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SMM Daily Review - 2011/8/31 Base Metals
Sep 1,2011 09:44CST
price review forecast
Source:SMM
SHFE 1111 copper contract prices, the most active one, opened slightly up RMB 70/mt at RMB 68,220/mt on Wednesday, with the prices moving like the shape of “V”.

SHANGHAI, Sept. 1 (SMM) –

Copper

SHFE 1111 copper contract prices, the most active one, opened slightly up RMB 70/mt at RMB 68,220/mt on Wednesday, with the prices moving like the shape of “V”. SHFE three-month copper contract prices followed LME copper prices to move downward after the opening, but gained support near RMB 68,000/mt, with an intraday low of RMB 67,960/mt. In the afternoon session, as LME copper prices continued to climb after breaking the morning resistance of USD 9,150/mt due to a drop in the US dollar index, and since Chinese stock markets turned into increasing from falling, SHFE three-month copper contract prices kept advancing. Finally, SHFE 1111 copper contract prices closed at the intraday high of RMB 68,360/mt, up RMB 210/mt or a gain of 0.31%. Positions for SHFE 1111 copper contracts were down 5,002 lots, while trading volumes were up 48,894 lots. The longs reported profit-taking at highs, and increases of sell-off pressures of the shorts were limited. As markets were waiting for China’s PMI data to be announced the following day and the US non-farm payrolls to be released Friday, market players would make operations till a clearer price trend, with cautious sentiment persistent in the market.   

In spot market, SHFE copper prices fell after a high open, but circulating copper sources in the market fell slightly due to cash flow pressures on the last trading day of August. Traders with no cash flow problems quoted price offers firm, helping copper discounts narrow. As a result, copper offers were initially quoted between discounts of negative RMB 100-0/mt, but later weak consumption dragged spot copper offers, which caused copper discounts to expand slightly to negative RMB 120-20/mt. Trade prices for standard-quality copper were between RMB 68,050-68,100/mt in the morning business, and RMB 68,100-68,200/mt for high-quality copper. Imported copper accounted for most of the market circulation during the whole trading day. Downstream producers made fewer purchases due to cash flow problems, which led market transactions to fall significantly, highlighting the characteristic of the month’s end. SHFE copper prices rebounded in the afternoon session, spot discounts expanded further. Discounts for standard-quality copper were negative RMB 200-150/mt, and negative RMB 150-100/mt for high-quality copper. The highest traded prices rose already to RMB 68,300/mt.      

Aluminum

As LME aluminum prices surged 2% overnight, most active SHFE 1111 aluminum contract opened higher at RMB 17,510/mt on August 31st in response. The contract hit an intraday high of RMB 17,525/mt in the morning, but soon fluctuated downward to a lowest RMB 17,420/mt during the day as a result of profit-taking. The contract finally closed at RMB 17,475/mt, up RMB 35/mt or 0.20% after narrowly fluctuating near RMB 17,450/mt. While the contract stagnated due to a lack of capital support, transactions during the day also dropped to less than 30,000 lots with low investor confidence. SMM expects the contract to test RMB 17,500/mt in the short term.

Trading prices of spot aluminum in Shanghai were between RMB 17,790-17,830/mt on August 31st, with premiums of RMB 90-120/mt over SHFE current-month aluminum prices. Due to tight capital supply among both suppliers and buyers on the last day of August, lower spot quotes were rarely seen despite excessive supply, and spot aluminum prices in Wuxi was pushed to the same levels in Shanghai. Market transactions were sparse. Spot quotes slightly rose to RMB 17,800-17,820/mt in the afternoon after SHFE current-month aluminum prices gained. After financial settlements, goods holders were in no need of active selling, while purchasers on the other hand lacked capital to buy, with no market transactions reported.

