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SMM Daily Review - 2011/11/17 Base Metals Market
Nov 18,2011 09:20CST
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SHFE 1201 copper contract prices followed LME copper prices to open slightly down by 230/mt at RMB 56,980/mt on Thursday.

SHANGHAI, Nov. 18 (SMM) --


SHFE 1201 copper contract prices followed LME copper prices to open slightly down by 230/mt at RMB 56,980/mt on Thursday. After the opening, SHFE three-month copper contract prices extended losses on the prior day and temporarily tested support at RMB 56,000/mt, but met profit-taking by short investors after falling to RMB 55,920/mt. As a result, downside pressures eased and SHFE three-month copper contract prices tracked rising LME and Chinese stocks prices to gradually return above RMB 57,000/mt, and climbed to RMB 57,420/mt in the afternoon session. At the tail of trading, SHFE copper prices lost rising momentum as short-term speculators left the market, and SHFE 1201 copper contract prices finally closed at RMB 57,010/mt, down RMB 200/mt or 0.35%. SHFE 1202 copper contract prices were RMB 55,610/mt at the low-end and RMB 57,130/mt at the high-end, and finally ended at RMB 56,680/mt, down RMB 270/mt. Positions and trading volumes for SHFE 1201 copper contracts were down 47,470 lots and 160,000 lots, respectively, while positions and trading volumes for SHFE 1202 copper contracts were up 23,690 lots and 339,000 lots, respectively, a signal of the competition of the shift of the most actively-traded copper contracts. SHFE copper prices would test the 30-day moving average.     

In the spot market, although SHFE copper prices moved higher after a low open, a significant drop in copper supply, especially high-quality copper supply, helped cargo-holders quote firm copper premiums between positive RMB 450-550/mt. Quotations for copper premiums rose to between positive RMB 500-650/mt near the midday, keeping downstream producers cautious towards purchases during the whole trading day. In the afternoon session, as SHFE copper prices continued to drift higher, copper premiums fell slightly to between positive RMB 300-450/mt, while highest traded prices already touched RMB 58,000/mt. Market activity was very quiet in the afternoon due to a drop in supply and low buying interest.


The most active SHFE aluminum contract 1201 opened at the settling price of the previous trading day at RMB 16,155/mt and closed RMB 25/mt or 0.15% lower at RMB 16,130/mt on November 17th. Positions of the contract decreased 3,292 lots to 75,652 lots as both longs and shorts reduced their holdings after a four-day drop in the contract. SMM expects the most active SHFE aluminum contract to first consolidate at RMB 16,100/mt in the short term before a possible rebound.

Traded prices of spot aluminum in Shanghai were between RMB 16,060-16,090/mt on Thursday, with discounts of RMB 20/mt to premiums of RMB 10/mt over the SHFE current-month aluminum price. In the morning, spot aluminum price fell below RMB 16,100/mt as SHFE current-month aluminum price continued to drop. Thus, goods holders were reluctant to move goods, narrowing discounts and even leading to premiums over the SHFE current-month aluminum price. Buyers were cautious due to stagnating futures prices. Transactions were moderate as a result. In the afternoon, the SHFE current-month aluminum contract recovered some losses. Goods movements were limited with quotations falling between RMB 16,050-16,070/mt. Transactions were moderate as a result of low buying interest even at lower prices.


SHFE 1201 lead contract prices dipped to RMB 15,170/mt after opening at RMB 15,295/mt on Thursday. But prices gained buying support at RMB 15,270/mt, and stopped falling to move around RMB 15,250-15,280/mt. In the afternoon, SHFE lead prices rose to RMB 15,350-15,400/mt due to rising stocks, and finally closed at RMB 15,395/mt, up RMB 165/mt. Trading volumes increased slightly by 12 lots to 460 lots, and positions increased by 52 lots to 1,662 lots.

SHFE lead prices rallied after dipping to the intraday low on Thursday. Quotations for domestic well-known brands such as Nanfang and Chihong Zn & Ge, Yuguang were RMB 15,300-15,330/mt early in the day, with premiums against SHFE 1201 lead contract prices of RMB 50/mt. As SHFE lead prices rebounded at nearly 11: 00 a.m., spot prices rose in response, and with premiums against SHFE 1201 lead contract prices remaining unchanged. Spot prices were mainly between RMB 15,360-15,400/mt, with transactions were still quiet.


On Thursday, SHFE 1201 zinc contract prices continued to fall after opening, dipping to as low as RMB 15,050/mt, finding support and rallied to the moving average. Boosted by the Shanghai Composite Index, SHFE 1201 zinc contract prices surged to the intraday high RMB 15,360/mt at noon, and fluctuated between RMB 15,200-15,300/mt in the afternoon, with prices finally closing at RMB 15,245/mt, up RMB 45/mt. Positions of SHFE 1201 zinc contract decreased by 16,166 lots to 142,414 lots, and SHFE 1202 zinc contract became the most actively traded, with positions increasing by 5,028 lots to 144,632 lots.

In domestic spot markets, market confidence was depressed as SHFE zinc prices plunged after opening in the morning session. #0 zinc was traded between RMB 15,100-15,150/mt in the morning, but downstream buying interest was low. Traded prices of #0 zinc rose to RMB 15,150-15,200/mt later the day, with premiums of RMB 20/mt against SHFE 1201 zinc contract prices, with transactions made at the low end. #1 zinc was traded between RMB 15,100-15,150/mt. Spot prices were close to SHFE zinc prices at noon, but downstream buyers were still cautious. Transactions of imported zinc were muted as prices were only RMB 10-20/mt lower than domestic zinc prices.


Shanghai spot tin prices slipped a little bit on November 17th as a result of continued weakness in LME tin and weak demand. Mainstream Yunxi, Yunheng, Yunxiang, Nanshan and Jinlong etc. branded tin was traded between RMB 177,000-180,000/mt. A lowest traded price of RMB 176,500/mt was also seen during the day’s trading, with limited traded volumes though. Supply near RMB 177,000/mt was also limited, even though deals at higher prices were hardly reached. Transactions remained limited as weak downstream demand continued.


LME nickel prices fluctuated around USD 18,000/mt after opening at USD 17,950/mt during the Asian trading hours on Thursday, with the highest price at USD 18,100/mt and the lowest price at USD 17,800/mt. The concern over the European debt crisis made investors conduct transactions cautiously and kept LME nickel pries fluctuating at low levels. LME nickel inventories were 83,220 mt, down 378 mt from a day earlier.

In the Shanghai nickel spot market, spot nickel prices were virtually unchanged from a day earlier. Mainstream traded prices of nickel from Russia were between RMB 130,500-131,000/mt, and mainstream traded prices of nickel from Jinchuan Group were around RMB 133,000/mt. Trading sentiment was relatively quiet in the market, as sluggish performance of LME nickel prices dampened traders’ confidence. Coupled with soft downstream demand, transactions were hard to improve.

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