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SMM Daily Review - 2011/7/29 Base Metals Market
Aug 1,2011 09:46CST
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Source:SMM
SHFE 1110 copper contract prices, the most active one, opened RMB 270/mt higher at RMB 72,980/mt on Friday, with prices falling after initially increasing during the whole trading day.

SHANGHAI, Aug. 1 (SMM) --
Copper:
SHFE 1110 copper contract prices, the most active one, opened RMB 270/mt higher at RMB 72,980/mt on Friday, with prices falling after initially increasing during the whole trading day. At the opening of trading in the morning, SHFE three-month copper contract prices were pushed up to RMB 73,480/mt by the longs, but then fluctuated around RMB 73,400/mt after meeting resistance. Near the midday, as LME copper prices dived, SHFE three-month copper contract prices lost RMB 73,000/mt. In the afternoon session, SHFE three-month copper contract prices basically moved below RMB 73,000/mt and touched a low level at around RMB 72,510/mt, as LME copper prices lowered to test USD 9,800/mt due to a rebound in the US dollar index, and since the Shanghai Composite Index slumped 1%. Finally, the most actively-traded copper contract prices failed to pare loses, closing at RMB 72,660/mt, down RMB 50/mt or 0.07%. Positions for SHFE 1110 copper contracts were up 3,734 lots, and trading volumes were up 46,504 lots. Market sentiment for intraday trading improved, but volumes for opening and closing positions by the longs were nearly the same due to concerns towards overnight risks. With technical support at the 5-day moving average available, SHFE three-month copper contract prices would likely move upward.

In the spot market, copper discounts increased to negative RMB 550-400/mt in the morning session as SHFE copper prices set new highs for the month, but fell to negative RMB 400-300 near the midday trading session as SHFE copper prices retreated nearly RMB 400/mt. Traded prices were still held firm at RMB 72,000/mt. Trade prices for standard-quality copper were between RMB 72,000-72,100/mt in the morning session, and RMB 72,050-72,250/mt for high-quality copper. As Friday was the last trading day before the month-end, tight cash flow problems kept chances of real transactions slim, resulting in low trading volumes. As copper prices in the SHFE market continued to slump in the afternoon session, spot copper discounts fell further to negative RMB 350-200/mt. Traded prices dropped from above RMB 72,000/mt to RMB 71,900-71,950/mt, with fewer market players making purchases. Copper inventories monitored by the Shanghai Future Exchange (SHFE) were up 5,021 mt to 117,067 mt in the week ending July 29th, as cash flow pressures at the month-end and wary sentiment over high prices caused market oversupply and increases in copper inventories.   

Aluminum:
Most active SHFE 1110 aluminum contract prices opened lower at RMB 18,380/mt on July 29th. After total positions sharply decreased by over 19,000 lots due to profit-making by the longs, SHFE 1110 aluminum contract prices plunged and hit RMB 18,200/mt. Finally closed price was RMB 18,210/mt, down RMB 245/mt or 1.33% from previous trading day. SHFE aluminum prices erased gains of the previous day to the RMB 18,200/mt mark after 3 successive days of rising. Falling aluminum prices in turn cooled down investor confidence and forced some longs to exit the market. However, support for aluminum prices at the 5-day moving average remained strong, and SMM expects aluminum prices to fluctuate in the short term. Latest SHFE aluminum inventories fell by 22,062 mt to 181,715 mt. Though aluminum prices fell, positive market fundamentals are expected to push up aluminum prices.

Morning mainstream traded prices of spot aluminum in Shanghai on July 29th were between RMB 18,450-18,550/mt, with premiums of positive RMB 40-60/mt over SHFE current-month aluminum prices. In the morning, as SHFE aluminum prices opened lower and moved downward with even short-term plunge reported, spot aluminum prices further dipped. Though goods holders increased their supplies, purchases were rare on the last trading day of July. Both suppliers and buyers have turned cautious after aluminum prices plunged. In the afternoon, SHFE current-month aluminum prices continued to fall, and spot aluminum prices followed with slight premiums. Mainstream traded prices were between RMB 18,350-18,380/mt. Market transactions were quite rare due to scarce purchases on Friday which was also the last trading day of July.

