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SMM Daily Review - 2012/1/20 Base Metals Market
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SHANGHAI, Jan. 21 (SMM) –

SHFE 1204 copper contract, the most active one, opened up by RMB 560/mt at RMB 60,850/mt Friday. On the last trading day ahead of the Chinese New Year, transactions on Shanghai futures copper market were quiet. However, Chinese stock rose further by 1%, driving SHFE copper prices to move at a high level around moving averages, with an intraday high at RMB 61,150/mt and a lowest point of the day at RMB 60,400/mt. SHFE three-month copper contract price finally closed at RMB 60,720/mt, up RMB 430/mt, or 0.71%. Trading volumes decreased by 102,000 lots, positions were down by 4,576 lots. The post-holiday movements of SHFE copper price will wait for the directions from LME copper prices during the holiday.

In China’s domestic spot market, spot supply kept reducing, with discounts over SHFE copper price narrowed from RMB 450/mt to RMB 200/mt. Traded prices for standard-quality copper were between RMB 59,700-59,800/mt, and RMB 59,800-60,100/mt for high-quality copper, with expanding price differenced. Low-end hydro copper were rarely seen in the market, causing the price to rise along with high-quality copper. With most market players staying away from markets, deals made above RMB 60,000/mt were hardly reported. In the afternoon, transactions were almost suspended with markets entering into the holiday.

SHFE 1204 aluminum prices, the most actively traded contract, opened at RMB 16,355/mt on Friday and moved down with pressure at moving averages in the morning. In the afternoon, boosted by Chinese domestic stocks, prices moved up to test RMB 16,400/mt. At the tail of trading, as market players were cautious on the last day before the Chinese New Year, SHFE 1204 aluminum prices fell slightly and finally closed at RMB 16,395/mt, up RMB 35/mt, increasing by 0.21%. Positions declined by 1,870 lots to 57,654 lots. As for post-holiday market, SHFE 1204 aluminum prices will be influenced by LME aluminum prices.

In domestic spot markets, traded prices for main transactions were between RMB 16,040-16,080/mt, with discounts of RMB 160-120/mt over the SHFE current-month aluminum contract price. On the last trading day ahead of the Chinese New Year, most traders and downstream enterprises were already in holiday, leaving few transactions done in the market. Although several deals were made in East China markets, delivery date for goods was postponed.

Influenced by the eased concerns over European debt issue and positive US economic data, SHFE three-month lead contract price opened at RMB 16,010/mt on Friday, the last trading day ahead of the Chinese New Year. Price then fluctuated around RMB 16,000/mt and touched the intraday low of RMB 15,890/mt. Later, SHFE lead prices fluctuated up with rising domestic stocks to RMB 16,225/mt, a new high since December 2011, but fell slightly at the tail of trading to close at RMB 16,120/mt, up RMB 195/mt. Trading volumes decreased by 250 lots to 464 lots, and positions decreased by 28 lots to 2,024 lots.

In domestic spot markets, quotations for domestic spot lead were rarely seen. Only brands such as Nanfang, Chihong Zn&Ge, Chengyuan and Shuikoushan were quoted at around RMB 16,000/mt, with discounts over the most active SHFE lead contract prices at RMB 10/mt. Deals were hardly reported on the last trading day ahead of the Chinese New Year holiday.

The most active SHFE zinc contract price opened slightly up at RMB 15,725/mt on Friday. In the morning trading hours, markets remained cautious with prices moving steadily around RMB 15,700/mt. In the afternoon, the most active SHFE zinc contract price rose to touch the intraday high of RMB 15,900/mt due to the increase in domestic stock market. Prices then surrendered some earlier gains as longs liquidated, and finally closed at RMB 15,855/mt, up RMB 230/mt. Positions were down 2,930 lots to 148,000 lots, trading volumes decreased by 9,952 lots to 140,048 lots.

In domestic spot markets, spot discounts over the most active SHFE zinc contract price were between RMB 300-350/mt. Traded prices for #0 zinc were around RMB 15,300/mt, and traded prices for #1 zinc were between RMB 15,150-15,250/mt. Deals were scarce on the last trading before the holiday with most sellers and buyers suspended trading.

In the Shanghai tin market, trading activities were basically suspended on the last trading day ahead of the Chinese New Year holiday, leaving transactions quiet.

During Friday’s Asian trading hours, LME nickel prices advanced slightly to USD 20,400/mt along with rally in Asian stock markets. Technically speaking, any room for LME nickel prices to climb further will be limited, and LME nickel prices are facing increasing downward risks.

In the Shanghai nickel spot market, supply of spot goods was very limited as few traders were in the market, so offers of nickel were relatively high in the morning trading hours. Jinchuan nickel was offered between RMB 142,000-144,000/mt, and Russian nickel was offered between RMB 141,000-142,000/mt. However, mainstream traded prices were lower than offers. It was reported that mainstream traded prices of nickel from Jinchuan Group were between RMB 140,500-142,000/mt, and mainstream traded prices of nickel from Russia were between RMB 139,300-139,500/mt. Trading sentiment was extremely sluggish during the last trading day before Chinese New Year holiday.

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