SMM Daily Review - 2011/6/28 Base Metals Market

SHANGHAI, Jun. 29 (SMM) --
Copper:
SHFE 1109 copper contract prices, the most active one, opened up by RMB 110/mt at RMB 67,160/mt on Tuesday, with prices fluctuating around RMB 67,300/mt during the whole trading day. SHFE three-month copper contract prices tried to move higher twice in the morning session, but failed due to resistance at the 30-day moving average of RMB 67,450/mt, and then gradually fell below the daily moving average as domestic stock market retreated from previous higher levels. In the afternoon session, SHFE three-month copper contract prices slid to RMB 67,000/mt following falling LME copper prices due to an increase in the US dollar index, but returned around the daily moving average at the tail of trading due to large position closings, with an intraday low level of RMB 67,060/mt. Finally, SHFE 1109 copper contract prices closed at RMB 67,170/mt, up RMB 170/mt or 0.18%. Positions for SHFE 1109 copper contracts were up 7,038 lots, while trading volumes were down 74,650 lots. SHFE three-month copper contract prices narrowed the fluctuating range. The shorts mainly made intraday transactions, increasing overnight risks for price fluctuations.

In the spot market, copper premiums reduced initially to positive RMB 50-150/mt given a high open in the SHFE copper market. Similar to yesterday, copper premiums fell further in major trading hours, to positive RMB 40-100/mt given continuous weak consumption. Traded prices for standard-quality copper were between RMB 68,250-68,350/mt in the morning session, and RMB 68,300-68,450/mt for high-quality copper. Cargo-holders reduced premiums significantly as they were eager to move goods for cash generation. Market supply was still dominated by imported copper. Fewer downstream producers entered into the market to make purchases due to cash flow pressures and financial problems, resulting in rising weak transactions. In the afternoon session, spot copper premiums fell along with the falling SHFE copper prices. High-quality copper could hardly hold at premiums of positive RMB 50/mt, standard-quality copper was forced to turn into discounts of negative around RMB 50/mt, and hydro-copper turned into large discounts of negative RMB 150/mt. Traded prices were between RMB 68,100-68,300/mt, and transactions failed to improve.   

Aluminum:
SHFE 1108 aluminum contract prices climbed rapidly to a two-week high of RMB 17,085/mt in the morning session after opening slightly higher at RMB 17,010 on Tuesday, with prices later moving around the daily moving average and finally closing at RMB 17,065/mt, up RMB 60/mt or 0.35% compared with the previous trading day. SHFE 1108 aluminum contract prices stabilized above RMB 17,000/mt, and are expected to test RMB 17,100/mt in the short term.  

Mainstream traded prices for spot aluminum were between RMB 17,170-17,190/mt in east China, with premiums of positive RMB 70-90/mt over SHFE current-month aluminum contract prices. SHFE current-month aluminum contract prices climbed to struggle at RMB 17,100/mt after opening higher in the morning, and spot aluminum prices rose to near RMB 17,200/mt in response. Traders moved goods aggressively at higher prices, but buying interest was low, keeping trading sentiment sluggish. SHFE aluminum prices fluctuated narrowly below the daily moving average in the afternoon, and mainstream traded prices for spot aluminum fell to between RMB 17,150-17,170/mt. Since most traders were reluctant to move goods, only limited lower-priced goods were available. However, buying interest was still low even at lower prices, with transactions still very sluggish.

Lead:
On Tuesday, SHFE lead prices climbed to a daily high of RMB 16,955/mt after opening, and maintained above RMB 16,900/mt, but failed to hit RMB 17,000/mt due to stronger short activities. SHFE lead prices fell back to around RMB 16,850/mt in the afternoon trading despite rising LME lead prices, finally closing at RMB 16,865/mt, up RMB 10/mt. Trading volumes were down 1,108 lots to 1,684 lots. Most market players were staying out of the market, with positions down 78 lots to 8,660 lots.

In China’s domestic lead spot markets, prices kept stable on Tuesday and unchanged from a day earlier, with well-known branded lead prices at RMB 16,180-16,230/mt and discounts against SHFE lead price around RMB 700/mt. High-priced transactions were limited. Lead from Gejiu, Yunnan province was quoted at around RMB 16,050/mt, while some Henan smelters offered at RMB 16,000-16,050/mt. Despite higher prices in the morning session, transactions were not boosted. In the afternoon, traders reduced sales in response of lower SHFE lead prices, with high-end lead spot prices falling to RMB 16,210/mt and continuously weak transactions.

Zinc:
On Tuesday, SHFE 1109 zinc contract prices opened higher tracking LME zinc prices overnight, and mostly moving around the moving average between RMB 17,400-17,450/mt in the morning session. At the end of trading, SHFE 1109 zinc contract prices finally closed at RMB 17,360/mt, or up RMB 110/mt. Trading volumes decreased by 10,000 lots to 285,500 lots, and total positions increased by 6,746 lots to 194,578 lots, with short momentum stronger.

Spot zinc prices rose as SHFE 1109 zinc prices opened higher in the morning session. #0 zinc was traded between RMB 17,150-17,200/mt, with discounts of RMB 200-230/mt against SHFE 1109 zinc contract prices. #1 zinc was traded around RMB 17,150/mt. Market players purchased actively since SHFE zinc prices opened high and moved higher, but then began to take a wait-and-see attitude since SHFE zinc prices met resistance, leaving the market quite at noon.

Tin:
On Tuesday in Shanghai tin spot markets, prices were unchanged from a day earlier. Mainstream traded prices for Nanshan, Kaiyuan and Guangsheng were around RMB 190,500/mt, while some transactions for tin from Yunnan Tin Group were made at RMB 190,500-192,500/mt. Despite some low-priced goods, mainstream prices managed to keep stable by virtue of stabilizing LME tin prices. Consumption remained soft, but prices find support at the RMB 190,000/mt mark, and are waiting for market direction from LME tin price movements.

Nickel:
LME nickel for delivery in three months opened at USD 21,925/mt and closed at USD 22,298/mt on Monday, up by USD 135/mt from a day earlier, with the highest price at USD 22,298/mt and the lowest price at USD 21,825/mt. LME nickel prices fluctuated narrowly after opening at USD 22,250/mt during the Asian trading hours on Tuesday, and surged to USD 22,460/mt from brief rally of the US dollar during the early European trading hours, with strong resistance at USD 22,500/mt. LME nickel inventories were down by 918 mt to 108,636 mt.

In the Shanghai nickel spot market, spot prices were almost flat from a day earlier. Mainstream traded prices of nickel from Jinchuan Group were around RMB 165,000/mt, and mainstream traded prices of nickel from Russia were in the RMB 162,500-162,600/mt range. Trading sentiment improved to certain extent, along with rebound of LME nickel prices and futures delivery by some traders. Some downstream consumers entered market, and transactions between traders increased, with overall trading sentiment brisker from a day earlier.  

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