SMM Daily Review - 2012/2//1 Base Metals Market

SMM Insight 09:41:31AM Feb 02, 2012 Source:SMM

SHANGHAI, Feb. 2 (SMM) --

Copper

SHFE 1204 copper contract prices, the most active one, opened down by RMB 380/mt at RMB 60,100/mt Wednesday. The PMI data released by both HSBC and China Federation of Logistics & Purchasing improved some compared with the previous reading, lowering the possibility of the introduction of loose monetary policy over the near term. Besides, LME copper prices retreated to USD 8,300/mt owing to the continuously strengthening US dollar index. SHFE three-month copper contract prices therefore moved lower after the opening and were unable to rally in the face of still increasing selling pressures. In the afternoon business, as LME copper prices lost the USD 8,300/mt point, and as Chinese stock markets closed down by more than 1%, SHFE three-month copper contract prices completely came under pressure at daily moving averages and touched an intraday low at RMB 59,420/mt. Finally, the most actively-traded copper contract prices closed at RMB 59,500/mt, down RMB 980/mt or 1.62%. Positions for the most actively-traded copper contracts were up 5,434 lots, while trading volumes were down 8,174 lots. SHFE copper prices would test support at the 10-day moving average.

In the spot market, as SHFE copper prices moved lower after a low open, copper discounts narrowed to between negative RMB 350-200/mt. Traded prices for standard-quality copper were between RMB 58,850-59,100/mt, and RMB 58,950-59,200/mt for high-quality copper. Cargo-holders held divergent views. Cargo-holders who were eager to generate cash chose to expand discounts, while others still had no intention to narrow discounts. Market activity was active in the morning session when copper discounts were relatively large, with downstream producers increasing buying at the lows. As a result, market transactions improved slightly compared with the previous two trading days. In the afternoon business, As SHFE copper prices continued to move lower, and as cargo-holders became unwilling to move goods at low price levels, spot copper discounts fell to between negative RMB 300-160/mt. Traded prices lost RMB 59,000/mt in the afternoon session, but transaction volumes were very limited.

Aluminum

While China Federation of Logistics and Purchasing reported a 0.2 percentage point gain in its China PMI for January to 50.5%, HSBC’s measure stayed below 50 the equilibrium line, which reads at 48.8, despite of a slight jump. Investors provided mixed responses to the two readings, with the Shanghai Composite Index surging and dropping on Wednesday. The most active SHFE three-month aluminum contract tracked movements of the Shanghai Composite Index and closed down RMB 90/mt or 0.55% at RMB 16,215/mt. Transactions dropped another 290 lots to 9,116 lots while total positions decreased 826 lots to 58,454 lots. The contract got barely enough support to stay above the RMB 16,200/mt mark as good news has been limited.

Spot aluminum traded between RMB 15,930-15,960/mt in Shanghai, at discounts of RMB 100-130/mt over the SHFE current-month aluminum price. Low-iron aluminum traded between RMB 15,980-16,010/mt. Traded prices of spot aluminum in Wuxi were between RMB 15,880-15,920/mt. Despite lower quotations due to gradually increasing supply, the traded volume was light as downstream demand still has not picked up. Some traders said spot aluminum will see discounts stay at present levels and aluminum price won’t be able to stay above RMB 16,000/mt in the near term as downstream demand needs time to recover.

Lead

On Wednesday, SHFE lead prices opened slightly lower at RMB 16,100/mt, and then rose to touch RMB 16,130/mt briefly due to the better-than-expected PMI data released by China’s National Bureau of Statistics. Later, however, prices fell to fluctuate between RMB 16,000-16,080/mt for a lack of upward momentum, and finally closed at RMB 15,995/mt, down RMB 165/mt, a decline of 1.02%. Trading volumes increased by 36 lots to 312 lots, and positions decreased by 50 lots to 1,842 lots.

In domestic spot markets, transactions were limited due to weak demand. Quotations for well-known brands such as Chihong Zn&Ge, Shuikoushan and Chengyuan were between RMB 15,950-16,000/mt, with discounts against the most active SHFE lead contract prices at RMB 60-100/mt. Other brands including lead from Yunnan Province were quoted at around RMB 15,850/mt. In the afternoon, spot prices decreased by RMB 20/mt, prices for most branded lead were below RMB 16,000/mt. Production at smelters and downstream enterprises did not fully restart, wait-and-see sentiment still dominated the markets.

