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SMM Daily Review - 2011/12/9 Base Metal Market
Dec 12,2011 09:52CST
smm insight
Source:SMM
SHFE 1202 copper contract prices opened RMB 700/mt lower at RMB 57,110/mt Friday, and the most active SHFE three-month aluminum contract opened slightly lower at RMB 16,090/mt.

SHANGHAI, Dec. 12 (SMM) –

Copper
Due to declines in LME copper prices overnight, SHFE 1202 copper contract prices, the most active one, opened RMB 700/mt lower at RMB 57,110/mt Friday. After the opening, China announced both November's CPI and PPI fell, but it had a limited impact on copper markets. LME copper prices still came under pressure at the 10-day moving average, and SHFE three-month copper contract prices faced resistance at levels near the 60-day moving average of RMB 57,500/mt. SHFE three-month copper contract prices basically fluctuated around the daily moving average during the whole trading day, with the low-end prices getting support at RMB 57,050/mt. Finally, SHFE 1202 copper contract prices closed at a recent low of RMB 57,070/mt, down RMB 740/mt or 1.28%. Positions for SHFE 1202 copper contracts were down 4,390 lots, and trading volumes were down 51,970 lots. Market investors had little interest in keeping up with rising prices, and SHFE copper prices faced growing upside pressures.

In the spot market, SHFE copper prices failed to move higher after a low open, but sufficient copper supply caused offers to generally be reported at discounts, while only some cargo-holders could maintain slight premiums. Mainstream copper offers were quoted between discounts of negative RMB 150/mt and premiums of positive RMB 20/mt in the morning business. Traded prices for standard-quality copper were between RMB 57,700-57,800/mt in the morning session, and RMB 57,800-57,900/mt for high-quality copper. Copper discounts were limited during the whole trading day, and market transactions improved slightly compared with the previous day levels due to approach of the weekends. In the afternoon session, SHFE copper prices continued to remain weak, but spot copper was traded at discounts across the board due to increasing bearish sentiment, with discounts reported between negative RMB 200-30/mt. Traded prices fell to between RMB 57,600-57,800/mt in the afternoon session, and market transactions were down from the morning business levels. SHFE copper inventories were up by 15,057 mt to 72,712 mt in the week ending December 9th due to an increase in imported copper, which would dampen spot copper markets in the coming week.

Aluminum

The most active SHFE three-month aluminum contract opened slightly lower at RMB 16,090/mt and closed at RMB 16,140/mt after China's CPI growth came out in line with market expectations. Transactions rose to 11,026 lots while positions dropped 2,236 lots to 65,914 lots. Though temporary support can be found at the 10-day moving average, future direction of the metal is to be determined by the news side. The SHFE aluminum stock climbed 6,948 mt to 184,363 mt. The largest increase was seen at the Shanggang warehouse in Shanghai. Spot aluminum stocks declined, however, at warehouses in Guangdong, Jiangsu and Zhejiang.

Spot aluminum trading remained depressed during the day even though the November CPI came out meeting market expectations. Domestic spot aluminum stock is rising slowly and supply has turned normal in the Northwest China region. Traders moved goods at discounts in Shanghai and Wuxi etc. regions during the day as downstream purchases remained limited. Spot aluminum trading slightly improved in South China's Nanhai, which local traders said were results of lower prices compared with other regions. Spot aluminum was traded between RMB 16,120-16,140/mt in Nanhai, Guangdong. At present most smelters are pessimistic towards future aluminum prices, saying that “the winter is coming”.

Lead
Last Friday, SHFE lead prices opened RMB 200/mt lower at RMB 15,540/mt as investors were depressed by negative news overnight. Later in the day, prices moved between RMB 15,600-15,650/mt with pressure at the 5-day moving average, and finally closed at RMB 15,640/mt, down RMB 90/mt. Trading volumes decreased by 84 lots to 278 lots, and positions decreased by 70 lots to 1,992 lots.

In domestic spot market, quotations for domestic well-known brands such as Nanfang, Chihong Zn & Ge were between RMB 15,620-15,630/mt, with discounts against the most active SHFE lead prices of negative RMB 20/mt. Other brands such as Baiyin, Shuangyan were traded around RMB 15,800/mt. In the afternoon, prices remained stable, with most brands traded at RMB 15,600/mt. Market players stayed on the sidelines with the approach of the weekend and ahead of the opening of EU summit, leaving the market quiet.

Zinc
Last Friday, SHFE three-month zinc contract prices opened slightly lower at RMB 15,535/mt, and then edged up to RMB 15,600/mt as a large number of longs entered the market. SHFE three-month zinc contract prices moved above the moving average during the day, fluctuating between RMB 15,600-15,650/mt, and finally closed at RMB 15,650/mt, down RMB 85/mt. Trading volumes decreased by over 10,000 lots to 162,966 lots, and total position decreased by 452 lots to 149,424 lots, with prices meeting resistance at the 10-day moving average.
In domestic spot markets, #0 zinc prices were RMB 120-160/mt below SHFE three-month zinc contract prices, between RMB 15,480-15,300/mt. Import discounts were around negative RMB 200/mt. Cargo holders were moving goods actively, but downstream buyers were purchasing on an as-needed basis, leaving transactions quiet.

Tin
Shanghai spot tin prices stabilized on December 9th, with Yunshan, Yunxiang and Kaiyuan trading between RMB 158,800-160,500/mt and Yunheng plus a small volume of Yunxi branded tin trading between RMB 162,500-164,000/mt. Even though LME tin dropped to struggle near the USD 2,000/mt mark, smelters were holding goods with some optimism towards results of the EU summit during the day. It is heard that a large Yunnan smelter has halted production this month for maintenance and the date to resume production is yet unknown. This is expected to provide limited support for the metal, however, due to a weak demand.

Nickel
LME nickel futures contract for delivery in three months fluctuated higher to hit the highest of USD 18,349/mt after opening at USD 18,150/mt during the Asian trading hours last Friday.  The European Central Bank (EBC) announced to cut benchmark interest rate to record low of 1% on 20:45 December 8th (Beijing time). However, the positive impact from EBC interest rate cut was overshadowed by EBC chief's negative remarks and divided opinions of the EU members.  Last Friday, China's November CPI announced on December 9th was up 4.2% YoY to hit a 14-month low. Nevertheless, the development of EU summit scheduled on December 9th will be major factor affecting market movement. LME nickel inventories were down by 306 mt to 90,042 mt last Friday.

In the Shanghai nickel spot market, spot nickel prices advanced slightly on Friday due to Thursday's LME nickel price hike. Traded prices of nickel from Jinchuan Group were in the RMB 130,000-130,300/mt range, and mainstream traded prices of nickel from Russia were in the RMB 128,500-128,800/mt range. However, trading sentiment was still lackluster, and total transactions did not change much.  Although some traders replenished stocks due to their bullish expectation over nickel price outlook, but the limited amount of stock replenishment failed to boost overall market transactions. Generally speaking, last Friday's transactions increased slightly from previous days, but were still considered limited.

 

 

base metals; base metal prices

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