, long momentum of SHFE 1101 zinc contract was stronger after a large number of long investors withdrew their funds from SHFE 1012 zinc contract, with signs of price gains still existent. 

Market players chose to stand on the sidelines as SHFE zinc prices plunged in the morning session. In the Shanghai spot market, #0 zinc was traded at RMB 17,250/mt, with some deals made at RMB 17,300/mt, but trading volumes were limited, while #0 zinc was traded around RMB 17,230/mt. In the Guangdong spot market, #0 zinc was traded between RMB 17,150-17,250/mt, while #1 zinc was traded between RMB 17,100-17,200/mt. Downstream inquiries were up when zinc prices plummeted in the morning session, but buying interest was low when prices were lower, and market players still stayed out of the market, keeping overall trading sentiment neutral.

Tin

LME tin prices opened at USD 21,100/mt and closed at USD 21,650/mt on Wednesday, up USD 700/mt from a day earlier, with the highest price at USD 21,700/mt and the lowest price at USD 20,925/mt. Daily trading volumes were 426 lots and positions were 16,209 lots. On Thursday, LME tin prices opened at USD 21,680/mt and fell sharply to test USD 21,225/mt

LME tin prices rallied along with other base metal prices boosted by strong equity markets as well as improved metal demand outlook due to the strong manufacturing data from China and the US. On Thursday, LME tin prices opened at USD 21,400/mt and moved relatively mildly later. Close attention should be paid to non-farm employment data to be released on Friday. Prices suffered early from an aggressive selloff during Asian trade as rumors circulated that Chinese authorities were investigating positions in the rubber market. LME tin inventories were up by 40 mt to 14,355/mt.

LME tin prices slipped sharply after receiving significant gains, and tin spot price in the Shanghai market were unchanged from a day earlier. Traded prices of unknown brand tin were between RMB 145,000-145,300/mt, and traded prices of unknown brand tin were between RMB 146,000-146,500/mt. Transactions for high-priced major brand tin at prices above RMB 146,500/mt were difficult. Overall demand was low, and trading sentiment remained quiet. 

Nickel

LME base metal prices ended with gains across the board on Wednesday, boosted by bullish sentiment and soft US dollar index. LME nickel prices experienced with largest gains by 3%, and closed at USD 22,815/mt, with the highest price at USD 22,930/mt and the lowest price at USD 21,925/mt. 

On Thursday, LME nickel prices opened at USD 22,850/mt and fell sharply from aggressive selloff around 9:00 as market rumored that Chinese authorities were investigating positions in the rubber market. Base metal pries all plunged, and LME nickel prices tumbled to USD 22,250/mt and later rebounded. LME nickel inventories were down by 324 mt to 118,956 mt.

In the Shanghai nickel spot market, transactions were sluggish, with downstream purchases accounting for 15% of total trading volumes. Mainstream traded prices of nickel from Jinchuan Group were between RMB 170,000-171,000/mt, up by RMB 1250/mt, and mainstream traded prices of nickel from Russia were between RMB 169,000-169,500/mt, up RMB 1,000/mt. Supported by positive fundamentals, some traders were unwilling to move goods when LME nickel prices tumbled on Thursday, and these traders believed that market outlook would be positive in the future. However, downstream were also unwilling to purchase goods for the consideration of high costs.

 

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