SMM Daily Review - 2012/1/11 Base Metals Market

SHANGHAI, Jan. 12 (SMM) --

Copper

As LME copper prices surged overnight, SHFE 1203 copper contract prices, the most active one, opened up by RMB 620/mt at RMB 56,220/mt Wednesday. SHFE three-month copper contract prices moved higher after a high open as both long and short investors closed positions during the trading day, with an intraday high at RMB 56,950/mt. Finally, SHFE 1203 copper contract prices closed at RMB 56,860/mt, up RMB 1,260/mt or 2.27%. Positions for SHFE 1203 copper contracts were down 5,248 lots, and trading volumes were down 53,834 lots. The fluctuating band of SHFE copper prices already stood above all daily moving averages, but investors lacked confidence in keeping up with rising prices. Therefore, SHFE copper prices still faced great selling pressures at highs, especially ahead of Thursday’s release of China’s important economic data, and a probable drop in GDP was likely to dampen copper prices.

In the spot market, SHFE copper prices moved higher after a high open, but spot copper supply decreased since cargo-holders became less willing to move goods, allowing copper discounts to move between negative RMB 200-80/mt in the morning business. Traded prices for standard-quality copper were between RMB 55,700-55,850/mt, and RMB 55,750-55,950/mt for high-quality copper. Downstream producers lacked buying interest near the RMB 56,000/mt level, causing market transactions to become quiet in the morning business. In the afternoon session, although SHFE copper prices rose further, spot copper discounts narrowed to between negative RMB 150-50/mt since high-quality copper was rarely seen. Traded prices rose to between RMB 55,750-56,250mt in the afternoon business, but market transactions failed to improve significantly.   

Aluminum

The most active SHFE four-month aluminum contract gapped higher at RMB 16,150/mt and closed RMB 205/mt or 1.28% higher at RMB 16,245/mt on Wednesday. Positions of the contract rose 184 lots at 54,070 lots. The contract successfully broke through the 60-day moving average with recent two surges. Profit-taking by longs, however, is expected to build some pressure at the RMB 16,300/mt mark.

Traded prices of spot aluminum in Shanghai were between RMB 15,970-16,010/mt on Wednesday, with discounts of RMB 70-100/mt over the SHFE current-month aluminum price. In the morning, despite the continuous rise in SHFE aluminum prices, spot aluminum prices were stagnating due to weak demand. Many goods holders were still actively clearing stocks ahead of the Chinese New Year. In this context, spot discounts over the SHFE current-month aluminum price expanded. Only some high quality aluminum ingots were in short supply, with relatively stable prices. Transactions remained limited. In the afternoon, as the SHFE current-month met resistance at the daily moving average and the sentiment was slightly bearish, goods movements were hardly seen among traders. Downstream buyers were even quieter. Quotations were sparse and between RMB 15,980-16,000/mt in the afternoon and deals were rarely concluded.

Lead

SHFE 1203 lead contract prices, influenced by rising LME lead prices, opened about RMB 100/mt higher at RMB 15,350/mt on Wednesday and moved around moving averages all day. SHFE lead prices finally closed at RMB 15,335/mt, up RMB 60/mt. Trading volumes decreased by 98 lots to 266 lots, and positions increased by 102 lots to 1,554 lots.

In domestic spot markets, transactions were modest, prices for well-known brands such as Nanfang, Chihong Zn & Ge were around RMB 15,350/mt. Quotation for Tongguan was RMB 15,300/mt. Other brands, including Tianma and Mengzi, were quoted between RMB 15,250-15,280/mt.

Zinc

On Wednesday, SHFE three-month zinc contract prices opened higher at RMB 15,065/mt, boosted by LME zinc prices overnight, fluctuating around the moving average during the day. At the end of trading, SHFE three-month zinc contract prices rose slightly to close at RMB 15,080/mt, up RMB 240/mt or 1.62%, meeting resistance at the 30-day moving average. Trading volumes decreased by nearly 20,000 lots to 154,246 lots, and total position decreased by 14,830 lots to 187,656 lots.

In domestic spot markets, spot discounts expanded to RMB 220-250/mt as SHFE three-month zinc contract prices open higher. #0 zinc was traded between RMB 14,800-14,850/mt, with transactions made at the low end. #1 zinc was traded between RMB 14,750-14,800/mt. The market barely accepted higher prices, and downstream buying interest was low, keeping the overall transaction muted.

In domestic spot markets, SHFE three-month zinc contract prices moved between RMB 14,750-14,800/mt, with spot discounts between RMB 150-180/mt. #0 zinc was traded around RMB 14,550/mt, and #1 zinc was traded around RMB 14,500/mt. Both cargo holders and downstream buyers were cautious. As SHFE zinc prices rose, spot discounts expanded to RMB 230-250/mt, but the market was unwilling to accept higher prices, keeping transactions quiet.

Tin

Shanghai spot tin prices climbed further to RMB 171,000-171,500/mt on Wednesday as tight supply continued and quotations were continually climbing. Mainstream spot tin brands were Jinhai and Nanshan. Mainstream futures tin brands were Yunxi, Yunheng and Jinhai. The downstream demand is turning weaker as tin consumers successively closed operation ahead of the Chinese New Year. Rapidly climbing tin prices also damped the buying interest. It is known that deals above RMB 170,000/mt during the day were mainly stock replenishment demand. Despite weak demand, the growing bullish sentiment may add further gains of the metal.

Nickel

LME nickel prices continued to advance slightly and hit a two-month high at USD 19,690/mt during Wednesday’s Asian trading hours.

In China’s nickel spot market, Jinchuan Group raised ex-works nickel prices by RMB 4,000/mt, to RMB 136,000/mt on Wednesday.  In response, traded prices advanced to great extent from a day earlier. Mainstream traded prices of nickel from Jinchuan Group were between RMB 135,000-135,500/mt, and mainstream traded prices of nickel from Russia were between RMB 134,000-134,500/mt during the morning trading hours. Inspired by continuous increase in LME nickel price and downstream pre-holiday stock replenishments, traders raised offers again. During the afternoon trading hours, mainstream offers of nickel from Jinchuan Group were between RMB 135,500-136,000/mt and mainstream offers of nickel from Russia were between RMB 134,000-134,500/mt. Supply of goods at RMB 134,000/mt reduced significantly.  Few traders were optimistic towards market outlook along with steady increase in LME nickel prices in recent days, and were reluctant to move goods. However, trading sentiment was still relatively brisk in spot nickel market on Wednesday.