SMM Daily Review - 2012/1/31 Base Metals Market

SMM Insight 09:38:47AM Feb 01, 2012 Source:SMM

SHANGHAI, Feb. 1 (SMM) --

Copper

SHFE 1204 copper contract prices opened RMB 310/mt lower at RMB 60,560/mt. SHFE copper prices remained weak after opening, but buying at lower prices and small gains in the Shanghai Composite Index provided some support for SHFE copper prices, with prices mainly fluctuating around RMB 60,500/mt. SHFE copper prices hit an intraday high of RMB 60,750/mt and touched an intraday low of RMB 60,130/mt, and finally closed at RMB 60,620/mt, down RMB 250/mt or 0.41%. Trading volumes of SHFE 1204 copper contracts fell by 41,980 lots, while positions increased by 18,180 lots.

In the spot market, most cargo-holders showed stronger willingness to sell goods given weak SHFE copper prices, prevailed market pessimism and month-end cash flow pressures, with discounts quoted between RMB 400-300/mt early yesterday. However, continuous declines in SHFE copper prices after 10:00 am greatly depressed market confidence, and spot discounts expanded to RMB 450-350/mt in response, with traded prices for standard copper between RMB 59,300-59,400/mt and traded prices for high-quality copper between RMB 59,400-59,600/mt. Some middlemen made purchases as an arbitrage window opened, but downstream consumers still closed for the holiday, keeping trading light. Market trading became more sluggish in the afternoon.

Aluminum

The most active SHFE three-month aluminum contract opened lower and closed down RMB 60/mt or 0.37% at RMB 16,305/mt on Tuesday. Though transactions dropped to less than 10,000 lots, shorts still dominated the market, with their positions adding another 1,338 lots before hitting 59,280 lots. Stronger selling off was seen during the day as downstream aluminum processors still have not fully resumed operation and in the face of over RMB 100/mt of discounts over the SHFE current-month aluminum price. SMM expects the contract to drop to RMB 16,200/mt in the near term given weak support at the 10-day moving average.

Mainstream traded prices of spot aluminum were between RMB 15,950-15,990/mt in Shanghai, with discounts of RMB 120-150/mt over the SHFE current-month aluminum contract. In East China, weak downstream demand led to continuous goods movements at high discounts and transactions were mainly arbitrage. Remaining strong short selling has eroded SHFE aluminum’s rebound momentum and bearish fundamentals have been building stronger resistance at the RMB 16,000/mt mark. Aluminum stocks surged to near 180,000 mt in South China following the Chinese New Year. Despite weak SHFE aluminum prices and light downstream demand, local goods holders kept quotations above RMB 16,000/mt. Mainstream traded aluminum prices in South China were between RMB 15,980-16,020/mt during the day. The overall traded volume was light as the wait-and-see sentiment prevailed.

Lead

On Tuesday, SHFE lead prices, following the movements of Chinese domestic stocks, opened at RMB 16,110/mt and dipped to RMB 16,060/mt at around 10:30 a.m., but stopped falling with strong support. Prices then hovered between RMB 16,100-16,180/mt, and finally closed at RMB 16,160/mt, up RMB 40/mt. Trading volumes decreased by 418 lots to 276 lots, and positions decreased by 48 lots to 1,892 lots.

In domestic spot market, quotations for well-known brands such as Chihong Zn&Ge were around RMB 16,020/mt, with discounts over the most active SHFE lead contract prices at RMB 100/mt. Other brands such as Hexing were quoted between RMB 15,850-15,860/mt. Lead prices changed little in the afternoon. Transactions remained modest though improved from the previous trading day.

Zinc

SHFE three-month zinc contract prices struggled at RMB 16,000/mt yesterday, with prices falling gradually to an intraday low of RMB 15,930/mt due to slipping Chinese stocks after briefly climbing to RMB 16,100/mt in the morning session. Driven up by rising LME zinc prices, SHFE three-month zinc contract prices gradually reversed previous losses at the end of trading, with prices finally closing at RMB 16,065/mt, down RMB 45/mt or 0.28%.

