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SMM Daily Review – 2011/9/21 Base Metals Market
Sep 22,2011 09:43CST
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SHFE 1112 copper contract prices, the most active one, opened down RMB 370/mt at RMB 62,480/mt on Wednesday.

SHANGHAI, Sept. 22 (SMM)--

SHFE 1112 copper contract prices, the most active one, opened down RMB 370/mt at RMB 62,480/mt on Wednesday. SHFE three-month copper contract prices moved lower after the opening, since short investors continued to increase position holdings, with prices dropping to a new yearly low of RMB 61,830/mt. In the afternoon session, People’s Bank of China (PBOC) said the country's newly increased RMB funds stemming from foreign exchanges totaled RMB 376.9 billion in August, still higher than July’s RMB 219.6 billion, and markets believed the PBOC would probably introduce new monetary policies to boost domestic demand. As a result, capitals rushed into Chinese stock markets, which then surged. SHFE three-month copper contract prices were lifted by rising Chinese stock markets, and reversed earlier losses. However, since short investors again imposed pressures at above RMB 63,000/mt, SHFE three-month copper contract prices couldn’t move up further after touching RMB 63,000/mt, and basically fluctuated around RMB 62,950/mt in the afternoon session. Finally, SHFE 1112 copper contract prices ended the day at RMB 62,940/mt, up RMB 90/mt or a gain of 0.14%. Positions for SHFE 1112 copper contracts were up 5,602 lots, and trading volumes were up 127,000 lots.

In the spot market, SHFE copper prices moved higher after a low open, while low sentiment in the spot market eased. In this context, cargo-holders held price offers firm in the morning business, with premiums reported between positive RMB 20-120/mt. However, SHFE current-month copper contract prices increased by nearly RMB 800/mt near the midday, increasing cargo-holders’ willingness in moving goods but dampening downstream producers’ buying interest. As a result, spot copper premiums fell rapidly, and standard-quality copper was even traded at discounts. Traded prices for standard-quality copper were between RMB 62,600-62,900/mt in the morning business, and RMB 62,700-63,100/mt for high-quality copper. Market surpluses were still more pronounced, and transactions were more cautious before rising copper prices were confirmed. SHFE copper prices fluctuated at high levels in the afternoon session, and mentality of buyers and sellers changed due to stable copper prices, with cargo-holders holding goods and downstream producers actively making purchases. Traded prices already surged between RMB 63,150-63,450/mt.   

Most active SHFE 1111 aluminum contract opened lower at RMB 17,155/mt on September 21st, and rebounded later with climbing Shanghai stock prices to broke through the 5-day moving average. The contract remained strong in the afternoon, and finally closed at RMB 17,290/mt, up RMB 115/mt or 0.67% from previous trading day. Positions of the contract decreased 5,576 lots to 103,036 lots. Position transfer to SHFE 1112 aluminum contract continued during the day.

Traded prices of spot aluminum in Shanghai were between RMB 17,530-17,560/mt on September 21st, with premiums of RMB 100-120/mt over SHFE current-month aluminum price. Mainstream traded prices of spot aluminum climbed in the morning with gaining SHFE aluminum prices. Goods holders’ selling interest at lower prices was weak and downstream buyers were slightly cautious. Transactions slightly rose in the market, but were mainly reselling among traders. In the afternoon, as SHFE aluminum prices remained strong with current-month aluminum price climbing to RMB 17,450/mt, goods holders became unwilling to sell their goods. Quotations were also lifted to RMB 17,580/mt by traders, whereas transactions were rarely seen.

On Wednesday, SHFE lead prices inched down after opening, gaining back previous losses as of 10:00 am. Domestic well-known brands such as Nanfang and Chihong Zn & Ge were quoted at RMB 15,680/mt, with prices rising to RMB 15,700/mt later the day, and remaining close to SHFE 1110 lead contract prices. Other brands such as Baiyin were quoted at RMB 15,670/mt. Traders were cautious due to optimism, keeping transactions quiet. Prices of well-known brands rose to RMB 15,800/mt in the afternoon, while prices of other brands were up to RMB 15,750/mt. SHFE 1111 lead contracts became the most actively traded, with discounts remaining around negative RMB 150 against SHFE 1111 lead contract prices. The market sentiment improved in the afternoon, with SHFE lead prices stabilizing. Downstream buying interest was high, keeping transactions brisk.

On Wednesday, SHFE 1112 zinc contracts became the most actively traded, with prices opening at RMB 16,280/mt in the morning session and then dipping to RMB 16,075/mt. Boosted by the Shanghai Stock Exchange composite index, SHFE 1112 zinc contract prices gained back previous looses to close at RMB 16,455/mt, up RMB 120/mt. Trading volumes increased by 140,000 lots to 385,630 lots, and total positions increased by 14,984 lots to 188,496 lots.
In domestic spot markets, #0 zinc was traded between RMB 16,000-16,050/mt in the morning session, with discounts between negative RMB 50-60/mt against SHFE 1111 zinc contract prices. Spot zinc was traded as high as RMB 16,300/mt at noon, with discounts of negative 100/mt against SHFE 1111 zinc contract prices. #1 zinc was traded between RMB 15,950-16,250/mt. The market was active as zinc prices began to rebound, keeping transactions brisk.

Spot tin price in Shanghai continued to drop on September 21st as LME tin price was falling near previous low and imported tin eroded the already weak domestic consumption. Prices of branded tin from Jiangxi dropped to RMB 189,000-190,000/mt. Yunheng branded tin traded between RMB 191,000-192,000/mt. Yunxi branded tin traded between RMB 194,000/mt. Continuously dropping spot prices also damped smelters’ confidence to hold price. Market transactions, however, remained sparse despite continuously sliding prices

On Tuesday, LME nickel prices opened at USD 21,100/mt and closed at USD 21,066/mt, up USD 60/mt from a day earlier, with the highest price at USD 21,445/mt and the lowest price at USD 20,905/mt. On Wednesday, LME nickel prices slipped slightly after opening at USD 21,000/mt during the Asian trading hours, but later ceased to decline and advanced to hit a high of USD 21,350/mt. During early European trading hours, LME nickel prices pared certain gains from stronger US dollar, still moving below moving averages without making any breakthrough. LME nickel inventories were 97,638 mt, down 408 mt. 

In the Shanghai nickel spot market, spot nickel prices fluctuated wider from a day earlier. During the morning trading hours, spot nickel prices were largely flat from a day earlier due to stable performance of LME nickel price, with mainstream traded prices of nickel from Russia around RMB 154,500/mt and mainstream traded prices of nickel from Jinchuan Group in the RMB 155,000-157,000/mt range. During the afternoon trading hours, spot nickel prices advanced along with LME nickel prices, with mainstream traded prices in the RMB 155,500-158,000/mt range. Some traders were reluctant to move goods, leading to no improvement in spot transaction. Overall trading sentiment was moderate, with deals largely done among traders but limitedly done from downstream producers.

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