Lead:
Last Friday, SHFE lead prices surged along with SHFE copper prices in the morning session, then plummeted by RMB 350/mt within a quarter, to RMB 17,430/mt. SHFE lead prices rallied to fluctuate between RMB 17,600-17,660/mt at noon, but lost previous gains to close at RMB 17,540/mt, down RMB 160/mt. Trading volumes increased by 320 lots to 2,356 lots, and total positions decreased by 394 lots to 6,372 lots.

SHFE lead prices opened higher and then fluctuated, with prices plummeting as of 10:30 am, dragging down domestic spot lead prices. Well-known brands such as Chihong Zn & Ge were quoted at RMB 17,170/mt, with discounts against SHFE 1109 lead contract prices between negative RMB 500-550/mt, and with offers falling to RMB 17120. Offers of other brands such as Chengyuan, Shuikoushan and Shuangyan were firm between RMB 17,100-17,150/mt. In the afternoon, downstream buying interest was low due to unfavorable offers and tight cash flow, keeping transactions muted.

Zinc:
Last Friday, SHFE 1110 zinc contract prices generally moved between RMB 18,900-19,000/mt in the morning session, but fell to RMB 18,700/mt at noon, dragged down by falling Shanghai Stock Exchange composite index. In the afternoon, SHFE 1110 zinc contract prices moved between RMB 18,700-18,800/mt, and fell further at the end of trading to close at RMB 18,735/mt, down RMB 250/mt, or down 1.32%. Trading volumes decreased by over 50,000 lots to 361,382 lots, and total positions decreased by 13,166 lots to 240,678 lots.

SHFE 1110 zinc contract prices generally moved between RMB 18,900-19,000/mt in the morning session. #0 zinc was traded between RMB 18,450-18,500/mt, with discounts of negative RMB 600-630/mt against SHFE 1110 zinc contract prices. Spot prices fell to RMB 18,250-18,300/mt at noon along with SHFE zinc prices, and with discounts against SHFE 1110 zinc contract prices narrowing to RMB 500-530/mt. #1 zinc was traded between RMB 18,200-18,250/mt. Downstream buyers increased purchases due to falling prices, but the overall transactions were still quiet. #0 zinc was traded around RMB 18,250/mt in the afternoon as SHFE zinc prices fluctuated.

Tin:
Tin prices fell on July 29th as a result of weak upward momentum of LME prices and weak consumption. Nanshan and Jinlong branded tin was traded between RMB 204,600-205,000/mt, Yinsheng was traded between RMB 205,400/mt and Yunxi between RMB 206,000-206,300/mt. Overall market transactions were a little bit sluggish. Though some smelters who had been holding goods increased supplies, the traders’ purchasing interest was low as tin prices were expected to fall in the short term and consumption was weak.

Nickel:
LME nickel for delivery in three months opened at USD 24,300/mt and closed at USD 24,650/mt last Thursday, up by USD 250/mt from a day earlier, with the highest price at USD 24,700/mt and the lowest price at USD 24,230/mt. LME nickel prices largely fluctuated stably after opening at USD 24,600/mt during the Asian trading hours on Friday, but fell at the tail of the trading and hit a low of USD 24,410/mt. During the early European trading hours, LME nickel prices extended weak momentum, but were still on upward track technically. LME nickel inventories were down by 390 mt to 102,540 mt.

Jinchuan Group raised ex-works nickel prices by RMB 2,000/mt to RMB 178,000/mt on Friday, boosting spot nickel prices to certain extent. Transactions were largely made during the morning trading hours, as trading sentiment was dampened when LME nickel prices slipped during the afternoon trading hours. Mainstream traded prices of nickel from Jinchuan Group were in the RMB 178,300-178,500/mt range, and mainstream traded prices of nickel from Russia were in the RMB 177,700-178,000/mt range. Spot nickel prices were boosted by Jinchuan Group’s consecutive increases in ex-works nickel  prices, but trading sentiment was low due to purchasers’ low price acceptance. Coupled with sluggish performance of LME nickel prices on Friday, overall trading sentiment was lackluster. 

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