Spot zinc was traded at discounts of RMB 350/mt over SHFE three-month zinc contract prices, while imported zinc was quoted at discounts of RMB 400/mt, with actual traded prices between RMB 15,600-15,650/mt. #1 zinc was traded between RMB 15,550-15,600/mt. Cargo-holders moved goods actively, while downstream consumers were also more interested in inquiries and buying, both helping improve market trading.

Tin

Domestic tin smelters have been delaying goods movements as some raw material suppliers were still in vocation, leading to a strong wait-and-see sentiment in the Shanghai tin market. Goods holders were continually lifting quotations despite of light trading volumes. Tight supply had left downstream businesses little alternative. More tin brands were seen during the day’s trading but deals were quite limited. Jinlong, Feidie, Yunheng, Yunshan and Yunxi branded tin traded between RMB 184,000-185,500/mt.

Nickel

During Tuesday’s Asian trading hours, LME nickel prices did nit make great breakthrough as China’s Shanghai Composite Index stabilized below 2,300 points, despite that the euro began to rise slightly after profit-taking. During Tuesday’s European trading hours, the weak US dollar index lent support for LME nickel prices to certain extent, but the Greek debt negotiation did not report further progress. In addition, yields of Portugal’s 10-year government bond hit historical high, disappointing market players. Generally speaking, LME nickel prices will be slightly weak during European and the US trading hours, and investors should pay close attention to development of the EU summit, debt action in the euro zone and Greek debt talk.

In the Shanghai nickel spot market, mainstream traded prices of nickel from Jinchuan Group were in the RMB 146,500-146,800/mt range, and mainstream traded prices of nickel from Russia were between RMB 145,000-145,500/mt. Demand was still quiet during initial post-holiday period. In addition, some traders were reluctant to move goods as spot prices slipped to certain extent along with Monday’s LME nickel price decline. In this context, transactions were extremely sluggish in the Shanghai nickel spot market, and are expected to improve after China’s Lantern Festival.

 

SMM Daily Review - 2012/1/31 Base Metals Market

SMM Insight 09:38:47AM Feb 01, 2012 Source:SMM

SHANGHAI, Feb. 1 (SMM) --

Copper

SHFE 1204 copper contract prices opened RMB 310/mt lower at RMB 60,560/mt. SHFE copper prices remained weak after opening, but buying at lower prices and small gains in the Shanghai Composite Index provided some support for SHFE copper prices, with prices mainly fluctuating around RMB 60,500/mt. SHFE copper prices hit an intraday high of RMB 60,750/mt and touched an intraday low of RMB 60,130/mt, and finally closed at RMB 60,620/mt, down RMB 250/mt or 0.41%. Trading volumes of SHFE 1204 copper contracts fell by 41,980 lots, while positions increased by 18,180 lots.

In the spot market, most cargo-holders showed stronger willingness to sell goods given weak SHFE copper prices, prevailed market pessimism and month-end cash flow pressures, with discounts quoted between RMB 400-300/mt early yesterday. However, continuous declines in SHFE copper prices after 10:00 am greatly depressed market confidence, and spot discounts expanded to RMB 450-350/mt in response, with traded prices for standard copper between RMB 59,300-59,400/mt and traded prices for high-quality copper between RMB 59,400-59,600/mt. Some middlemen made purchases as an arbitrage window opened, but downstream consumers still closed for the holiday, keeping trading light. Market trading became more sluggish in the afternoon.

Aluminum

The most active SHFE three-month aluminum contract opened lower and closed down RMB 60/mt or 0.37% at RMB 16,305/mt on Tuesday. Though transactions dropped to less than 10,000 lots, shorts still dominated the market, with their positions adding another 1,338 lots before hitting 59,280 lots. Stronger selling off was seen during the day as downstream aluminum processors still have not fully resumed operation and in the face of over RMB 100/mt of discounts over the SHFE current-month aluminum price. SMM expects the contract to drop to RMB 16,200/mt in the near term given weak support at the 10-day moving average.

