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SMM Daily Review - 2011/8/10 Base Metals Market
Aug 11,2011 09:53CST
price review forecast
base metal; base metal price;

SHANGHAI, Aug. 11 (SMM) --


As LME copper prices opened higher overnight after stabilizing on the previous trading day, SHFE 1110 copper contract prices opened up RMB 2,170/mt at RMB 67,000/mt on Wednesday. SHFE three-month copper contract prices tried several times to move higher in the morning business, but failed after touching an intraday high RMB 67,360/mt, due to pressures at the daily moving average. Coupled with downside movements in domestic stock markets in the afternoon session, SHFE three-month copper contract prices basically fluctuated below the daily moving average, reaching a low level at RMB 66,550/mt. Since large short-term speculative funds left the market at the tail of trading, SHFE three-month copper contract prices broke the resistance of daily moving average. Finally, SHFE 1110 copper contract prices closed at RMB 67,090/mt, up RMB 2,260/mt, or a gain of 3.49%. Positions for SHFE 1110 copper contracts were down 2,124 lots, and trading volumes were down 144,000 lots, while positions for SHFE 1111 copper contracts were up 8,792 lots, suggesting cautious market transactions, as both the longs and shorts need further confirmation on whether or not SHFE copper prices would extend the rebound.        

In spot market, SHFE copper prices opened more than 4% higher, but market players were still skeptical about the stability of prices, keeping downstream producers cautious towards purchases. In this context, copper offers in the morning business were quoted between discounts of negative RMB 80/mt and premiums of positive RMB 0/mt. Near the midday, some trader’s buying interest slightly increased for high-quality due to discounts and the approach of delivery dates, helping improve transactions for high-quality copper. As a result, offers for high-quality copper gradually turned into premiums of positive 0-20/mt, and spot copper offers were reported between discounts of negative RMB 50/mt and premiums of positive RMB 20/mt. Trade prices for standard-quality copper were between RMB 66,950-67,050/mt, and RMB 67,000-67,150/mt for high-quality copper. Overall transactions were weak. SHFE copper prices were little changed in the afternoon session, and offers were basically flat with morning levels. Traded prices also remained almost the same, and transactions were limited. 


Most active SHFE aluminum contract prices opened 3% higher at RMB 17,330/mt on August 10th, and slightly rose in the morning to struggle at RMB 17,500/mt. In the afternoon, after standing above the 5-day moving average, most active SHFE aluminum contract prices further rose to hit the 10-day moving average but failed to break through due to strong resistance. Finally closed price was RMB 17,590/mt, up RMB 605/mt or 3.56%. SHFE aluminum followed strong rebound of other base metals with most active SHFE aluminum contract prices recovering previous gaps. The rebounding trend also forced shorts to exit the market with position falling by over 12,000 lots during the day. SMM expects SHFE aluminum prices to struggle at RMB 17,500/mt given insufficient long confidence.

Mainstream trading prices of spot aluminum in Shanghai on August 10th were between RMB 17,960-18,000/mt, with premiums of positive RMB 110-150/mt over SHFE current-month aluminum prices. SHFE current-month aluminum prices gapped higher at RMB 18,000/mt today, boosting goods holders confidence to sell at RMB 18,000/mt. However, as spot premiums were kept firm after aluminum prices surged, buying interest turned low in the market, which pulled down mainstream trading prices with even spot premiums lower than RMB 100/mt reported. Market transactions were rare. In the afternoon, SHFE current-month aluminum prices recovered previous loss, but fluctuated at RMB 17,980/mt with premiums narrowing to RMB 20/mt due to scarce purchase. Meanwhile, most active SHFE aluminum contract prices opened 3% higher on August 10th and struggled at RMB 17,500/mt in the morning session, pushing back spot aluminum prices to above RMB 18,000/mt in south China. Mainstream trading prices were between RMB 18,150-18,190/mt. Goods holders were unwilling to sell due to limited supply, and market supplies turned scarce despite reduced downstream purchases compared with previous day. Market sentiment was active.


On Wednesday, SHFE 1110 lead contract prices opened higher at RMB 16,300/mt, then fell to fluctuate around RMB 16,000/mt. In the afternoon, SHFE lead prices touched RMB 16,605/mt, tracking LME lead prices, with prices finally closing at RMB 16,480/mt, up RMB 455/mt, or up 2.84%. Trading volumes decreased by 1,516 lots to 3,344 lots, while total positions increased by 156 lots to 4,614 lots.

