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SMM Daily Review - 2011/8/3 Base Metals Market
Aug 4,2011 09:33CST
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Source:SMM
SHFE 1110 copper contract prices, the most active one, opened down RMB 330/mt at RMB 71,900/mt on Wednesday, with weak rising momentum during the whole trading day.

SHANGHAI, Aug. 4 (SMM) --
Copper:
SHFE 1110 copper contract prices, the most active one, opened down RMB 330/mt at RMB 71,900/mt on Wednesday, with weak rising momentum during the whole trading day. SHFE three-month copper contract prices gained support after dropping briefly to RMB 71,850/mt after opening, tracking LME copper prices to move stably higher. Coupled with rising domestic stock markets in the morning business, SHFE three-month copper contract prices gradually pared Tuesday’s losses, but met resistance at the 20-day moving average of RMB 72,280/mt. LME copper prices also met pressures at this price mark, causing stock markets to fall from initially increasing, and leading SHFE three-month copper contract prices to lose RMB 72,000/mt again. Finally, SHFE 1110 copper contract prices closed at RMB 72,060/mt, down RMB 170/mt, or a loss of 0.24%. Positions for SHFE 1110 copper contracts were up 5,400 lots, while trading volumes were down 32,830 lots. With the existing resistance at the 20-day moving average, both the longs and shorts were wary of building new positions. Hence, SHFE three-month copper contract prices were expected to continue to make corrections.     

In spot market, SHFE copper prices moved higher after a low open, and cargo-holders showed slight unwillingness in moving goods due to growing market optimistic sentiment, resulting in limited market supply. However, copper discounts were not seen to increase but were still quoted between negative RMB 250-150/mt. Trade prices for standard-quality copper were between RMB 71,600-71,700/mt in the morning business, and RMB 71,650-71,850/mt for high-quality copper, essentially flat with the previous trading day. Downstream producers continued to make purchases at low prices, and market transactions continued to improve compared with a day earlier. In the afternoon session, as SHFE current-month copper contract prices dropped from high levels, spot copper discounts fell slightly, with discounts for high and standard-quality copper reported at around negative RMB 150/mt and RMB 190/mt, respectively. Traded prices were flat with morning levels, but trading sentiment was lower.        

Aluminum:
Most active SHFE 1110 aluminum contract prices opened lower at RMB 18,285/mt on August 3rd, and surged later with strong long momentum to above the 5-day moving average. Most active SHFE aluminum contract prices climbed to RMB 18,500/mt after positions rose by over 20,000 lots, and finally closed at RMB 18,520/mt, up RMB 185/mt or 1.01% from previous trading day. As SHFE aluminum gained despite falling of other metals pries, market confidence for aluminum prices recovered following temporary fluctuation, and SMM expects SHFE aluminum prices to hit RMB 18,645/mt again after consolidating at RMB 18,500/mt.

Mainstream traded prices of spot aluminum in Shanghai on August 3rd were between RMB 18,640-18,660/mt, with premiums of positive RMB 40-60/mt over SHFE current-month aluminum prices. In the morning, as SHFE aluminum prices gained over 1% despite falling of other metals prices, spot aluminum prices rebounded to above RMB 18,600/mt in response. Selling interest at higher prices was strong among goods holders. Purchases among consumers also slightly increased as they were building up inventories. Market transactions were significantly improved compared with previous trading day. In the afternoon, as SHFE aluminum prices narrowly fluctuated, spot premiums were maintained at positive RMB 60/mt over SHFE current-month aluminum prices. Recent stable spot premiums also led to growing strong market confidence for spot aluminum. However, market transactions were rare during the day as a result of scarce purchases.

Lead:
On Wednesday, SHFE lead prices opened slightly lower at RMB 17,085/mt, fluctuating around the moving average, and surged to RMB 17,280/mt at around 11:00 am, boosted by rising LME lead prices and stocks. In the afternoon, SHFE lead prices continued fluctuating between RMB 17,220-17,280/mt, but lost previous gains to close at RMB 17,090/mt at the end of trading, down RMB 100/mt. Trading volumes decreased by 606 lots to 1,042 lots, and total positions decreased by 352 lots to 5,450 lots.