Lead

On Wednesday, SHFE lead prices opened higher at RMB 16,940/mt, boosted by LME lead prices overnight, once touching RMB 16,985/mt, but met resistance at RMB 17,000/mt level, finding support at the 5-day moving average. In the afternoon, SHFE lead prices rallied due to rising stock markets, with prices finally closing at RMB 16,955/mt, up RMB 35/mt. Trading volumes increased by 178 lots to 1,166 lots, while total positions decreased by 58 lots to 4,134 lots.

In domestic spot markets, discounts of well-know brands remained around negative RMB 450/mt against SHFE 1110 lead contract prices, with brands such as Nanfang and Chihong Zn & Ge quoted at RMB 16,500/mt. In the afternoon, prices for Chihong Zn & Ge and Nanfang rose to RMB 16,500/mt, pushed up by SHFE lead prices, but with prices for other brands remaining relatively unchanged. Transactions were quiet due to cash flow problems at the end of the month.

Zinc

On Wednesday, SHFE three-month zinc contract prices opened slightly higher at RMB 17,380/mt, with prices fluctuating around the moving average in the morning session. Dragged down by LME zinc prices, SHFE three-month zinc contract prices fell to a intraday low RMB 17,270/mt at noon, but rallied along with the rebounding LME zinc prices in the afternoon, with prices finally closing at RMB 17,360/mt, up RMB 70/mt, above the 5-day moving average. Trading volumes decreased by nearly 160,000 lots to 248,168 lots, and total positions decreased by 4,106 lots to 261,666 lots.

In domestic spot markets, as SHFE three-month zinc contract prices fluctuated around the moving average in the morning session and then fell, prices for #0 zinc were between RMB 17,000-17,050/mt in the morning session, then dropped to RMB 17,000/mt, with discounts remaining at negative RMB 180/mt against SHFE 1110 zinc contract prices. #1 zinc was traded around RMB 16,950/mt. Downstream buying interest was low at RMB 17,000/mt, leaving the overall transactions muted. Spot discounts expanded to negative RMB 200-230/mt against SHFE 1110 zinc contract prices along with rising SHFE zinc prices, some buyers with sufficient cash flow increased purchases due to optimistic speculations.

Tin

Market supplies in Shanghai tin market remained limited due to strong wait-and-see sentiment among goods holders in consideration of production cost and unstable LME tin prices. On the other side, traders and downstream buyers were also cautious towards purchases while waiting for non-farm payroll data from the US. Mainstream Nanshan, Yunxi and Tianti branded tin was mainly traded between RMB 194,500-196,500/mt. Yunheng branded tin won’t enter the market until its arrival in Shanghai during next week, and its RMB 196,000/mt quote was also a little bit high among mainstream trading prices. Market transactions remained sluggish during the day.

Nickel

On Tuesday, LME nickel prices fluctuated higher after opening at USD 21,701/mt and closed at USD 21,910/mt, up by USD 210/mt from a day earlier, with the highest price at USD 22,049/mt and the lowest price at USD 21,650/mt. On Wednesday, LME nickel prices opened low at USD 21,805/mt. The US dollar was weighed below 74, sending LME nickel price to a high of USD 22,025/mt. LME nickel prices test sustainability at USD 22,000/mt. LME nickel inventories were 103,800 mt, down 1,980 mt.

In the Shanghai nickel spot market, although LME nickel prices only advanced limitedly on Tuesday, Jinchuan Group raised ex-works nickel prices by RMB 2,000/mt to RMB 163,000/mt on Wednesday. In response, offers of spot nickel also advanced by RMB 1,000/mt. Advance in LME copper and nickel prices made traders reluctant to move goods, waiting to move goods at higher prices. However, debt crisis in the US and EU still haunted market, making traders cautiously build stocks. Mainstream traded prices of nickel from Russia were in the RMB 162,500-162,800/mt range, and mainstream traded prices of nickel from Jinchuan Group were in the RMB 163,300-163,800/mt range. Transactions were slightly brisk from a day earlier.

 

base metals

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