SHFE lead prices opened higher and moved around RMB 16,000/mt, boosting spot lead prices to rise RMB 250/mt. Well-known brands such as Nanfang and Chihong Zn & Ge were quoted at RMB 15,930/mt, with discounts of RMB 250-300/mt against SHFE 1109 lead contract prices. Other brands such as Baiyin were generally quoted between RMB 15,900-15920/mt. Traders began to stand on the sidelines as SHFE lead prices moved lower, leaving transactions quiet in the morning session. In the afternoon, spot lead prices rose along with SHFE lead prices. Well-known brands such as Chihong Zn & Ge, Nanfang, Shuikoushan and Chengyuan were traders between RMB 16,100-16,150/mt, while other brands were traded between RMB 15,950-16,000/mt. Goods supply available in the market decreased at lower prices, while market players increased purchases as lead prices stabilized, causing transactions to improve. The Gejiu brand was modestly available in the market, with prices quoted between RMB 15,830-15,850/mt, and was sold out soon.


On Wednesday, SHFE three-month zinc contract prices opened higher at RMB 16,650/mt, tracking LME zinc prices overnight, and generally fluctuated between RMB 16,500-16,700/mt during the day, with prices finally closing at RMB 16,710/mt, up RMB 575/mt, or up 3.56%. Trading volumes decreased significantly by 300,000 lots to 398,622 lots, and total positions decreased by 4,880 lots to 191,648 lots. SHFE 1111 zinc contract prices became more actively traded, with total positions increasing by 21,112 lots to 136,324 lots.

As SHFE 1110 zinc contract prices opened higher and fluctuated around the moving average, spot transactions were brisk. #0 zinc was traded between RMB 16,400-16,450/mt, with some brands traded as high as RMB 16,500/mt, with discounts of RMB 200-250/mt against SHFE 1110 zinc contract prices. #1 zinc was traded between RMB 16,380-16,400/mt. Downstream buyers were active due to rebounding zinc prices, keeping transactions brisk. As goods supply was tight in south China since smelters in Guangxi province were affected by power restrictions, spot prices surged to RMB 16,600-16,700/mt. Besides traders and downstream buyers, transactions were also made among smelters.


Spot tin prices in Shanghai stood steady at RMB 190,000/mt on August 10th supported by rebounding LME tin prices, market transactions also improved. Mainstream trading prices during the day were between RMB 190,000-193,000/mt, mainstream trading brands were Yunxi, Yunheng and Nanshan. Market players said wait-and-see attitude was strong in the morning since rebounding of LME tin prices was relatively low. In the afternoon, after LME tin prices rose further, both market transactions and trading prices rose. For instance, Yunxi branded tin was traded at RMB 192,000/mt in the morning and transactions at RMB 193,000/mt were reported in the afternoon. Limited by weak downstream consumption, rebounding of domestic tin prices was relatively slow compared with LME tin prices.


LME nickel for delivery in three months opened at USD 21,500/mt and closed at USD 21,500/mt on Tuesday, up by USD 199/mt from a day earlier, with the highest price at USD 21,967/mt and the lowest price at USD 20,200/mt. The Federal Reserve announced to keep ultra low interest rate unchanged till 2013 on Tuesday night, easing market panic sentiment and boosting base metal market. On Wednesday, LME nickel prices opened at USD 21,500/mt and advanced to hit a high of USD 22,050/mt, due to support from lower US dollar index. LME nickel inventories were up by 294 mt to 102,876 mt.

Jinchuan Group cut ex-works nickel prices by RMB 5,000/mt to RMB 164,000/mt on Wednesday. In the Shanghai nickel spot market, spot prices advanced significantly from a day earlier. Traded prices were mixed. Mainstream traded prices of nickel from Russia were around RMB 165,000/mt, and mainstream traded prices of nickel from Jinchuan Group were around RMB 166,000/mt. However, overall trading sentiment was quiet, as faltered sentiment restricted transactions. Although LME nickel prices rebounded on Tuesday, most market players still made transactions cautiously.


base metal; base metal price;

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