SMM Daily Review - 2012/1/12 Base Metals Market

SHANGHAI, Jan. 13 (SMM) --

Copper

As LME copper prices extended gains overnight, SHFE 1203 copper contract prices, the most active one, opened up by RMB 620/mt at RMB 56,980/mt Thursday. SHFE three-month copper contract prices continued to fluctuate around the daily moving average after the opening, and were pushed down to a low of RMB 56,730/mt after challenging resistance at RMB 57,000/mt. In the afternoon session, a drop in the US dollar helped LME copper prices soar through USD 7,800/mt, causing SHFE three-month copper contract prices to move higher and touch an intraday high of RMB 57,460/mt. Finally, SHFE 1203 copper contract prices settled at RMB 57,400/mt, up RMB 1,000/mt or 1.77%. Positions for 1203 copper contracts were down 26,206 lots, and trading volumes were down 114,000 lots. SHFE copper prices climbed this week and would continue to move higher over the near term owing to technical support. 

In the spot market, SHFE copper prices moved higher after a high open, but cargo-holders of domestic copper reduced quantities of sales volumes significantly and refused to expand discounts, which, therefore, were generally between negative RMB 280-120/mt in the morning business. Traded prices for standard-quality copper were between RMB 56,100-56,350/mt, and RMB 56,200-56,500/mt for high-quality copper. Cargo-holders of imported copper chose to move goods aggressively during the whole trading day, but market transactions were obviously restricted at levels above RMB 56,000/mt. In the afternoon session, as SHFE copper prices continued to trend upside, both speculators and downstream producers opted to buy small quantities of spot copper and sell SHFE copper contracts, while traded prices edged up to between RMB 56,150-56,550/mt.
 
Aluminum

The most active SHFE four-month aluminum contract gapped higher at RMB 16,240/mt and only gained RMB 15/mt or 0.09% closing at RMB 16,215/mt on Thursday. Though China’s CPI for December dropped as expected, the contracted PPI weighed heavily on market confidence. Positions of the contract increased 390 lots to 54,460 lots. Mixed results were seen for different contracts. Investors are cautiously leaving the aluminum market ahead of the Chinese New Year. The most active SHFE aluminum contract will face mounting pressures at the RMB 16,200/mt mark lacking support.

Traded prices of spot aluminum in Shanghai were between RMB 15,980-16,010/mt on Thursday, with discounts of RMB 30-50/mt over the SHFE current-month aluminum price. In the morning session, she SHFE current-month aluminum price was firm above the RMB 16,000/mt mark. In domestic spot markets, buying interest remained low with the approach of the Chinese New Year. Meanwhile selling interest among goods holders dropped dramatically, with spot discounts over the SHFE current-month aluminum price narrowing to RMB 50/mt. A few imported aluminum ingots available in markets were quoted at RMB 15,940-15,960/mt. Despite the price advantage, transactions were limited. Trading market was quiet ahead of the holiday. In the noon session, the SHFE current-month aluminum price was little changed and the spot market was extremely quiet, with sparse quotations seen at RMB 15,980/mt.

Lead

SHFE 1203 lead contract prices moved down to RMB 15,220/mt after opening at RMB 15,265/mt on Thursday. Later as the National Bureau of Statistics released China’s December CPI data, prices stopped decreasing and stabilized. In the afternoon, SHFE lead prices fluctuated upward along with domestic stocks and finally closed at RMB 15,400/mt, up RMB 65/mt. Trading volumes increased by 118 lots to 384 lots, and positions increased by 166 lots to 1,720 lots.

In domestic spot markets, traders began their holiday successively, leaving fewer quotations in the markets. Traded prices were close to previous trading day, with prices for well-known brands such as Nanfang, Chihong Zn & Ge at RMB 15,320-15,350/mt. Other brands including Tianma were quoted around RMB 15,250/mt. In the afternoon, SHFE lead prices moved up, but increases in spot prices were limited due to weak demand. Prices remained unchanged from morning session. Transactions were relatively quiet.

Zinc

On Thursday, SHFE three-month zinc contract prices touched RMB 14,955/mt in the morning session. According to data from the NBS, CPI was up 4.1% in December, while PPI rose 1.7%, causing speculations that China’s Central Bank will further cut deposit reserve ratio. In the afternoon, SHFE three-month zinc contract price finally closed at RMB 15,185/mt, up RMB 155/mt or 1.03%. Trading volumes increased by nearly 20,000 lots to 178,202 lots, and total position decreased by 20,984 lots to 166,672 lots.

In domestic spot markets, spot discounts remained at RMB 230/mt as SHFE zinc prices fell, and expanded to RMB 260-280/mt along with rising SHFE zinc prices. #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. imported zinc prices were RMB 300/mt below. Goods supply available in the market was contributed by traders, with smelters reducing goods supply. Downstream buying interest was low, and the overall transactions were quiet.

Tin

Spot tin prices stabilized on Thursday as weaker demand overshadowed tight supply, with mainstream Yunxi, Jinhai, Yunshan and Nanshan branded tin trading between RMB 170,000-172,000/mt. Almost completed stock replenishments ahead of the Chinese New Year and damped buying interest are major contributors of the weaker demand.

Nickel

LME nickel for delivery in three months advanced after falling to USD 19,350/mt during the Asian trading hours on Thursday, and continued to advance to hit USD 19,500/mt on weaker US dollar during the European trading hours. It is expected that the industrial output data from the euro zone and the jobless claim data from the US will affect base metal market movement.

In the Shanghai nickel spot market, demand for spot nickel was still strong. Mainstream traded prices of nickel from Russia were between RMB 134,000-134,500/mt. As some traders were reluctant to move goods, offers of nickel from Jinchuan Group were mixed. Mainstream traded prices of nickel from Jinchuan Group were between RMB 135,700-136,000/mt, and offers as high as RMB 136,200-136,500/mt were also reported in the market. Generally speaking, trading sentiment was relatively brisk due to pre-holiday stock replenishment from downstream consumers on Thursday.