SMM Daily Review - 2011/2/1 Base Metals Market

SHANGHAI, Feb. 9 (SMM) --

Copper

SHFE 1105 copper contract prices, the most active one, opened with significant gains at RMB 74,550/mt and fluctuated higher later. Prices mostly moved around RMB 74,950/mt, and constantly test high level after 2:00 pm, with prices touching intraday high at RMB 75,620/mt and closing at RMB 75,580/mt, the highest since June 2006. Trading volumes were 102,224 lots. Power of longs and shorts were both weak before Chinese New Year holiday, resulting in quiet trading sentiment.

In the Shanghai copper spot market, most traders were off on holiday, and supply of goods was limited in the market. Spot discount for high-quality copper were at negative RMB 400-450/mt, while spot discounts for standard-quality copper were between RMB 500-550/mt. Spot discount expanded with the constantly rising SHFE copper contract prices, but actual traded prices were up by RMB 1,000/mt from a day earlier, depressing downstream buying interest and resulting in few trading volumes. During the mainstream trading hours, fluctuations were relatively quiet, and spot discount were remain in the RMB 400-550/mt range. In the afternoon trading hours, spot transactions almost stagnated due to bank settlement during the last working day before Chinese New Year holiday.

Aluminum

Last Tuesday, SHFE three-month aluminum contract prices rebounded to RMB 17,000/mt and once hit RMB 17,145/mt boosted by other metal prices, and finally closed at RMB 17,130/mt, up RMB 235/mt from the previous trading day. The market was optimistic toward aluminum prices due to strong LME aluminum prices and the improving transaction, and aluminum prices are expected to rise after the Chinese New Year holiday.

Spot aluminum prices rose along with SHFE aluminum prices, but the overall transaction was still weak as most suppliers and buyers were on the holiday. Mainstream traded prices of spot aluminum in east China were between RMB 16,690-16,710/mt, with spot discounts expanding to RMB 30-60/mt.

Lead

The overall transaction was weak last Tuesday as it was the last trading day before the Chinese New Year, and most traders and manufacturers were on the holiday. Offers were limited but firm, with some offers at RMB 17,100/mt and most offers at RMB 17,000/mt.

Zinc

Last Tuesday, metal prices rose as the US dollar index plummeted. SHFE three-month zinc contract prices opened at RMB 19,120/mt, and then rose to RMB 19,490/mt in the afternoon, with prices finally closing at RMB 19,460/mt, up 4.2%. Trading volumes increased by 48,592 lots to 248,938 lots, and total positions decreased by 35,414 lots to 179,812 lots, with prices stabilizing at 20-day moving average. The weakening US dollar index will boost metal prices recently, and speculations that China will take further tightening monetary policies continue. In this context, zinc prices should be on the rise.
 
SHFE zinc prices opened high at RMB 19,120/mt boosted by LME zinc prices, and then fluctuated above the daily moving average, with prices hitting RMB 19,350/mt near 11:00 am. Spot transactions were very weak and both smelters and traders were on the holiday. SMM offers of #0 zinc were up RMB 450/mt to RMB 18,550-18,650/mt. The market took a optimistic attitude towards zinc prices during 2011.

Tin

LME tin prices opened at USD 29,600/mt and closed at USD 30,240/mt on January 31st, up by USD 739/mt, with the highest price at USD 30,240/mt and the lowest price at USD 29,600/mt. Daily trading volumes were 290 lots and positions were 21,015/mt. During the Asian trading hours on February 1st, LME tin prices moved lower after opening high at USD 30,400/mt, and hit the lowest at USD 30,200/mt. The US dollar continued to be weak, lending support for base metal prices.

In the Shanghai tin spot market, traders were all off on holidays, with no transactions reported.

Nickel

In the Shanghai nickel spot market, Jinchuan Group raised ex-works nickel prices by RMB 3,000/mt to RMB 208,000/mt, but there were no transactions reported.

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