Metals News
SMM Daily Review - 2010/12/1 Base Metals Market
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SHANGHAI, Dec. 2 (SMM) --


SHFE copper market moved higher after a high open on Wednesday. The copper for delivery in three months opened at RMB 62,970/mt, and stabilized in the RMB 63,000 -63,300/mt range in the morning session. In the afternoon, China’s stocks market showed an upward trend, and LME copper prices advanced as well. In this context, SHFE three-month delivery copper contract prices rose above RMB 63,500/mt, and finally closed at RMB 63,670/mt, up RMB 1,380/mt, or a gain of 2.22%. Positions for SHFE 1103 copper contracts were up 2,930 lots to more than 160,000 lots, while trading volumes fell to less than 240,000 lots. SHFE copper market finally succeeded to make breakthroughs on Wednesday after fluctuating at around the 60-day moving average for a sixth straight trading day, and the next target is to test the 30-day moving average.

Spot trading sentiment improved greatly on the first trading day of December. The stabilizing SHFE copper prices strengthened trader confidence towards the outlook. Hence, traders were not in hurry to move goods in the morning business, with spot discounts at around negative RMB 150/mt. As the price difference between high-quality and standard-quality copper was only RMB 50/mt, transactions of high-quality copper enjoyed advantages, dealing between RMB 62,550-62,750/mt, and deals were mainly done between traders. Spot copper prices rallied in tandem with rising SHFE copper prices in the afternoon business, and spot discounts remained unchanged, with traded prices up to RMB 62,800-63,050/mt, and transactions of high-quality copper were made around RMB 63,000/mt. Downstream producers increased purchases after standing on the sidelines for more than a week. In general, overall trading sentiment improved significantly on Wednesday.


SHFE 1102 aluminum contract prices opened slightly lower at RMB 16,190/mt, and were weaker than other base metals prices in the morning session, with the lowest prices reported at RMB 16,150/mt. SHFE 1102 aluminum contract prices climbed to RMB 16,220/mt in the afternoon session driven up by rising Shanghai Stock Exchange composite index, and finally closed at RMB 16,195/mt, up RMB 30/mt. SHFE aluminum prices were obviously weaker than other base metals prices, and lacked upward momentum, with trading sentiment sluggish. SHFE aluminum prices are expected to continue to fluctuate around the 5-day moving average if inflows of speculative funds report no increases.

Spot aluminum prices in east China slipped in the morning business when SHFE 1012 aluminum contract prices edged lower, and deals were mainly made at prices flat at SHFE 1012 aluminum contract prices, with traded prices between RMB 15,860-15,880/mt. Traders were reluctant to move goods as they made no profits by hedging, and downstream producers also purchased on an as-needed basis, keeping market sentiment sluggish. Traded prices climbed slightly in the afternoon business, but market sentiment remained weak.        

In China’s domestic lead markets, downstream producers remained low buying interest on Wednesday despite gains in LME lead prices, keeping trading sentiment quiet. Traded prices remained at around RMB 17,000/mt. At present, downstream producers are still unclear about market outlook, but may be stimulated to purchase if LME lead prices keep rising in several consecutive days.


On Wednesday, SHFE 1103 zinc contract prices opened slightly higher at RMB 17,485/mt boosted by LME zinc prices overnight, with prices fluctuating between RMB 17,450-17,550/mt in the morning session, and later prices rose to between RMB 17,550-17,600/mt in the midday. Since the US dollar index fell slightly in the midday, LME zinc prices rallied to USD 2,150/mt from USD 2,120/mt in response, and the Shanghai Stock Exchange composite index gained, both boosting SHFE 1103 zinc contract prices to between RMB 17,650-17,750/mt. SHFE 1103 zinc contract prices finally closed at RMB 17,665/mt, up RMB 275/mt, or up 1.58%, with prices climbing to the 10-day moving average. Trading volumes decreased by 400,000 lots to 865,968 lots, and total positions increased by 2,000 lots to 276,998 lots. A large number of long positions left the market after profit-taking.

On Wednesday, SHFE zinc prices rallied tracking LME zinc prices overnight, with prices moving between RMB 17,450-17,600/mt in the morning session. In Shanghai spot market, traded prices of #0 zinc were between RMB 17,000-17,050/mt, with discounts of RMB 570/mt against SHFE 1103 zinc contract prices, and spot discounts of some imported zinc were around RMB 630/mt against SHFE 1103 zinc contract prices; traded prices of #1 zinc were between RMB 16,950-17,000/mt. In Guangdong spot market, traded prices of #0 zinc were between RMB 17,000-17,050/mt, and traded prices of #1 zinc were between RMB 16,850-16,900/mt. Zinc spot prices rose along with SHFE zinc prices, with some brands traded around RMB 17,100/mt. Market speculations of price trends were mixed as to zinc prices at RMB 17,000/mt mark.

Downstream buyers reduced their purchases after zinc prices rallied to RMB 17,000/mt level given sufficient inventories recently. Some traders were holding goods on expectation that zinc prices should further rise. Since smelters were unwilling to sell goods at lower prices recently, goods supplies were mainly available from arbitrage traders. As a result, market supplies decreased.


In Shanghai tin markets, mainstream traded prices kept stable on Wednesday. Most transactions were made for tin from Gejiu Zili Metallurgy Company, with traded prices between RMB 156,800-157,500/mt. Price for tin from Yunnan Tin Group was RMB 160,000/mt, and unknown brand tin was traded at RMB 156,700/mt. Despite volatile LME tin prices recently, SMM expects prices in China’s domestic tin markets will continue to be stuck in the short term, amid insufficient supply and weak consumption in domestic markets.  


LME nickel market opened at USD 22,600/mt and ended at USD 22,845/mt on Tuesday, up by USD 185/mt or up by 0.82% from a day earlier, with the highest price at USD 23,225/mt and the lowest price at USD 22,400/mt. LME nickel prices ended with gains across the board.

During the Asian trading hours on Wednesday, LME nickel prices opened low at USD 22,850/mt and then climbed all the way to test USD 23,452/mt. LME nickel inventories were up by 936 mt to 131,802 mt. The US consumer confidence index in November climbed to a 5-month high, and growth of Midwest manufacturing index was better than expectation. China’s official purchasing managers’ index (PMI) has been above 50 consecutively for 21 months. The euro versus the US dollar advanced slight during the Asian foreign exchange markets on Wednesday, but still remained at an 11-week low level. Base metal market was not negatively affected by macro economy concern on Wednesday, pointing to positive upward track.

In the Shanghai nickel spot market, Jinchuan Group raised ex-works nickel prices by RMB 3,000/mt to RMB 178,000/mt amid tepid transactions. After nickel price hike by Jinchuan Group, traders also lifted offers to RMB 178,000/mt, but buying was still not brisk. With LME nickel prices surging later on Wednesday, traders who moved goods in the morning trading session actively replenished stocks.


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