SMM Daily Review - 2011/12/22 Base Metals Market

SHANGHAI, Dec. 23 (SMM) --

Copper

SHFE 1203 copper contract prices opened slightly down by RMB 80/mt at RMB 54,460/mt Thursday. SHFE three-month copper contract prices got temporary support at the 5-day moving average of RMB 54,299/mt after the opening, and were pushed up to a high of RMB 54,850/mt near the midday. In the afternoon session, SHFE three-month copper contract prices followed LME copper prices to rise further, but met resistance after touching the RMB 55,000/mt level at the tail of trading. Finally, SHFE 1203 copper contract prices closed at RMB 54,870/mt, up RMB 330/mt or 0.61%. Positions for SHFE 1203 copper contracts were down 2,660 lots, while trading volumes were up 80,746 lots. SHFE copper prices were restricted between the 5- and 10-day moving averages during the trading day, and tried to break out resistance at RMB 55,000/mt.

In the spot market, as SHFE copper prices rose abruptly near the midday following a low open, and as copper supply was sufficient due to cargo-holders’ strong willingness in moving goods at prevailing high price levels, copper discounts appeared across the board and expanded all the way. Daily traded prices for standard-quality copper were between RMB 54,850-55,000/mt, and RMB 54,950-55,150/mt for high-quality copper. Restriction in finance settlement resulted in extremely limited market transactions in the morning session, despite increasing copper discounts. In the afternoon business, SHFE copper prices continued to increase, but traded prices for spot copper failed to rise further. Spot copper discounts expanded further in the afternoon session, with mainstream discount offers rising to between negative RMB 300-150/mt, and market transactions still stagnated.

Aluminum

SHFE aluminum for three-month delivery opened at RMB 15,800/mt and closed RMB 35/mt or 0.22% lower at RMB 15,790/mt on Thursday. SMM expects the contract to see the low end dropping to RMB 15,700/mt as pressure is mounting at the RMB 15,800/mt mark and fundamentals were depressive.

Traded prices of spot aluminum in Shanghai were between RMB 15,970-16,000/mt on Thursday, with discounts of RMB 0-30/mt over the SHFE current-month aluminum price. In the morning, the SHFE current-month aluminum price struggled at the RMB 16,000/mt mark and goods holders were actively moving goods, but downstream consumption did not improve. As a result, spot aluminum prices fell below RMB 16,000/mt. Despite narrowing spot discounts due to lower selling interest after the decline, transactions remained quiet. In the afternoon, the SHFE current-month aluminum price continued to struggle near RMB 16,000/mt and deals were hardly seen in the afternoon, with only sparse quotations seen between RMB 15,980-15,990/mt, due to rare purchases.

Lead

On Thursday, SHFE 1202 lead contract prices opened slightly lower at RMB 15,120/mt and slid to RMB 15,095/mt due to falling domestic stocks. Later, prices edged up slowly and moved around RMB 15,150/mt. In the afternoon, SHFE lead prices moved between RMB 15,160-15,200/mt and finally closed at RMB 15,180/mt. Trading volumes decreased by 48 lots to 110 lots, and positions increased by 18 lots to 1,462 lots.

Transactions were quiet in domestic spot markets with wait-and-see sentiment. Quotations for well-known brands such as Nanfang, Chihong Zn & Ge were around RMB 15,250/mt, with premiums against SHFE 1202 lead contract prices of RMB 50/mt. Quotations of other brands such as Hexing from Gejiu and the brand from Fujian were between RMB 15150-15180/mt.

Zinc

On Thursday, SHFE three-month zinc contract prices opened lower at RMB 14,845/mt below the 5-day moving average, and dipped to RMB 14,730/mt in the morning session, causing a large number of shorts to leave the market with profit-taking. Later in the day, SHFE three-month zinc contract prices rallied to close at RMB 14,865/mt, down RMB 50/mt. Trading volumes increased by nearly 50,000 lots to 213,354 lots, and total position increased by 7,620 lots to 197,048 lots.

In domestic spot markets, spot discounts against SHFE 1203 zinc contract prices were around negative RMB 100/mt, with traded prices between RMB 14,650-14,700/mt. As SHFE zinc prices rose in the midday, spot discounts expanded to negative RMB 120-130/mt, with traded prices touching RMB 14,750/mt. Imported zinc prices were RMB 180/mt below SHFE 1203 zinc contract prices. #1 zinc was traded between RMB 14,650-14,700/mt. Transactions were still muted.

Tin

Spot tin prices were little changed on Thursday in Shanghai, with mainstream Yunxi and Yunheng branded tin trading between RMB 158,500-160,000/mt and small amounts of Kaiyuan and Nancang branded tin trading between RMB 157,000-158,000/mt. Cost pressure due to high tin ore prices have led to limited tin supply, thereby providing support for the metal. Spot tin consumption, however, stayed limited. As such, SMM expects tin prices to see a stable run in the short term.

Nickel

During Thursday’s Asian trading hours, LME nickel prices fluctuated narrowly, and showed waned upward momentum on negative factors. It was expected that LME nickel prices would continue to meet resistance to climb further. LME nickel inventories were up by 1,668 mt to 89,568 mt.

Jinchuan Group raised ex-works nickel prices by RMB 2,000/mt to RMB 130,000/mt on Thursday. In the Shanghai nickel spot market, mainstream traded prices of nickel from Jinchuan Group were in the RMB 130,500-131,000/mt range, and mainstream traded prices of nickel from Russia were in the RMB 128,500-129,000/mt range. Affected by slight advance of LME nickel price and Jinchuan Group price hike, mainstream traded prices in spot nickel market advanced to certain extent. However, traders’ interest in replenishing stocks was low amid price increase. Coupled with limited downstream demand, trading sentiment was quiet in the Shanghai spot nickel market.