Mainstream traded prices of spot aluminum were between RMB 15,950-15,990/mt in Shanghai, with discounts of RMB 120-150/mt over the SHFE current-month aluminum contract. In East China, weak downstream demand led to continuous goods movements at high discounts and transactions were mainly arbitrage. Remaining strong short selling has eroded SHFE aluminum’s rebound momentum and bearish fundamentals have been building stronger resistance at the RMB 16,000/mt mark. Aluminum stocks surged to near 180,000 mt in South China following the Chinese New Year. Despite weak SHFE aluminum prices and light downstream demand, local goods holders kept quotations above RMB 16,000/mt. Mainstream traded aluminum prices in South China were between RMB 15,980-16,020/mt during the day. The overall traded volume was light as the wait-and-see sentiment prevailed.

Lead

On Tuesday, SHFE lead prices, following the movements of Chinese domestic stocks, opened at RMB 16,110/mt and dipped to RMB 16,060/mt at around 10:30 a.m., but stopped falling with strong support. Prices then hovered between RMB 16,100-16,180/mt, and finally closed at RMB 16,160/mt, up RMB 40/mt. Trading volumes decreased by 418 lots to 276 lots, and positions decreased by 48 lots to 1,892 lots.

In domestic spot market, quotations for well-known brands such as Chihong Zn&Ge were around RMB 16,020/mt, with discounts over the most active SHFE lead contract prices at RMB 100/mt. Other brands such as Hexing were quoted between RMB 15,850-15,860/mt. Lead prices changed little in the afternoon. Transactions remained modest though improved from the previous trading day.

Zinc

SHFE three-month zinc contract prices struggled at RMB 16,000/mt yesterday, with prices falling gradually to an intraday low of RMB 15,930/mt due to slipping Chinese stocks after briefly climbing to RMB 16,100/mt in the morning session. Driven up by rising LME zinc prices, SHFE three-month zinc contract prices gradually reversed previous losses at the end of trading, with prices finally closing at RMB 16,065/mt, down RMB 45/mt or 0.28%.

Spot zinc was traded at discounts of RMB 350/mt over SHFE three-month zinc contract prices, while imported zinc was quoted at discounts of RMB 400/mt, with actual traded prices between RMB 15,600-15,650/mt. #1 zinc was traded between RMB 15,550-15,600/mt. Cargo-holders moved goods actively, while downstream consumers were also more interested in inquiries and buying, both helping improve market trading.

Tin

Domestic tin smelters have been delaying goods movements as some raw material suppliers were still in vocation, leading to a strong wait-and-see sentiment in the Shanghai tin market. Goods holders were continually lifting quotations despite of light trading volumes. Tight supply had left downstream businesses little alternative. More tin brands were seen during the day’s trading but deals were quite limited. Jinlong, Feidie, Yunheng, Yunshan and Yunxi branded tin traded between RMB 184,000-185,500/mt.

Nickel

During Tuesday’s Asian trading hours, LME nickel prices did nit make great breakthrough as China’s Shanghai Composite Index stabilized below 2,300 points, despite that the euro began to rise slightly after profit-taking. During Tuesday’s European trading hours, the weak US dollar index lent support for LME nickel prices to certain extent, but the Greek debt negotiation did not report further progress. In addition, yields of Portugal’s 10-year government bond hit historical high, disappointing market players. Generally speaking, LME nickel prices will be slightly weak during European and the US trading hours, and investors should pay close attention to development of the EU summit, debt action in the euro zone and Greek debt talk.

In the Shanghai nickel spot market, mainstream traded prices of nickel from Jinchuan Group were in the RMB 146,500-146,800/mt range, and mainstream traded prices of nickel from Russia were between RMB 145,000-145,500/mt. Demand was still quiet during initial post-holiday period. In addition, some traders were reluctant to move goods as spot prices slipped to certain extent along with Monday’s LME nickel price decline. In this context, transactions were extremely sluggish in the Shanghai nickel spot market, and are expected to improve after China’s Lantern Festival.