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SMM Daily Review - 2011/11/10 Base Metal Market
Nov 11,2011 09:51CST
smm insight
SHFE 1201 copper contract prices opened 2,360/mt down at RMB 55,980/mt on Thursday, and the most active SHFE aluminum contract 1201 opened much lower at RMB 16,000/mt.

SHANGHAI, Nov. 11 (SMM) –

As LME copper prices slumped overnight, SHFE 1201 copper contract prices, the most active one, opened 2,360/mt down at RMB 55,980/mt on Thursday. After the opening, SHFE three-month copper contract prices slid quickly and directly tested support at RMB 55,000/mt. Since Chinese stock markets continued to plummet after a low open, down by 2%, SHFE three-month copper contract prices only fluctuated around the RMB 55,000/mt mark before falling by their daily limit at the tail of trading. Finally, SHFE 1201 copper contract prices closed at RMB 54,830/mt, down RMB 3,510/mt, or a loss of 6.02%. Positions for SHFE 1201 copper contracts were up 17,542 lots, while trading volumes were down 479,000 lots. SHFE copper prices were expected to extend the fluctuation for the foreseeable future.  
In the spot market, as SHFE copper prices plunged by nearly 6% and fell by their daily limit in the session, copper premiums rose to between positive RMB 100-200/mt in the morning business. Traded prices for standard-quality copper were between RMB 55,750-56,000/mt, and RMB 55,850-56,150/mt for high-quality copper. Cargo-holders of hedged copper were eager to move goods, keeping market supply sufficient during the whole trading day, and with low-quality copper dominating the market. Traders' purchasing interest was dampened by high spot copper premiums, while downstream producers slightly increased purchases, which helped promote market transactions. In the afternoon session, since SHFE copper prices remained weak and spot copper supply, especially high-quality copper, contracted compared with the morning business, spot copper premiums expanded slightly to between positive RMB 120-250/mt, but traded prices failed to touch RMB 56,000/mt.   


The most active SHFE aluminum contract 1201 opened much lower at RMB 16,000/mt on November 10th, and stayed near the opening price before finally closing RMB 330/mt or 2.03% lower at RMB 15,955/mt. Transactions during the day surged to 108,500 lots and positions of the contract increased 18,188 lots to 91,530 lots. With the Italian debt issue pushing the Euro zone to a dangerous edge, the most active SHFE aluminum contract is expected to slip further.

Shanghai spot aluminum was traded between RMB 16,030-16,060/mt on November 10th, with premiums of RMB 20-40/mt over the SHFE current-month aluminum price. Low-iron aluminum was traded between RMB 16,120-16,160/mt. Traded prices of spot aluminum in Wuxi were between RMB 16,000-16,040/mt. The bearish market sentiment gained strength after the SHFE current-month aluminum price dropped to near RMB 16,000/mt during the day. Spot aluminum prices also plunged to a new low of the year. Goods holders held their quotations firm above RMB 16,000/mt, which reversed previous discounts over the SHFE current-month aluminum price to premiums. The buying interest at lower prices was moderate.

On Thursday, SHFE lead prices opened RMB 200/mt lower at RMB 15,200/mt, then dipped to as low as RMB 14,605/mt, dragged down by stocks and SHFE copper prices. Finally, SHFE lead prices closed at RMB 14,670/mt, down RMB 755/mt, or a drop of 4.89%. Trading volume increased by 1,006 lots to 1,320 lots, and total position increased by 186 lots to 2,094 lots.

In domestic spot markets, goods supply available in the market increased apparently, with brands Nanfang, Chihong Zn & Ge, Jinli and Shuangyan, and with premiums of RMB 30-50/mt against SHFE three-month lead contract prices. Mainstream traded prices were between RMB 14,780-14,900/mt. Downstream buyers increased by purchases, causing transactions to improve.

On Thursday, SHFE three-month zinc contract prices opened lower at RMB 15,085/mt, and then plummeted to RMB 14,715/mt, fluctuating between RMB 14,510-14,780/mt. Trading volumes increased noticeably, with prices finally closing at RMB 14,510/mt, down RMB 930/mt. Trading volumes surged by nearly 30,000 lots to 548,888 lots, and total position increased by 46,670 lots to 238,056 lots.

In domestic spot markets, #0 zinc was traded between RMB 14,700-14,750/mt, causing downstream buyers to purchase actively. As a result, traded prices of #0 zinc were pushed up to as high as RMB 14,900/mt. Mainstream traded prices of #1 zinc were between RMB 14,700-14,800/mt. Smelters were holding goods as zinc prices fell, but traders were aggressively moving goods due to expanding premiums while downstream buying interest was strong, keeping transactions brisk.

Shanghai spot tin prices dropped slightly on November 10th following an overnight plunge in LME tin prices. Mainstream Yunxi, Yunheng, Tianti and Nancang branded tin was traded between RMB 178,000-181,000/mt. Market transactions were quite sparse due to weak demand. The continued plunge in LME tin prices during the day's trading indicated that domestic tin prices may dip further.

LME nickel prices fluctuated around USD 18,000/mt after opening at USD 18,165/mt during the Asian trading hours. During the early European trading hours, LME nickel prices plunged to hit a low of USD 17,850/mt due to increased risk aversion sentiment from worsening economic condition in Italy, but later rebounded above USD 18,000/mt. LME nickel inventories were 83,280 mt, up 120 mt from a day earlier.

In the Shanghai nickel spot market, sluggish performance of LME nickel prices dragged down spot nickel prices. Although spot nickel was offered in the RMB 133,000-135,000/mt range, actual transactions at these price levels were extremely limited. Mainstream traded price of nickel from Russia were in the RMB 131,000-131,500/mt range, and mainstream traded prices of nickel from Jinchuan Group were in the RMB 134,000-134,500/mt range. Transactions were quiet sluggish in the market, which forced traders to cut prices. However, price cut from traders still failed to boost market transactions.



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