SHANGHAI, Feb. 18 (SMM) --
SHFE three-month copper contract prices opened at RMB 75,600/mt on Thursday, and briefly reached RMB 75,710/mt after opening, but then fell back. After 11:00 am, the copper for delivery in three months in the SHFE market accelerated its declines due to profit-taking, and slid below RMB 75,000/mt before the end of morning session, with positions up nearly 10,000 lots. After the afternoon session began, the US dollar index rallied all the way, and SHFE copper market tracked the declines in the LME copper market, down as low as RMB 74,520/mt. In addition, the lack of upward momentum for stock prices at 2,900 points also weighed on the SHFE copper market. Finally, SHFE three-month copper contract prices closed at RMB 74,680/mt, down RMB 650/mt, or a drop of 0.86%. Positions for SHFE three-month copper contract prices were up 8,584 lots to 206,800 lots, and trading volumes were up 2,334 lots to 168,292 lots, a sign of increasing trading in the day. SHFE three-month copper contract prices dropped below the 10-day moving averages, and finally closed below the mark, suggesting that SHFE copper market will follow LME copper market to experience corrections in the short term.
In the spot market, spot discounts were offered between negative RMB 450-300/mt. In the morning business, traded prices of standard-quality copper were between RMB 73,800-74,000/mt, and RMB 73,950-74,150/mt for high-quality copper. Copper futures prices moved lower after a high open, and dropped further after 11:00 am, but spot discounts remained, with ample supply. Copper prices in the SHFE market continued to fall in the afternoon session, and little changes in spot discounts sent traded prices down from RMB 73,600/mt to RMB 74,000/mt. Smelters remained on the sidelines due to limited changes in spot discounts, and buyers were also wary of purchases due to expectations of price corrections. Transactions dropped from a day earlier, as the narrowing price difference between short-term and forward-month copper contracts reduced arbitraging trading.
Although SHFE 1104 aluminum contract remained the most active contract based on the positions at the closing, trading volumes of SHFE 1105 aluminum contract increased significantly. On Thursday, SHFE 1105 aluminum contract prices climbed further to RMB 17,270/mt after opening slightly higher at RMB 17,205/mt. Later, as many long investors exited the market after profit-taking, and the Shanghai Stock Exchange composite index fell back, SHFE 1105 aluminum contract prices gradually lost previous gains, and even hit a low of RMB 17,125/mt in the afternoon session, with prices finally closing at RMB 17,150/mt, down RMB 15/mt. Total trading volumes were 38,344 lots, and positions increased slightly by 1,094 lots. SHFE aluminum prices will continue to fluctuate in a narrow band in view of high spot aluminum inventories and weak downstream consumption.
Spot aluminum prices climbed slightly to between RMB 16,780-16,800/mt in east China following SHFE aluminum prices, with discounts remaining between RMB 100-120/mt against SHFE current-month aluminum contract prices. Suppliers remained optimistic toward market outlook. SHFE aluminum prices were moving below the daily moving average, and although downstream inquiries were limited in spot markets, and buying interest remained low, suppliers remained optimistic toward future aluminum consumption and kept offers firm. Almost no deals were made above RMB 16,800/mt, and overall market transactions were sluggish. The conditions of sufficient supply and sluggish demand are expected to improve gradually after the Lantern Festival on February 17th.
In China’s domestic lead markets, most smelters showed strong selling sentiment on Thursday, due to ample market supply since they maintained normal production during the Chinese New Year holiday period. Downstream producers had not resumed production completely, and were standing on the sidelines in the wake of LME lead prices fluctuating at the USD 2,600/mt mark, keeping transactions muted. Traders offered at RMB 17,350/mt for well-known branded lead in the morning, with limited transactions, but did not cut offers significantly even through LME lead prices fell in the afternoon. Mainstream traded prices were RMB 17,050-17,100/mt for “Gejiu” lead and RMB 17,250-17,300/mt for well-known branded lead on Thursday.
On Thursday, SHFE 1105 zinc contract prices opened higher at RMB 20,020/mt, with positions surging by over 20,000 lots within one hour in the morning session. SHFE 1105 zinc contract prices touched RMB 20,220/mt during the day, but then fell to RMB 19,750-19,950/mt as market players closed positions after profit-taking, with prices finally closing at RMB 19,760/mt, up RMB 115/mt, or with a gain of 0.59%. A lot of investors left the market after profit-taking. Total positions of SHFE 1105 zinc contracts decreased by 4,964 lots to 292,944 lots. Trading volumes increased significantly by 280,000 lots to 882,926 lots, with the turnover rate above 300%. SHFE zinc contract prices still stabilized above the 5-day moving average.
SHFE zinc contract prices opened higher but then fell from RMB 20,000/mt on Thursday. Speculative capital surged into SHFE zinc market. But in spot markets, most downstream buyers were adopting a wait-and-see attitude, leaving the overall transaction quiet. #0 zinc was traded above RMB 19,100/mt in the morning session, but with transactions limited, and then fell to RMB 19,000/mt with discounts of RMB 800-850/mt against SHFE 1105 zinc contract prices. #1 zinc was traded between RMB 18,850-18,900/mt. Spot transactions were even weaker when SHFE zinc prices fell slightly in the afternoon, with offers mostly between RMB 19,000-19,100/mt, but with transactions weak. Spot discounts were between RMB 800-900/mt, but trading volumes did not improve.
In Shanghai tin markets, mainstream traded prices rose slightly on Thursday from a day earlier. Transactions for tin from Yunnan Tin Group, Gejiu Zili Metallurgy Company and some minor branded tin were made between RMB 202,000-203,500/mt, and traders said transactions remained muted. Price gains in Shanghai tin markets slowed down, due to weaker downstream demand and falling LME tin prices. In this context, SMM expects spot prices in Shanghai tin markets to stabilize in the short term.
LME nickel prices opened at USD 28,705/mt and closed at USD 28,730/mt on February 16th, up by USD 30/mt from a day earlier, with the highest price at USD 28,850/mt and the lowest price at USD 28,450/mt. Daily trading volumes were 2,197 lots and positions were 108,765 lots. During the Asian trading hours on February 17th, LME nickel prices opened at USD 28,701/mt, and began to slip significantly from 16:00 to hit the lowest at USD 28,025/mt, due largely to profit-taking. The US dollar index fluctuated higher to 78.35. LME nickel inventories were down by 174 mt to 129,924 mt. Eramet Nickel announced on Thursday that nickel output at its Doniambo smelter will grow by around 6% in 2011.
In the Shanghai nickel spot market, prices continued to slip and transactions were sluggish. In the morning trading hours, nickel from Jinchuan Group was traded around RMB 217,000/mt and nickel from Russia was traded around RMB 216,000/mt. In the afternoon trading hours, market players largely adopted a wait-and-see attitude and market sentiment became cautious due to slip of LME nickel prices and weak demand in spot market. In this context, spot nickel prices continued to slip, with nickel from Jinchuan Group at RMB 216,000/mt and nickel from Russia at RMB 215,000/mt.
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