SHFE lead prices opened lower and rose. In domestic spot markets, well-known brands such as Nanfang and Tongguan were at first quoted at RMB 16,770/mt, with discounts of negative RMB 350-370/mt against SHFE 1109 lead contract prices. At around 11:00 am, prices of well-known brands rose to RMB 16,800-16,830/mt along with SHFE lead prices, with discounts unchanged. Other brands such as Shuangyan and Baiyin were quoted between RMB 16,700-16,730/mt. Yuguang brand of lead was available in the market, with offers at RMB 16,850/mt. Some traders were actively purchasing at higher prices. As SHFE lead prices fell in the afternoon, offers of well-known brands were dropped to RMB 16,750/mt, and other brands were quoted around RMB 16,700/mt. The market was cautious as SHFE lead prices fell, leaving transactions muted.

Zinc:
On Wednesday, SHFE 1110 zinc contract prices opened lower at RMB 18,440/mt, with prices moving between RMB 18,300-18,400/mt in the morning session. Boosted by LME zinc prices, SHFE 1110 zinc contract prices rose to RMB 18,535/mt, touching the 20-day moving average. At the end of trading, SHFE 1110 zinc contract prices finally closed with declines at RMB 18,395/mt as a large number of longs left the market, down RMB 125/mt. Trading volumes increased by 6,000 lots to 287,348 lots, and total positions decreased by 2,722 lots to 241,020 lots.

In spot markets, SHFE zinc prices opened lower and rose slightly at noon, while #0 zinc was traded at RMB 18,000/mt in the morning session, with discounts of negative RMB 400/mt against SHFE 1110 zinc contract prices. Pushed up by SHFE zinc prices, spot zinc prices climbed to RMB 18,050/mt later the day, and with discounts expanding to negative RMB 450/mt. #1 zinc was traded between RMB 17,950-18,000/mt. Smelters were holding goods at RMB 18,000/mt, while traders were aggressively selling goods given narrowing discounts, keeping transactions brisk. Downstream buyers increased purchases, but were still cautious.

Tin:
In Shanghai tin markets, as plunging LME tin prices dampened market confidence, selling at low prices among a small number suppliers were reported, and traders were forced to lower their quotes as a result. Mainstream traded brands were Yunxi, Yunheng and Nanshan, with traded prices between RMB 202,500-204,500/mt. Overall goods movements were limited due to lower market confidence. Some market players believe market sentiment will not be significantly affected by price movements, as weak consumption is the main cause for low market confidence. During current low-demand season, tin demand is even less due to power restrictions and tight capital supply, and peak-season of this year is expected to come later than previous years.

Nickel:
LME nickel for delivery in three months opened at USD 24,650/mt and closed at USD 24,700/mt on Tuesday, up by USD 65/mt from a day earlier, with the highest price at USD 24,850/mt and the lowest price at USD 24,451/mt. LME nickel futures contract for delivery in three months fluctuated narrowly between 5-day and 10-day moving average after opening at USD 24,650/mt during the Asian trading hours on Wednesday, with prices hitting the lowest of USD 24,430/mt. Although LME nickel prices slipped after rallying for four consecutive days, LME nickel prices were still able to hold above 5-day moving average, and found support at USD 24,300/mt. LME nickel inventories were down by 42 mt to 102,900 mt.

In the Shanghai nickel spot market, spot prices were relatively soft due to Wednesday's LME nickel price decline. Purchasers’ acceptance towards spot nickel prices at RMB 180,000/mt was still low, so trading sentiment was still quiet in the market. In addition, volatile LME nickel prices dampened cargo-holders’ confidence, with limited transactions reported. Mainstream traded prices of nickel from Jinchuan Group were in the RMB 179,800-180,000/mt range, and mainstream traded prices of nickel from Russia were in the RMB 179,200-179,500/mt range. Few downstream consumers entered market, and deals were largely done among traders.  

 

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