Zinc

SHFE three-month zinc contract prices fell slightly on Wednesday. China’s official Purchasing Managers Index (PMI) for the manufacturing sector in January 2012 stood above 50% after removing the Chinese New Year holiday factor, which was better than expected, but the HSBC January manufacturing PMI for China released later was disappointing, causing markets to be more cautious. As a result, SHFE three-month zinc contract prices mainly moved around the daily moving average, and later fell below the daily moving average in the afternoon session due to significant declines in LME zinc prices, with prices finally closing at RMB 15,775/mt, down RMB 235/mt or 1.47%. 

In the spot market, #0 zinc was traded at discounts between RMB 310-320/mt over SHFE three-month zinc contract prices, with actual traded prices between RMB 15,600-15,650/mt. Traded prices for imported zinc fell below RMB 15,600/mt, while #1 zinc was traded around RMB 15,500/mt, with discounts of RMB 400-420/mt. Downstream consumers gradually entered the market, helping improve overall trading activity.

Tin

Mainstream Yunxi, Yunheng, Tianti, Feidie and Jinlong branded tin traded between RMB 184,000-185,000/mt on Wednesday, little changed from Tuesday, as losses in LME metals and increased supply after more suppliers resumed operation damped market confidence. The traded volume stayed light. A few deals at RMB 183,000/mt were seen in the afternoon.

Nickel

During Wednesday’s Asian trading hours, the euro extended downward momentum against the US dollar, and hit a low of 1.3026 as of 4:00 pm. Generally speaking, LME nickel prices were negatively affected decline in China’s stock market and the slump in the US dollar, without strong upward momentum. The Greek debt crisis still lacked effective solution. Coupled with 17% yields rate of Portugal’s 10-year government bond, expanding balance sheet of European Central Bank and disappointing EU summit, the euro was weighed down. What’s more, the highly-expected US economic data also disappointed market players as well. In this context, LME nickel prices may be weighed down further. As of 5:00 pm on Wednesday, LME nickel prices rebounded to USD 20,850/mt. LME nickel prices have closed with losses for two consecutive days, and are weighed below 10-day moving average. Technically, LME nickel prices are tend to slip. LME nickel inventories were up by 1,086 mt to 95,598 mt.

In the Shanghai nickel spot market, mainstream traded prices of nickel from Jinchuan Group were between RMB 144,000-144,500/mt, and mainstream traded prices of nickel from Russia were between RMB 142,500-143,000/mt during the morning trading hours. As LME nickel prices were weak, spot nickel prices fell slightly as well. In response, mainstream traded prices of nickel from Jinchuan Group slipped to RMB 143,500-144,000/mt, and mainstream traded prices of nickel from Russia were in the RMB 142,000-142,500/mt range during afternoon trading hours. Since downstream producers still had some raw material inventories, overall trading sentiment was not brisk in spot market. However, some suppliers initially lowered price along with LME nickel price decline, despite that Jinchuan Group did not cut its ex-works nickel prices, which attracted bargain hunters and increased trading volumes compared to two days earlier.
 

SMM Daily Review - 2012/2//1 Base Metals Market

SMM Insight 09:41:31AM Feb 02, 2012 Source:SMM

SHANGHAI, Feb. 2 (SMM) --

Copper

SHFE 1204 copper contract prices, the most active one, opened down by RMB 380/mt at RMB 60,100/mt Wednesday. The PMI data released by both HSBC and China Federation of Logistics & Purchasing improved some compared with the previous reading, lowering the possibility of the introduction of loose monetary policy over the near term. Besides, LME copper prices retreated to USD 8,300/mt owing to the continuously strengthening US dollar index. SHFE three-month copper contract prices therefore moved lower after the opening and were unable to rally in the face of still increasing selling pressures. In the afternoon business, as LME copper prices lost the USD 8,300/mt point, and as Chinese stock markets closed down by more than 1%, SHFE three-month copper contract prices completely came under pressure at daily moving averages and touched an intraday low at RMB 59,420/mt. Finally, the most actively-traded copper contract prices closed at RMB 59,500/mt, down RMB 980/mt or 1.62%. Positions for the most actively-traded copper contracts were up 5,434 lots, while trading volumes were down 8,174 lots. SHFE copper prices would test support at the 10-day moving average.

In the spot market, as SHFE copper prices moved lower after a low open, copper discounts narrowed to between negative RMB 350-200/mt. Traded prices for standard-quality copper were between RMB 58,850-59,100/mt, and RMB 58,950-59,200/mt for high-quality copper. Cargo-holders held divergent views. Cargo-holders who were eager to generate cash chose to expand discounts, while others still had no intention to narrow discounts. Market activity was active in the morning session when copper discounts were relatively large, with downstream producers increasing buying at the lows. As a result, market transactions improved slightly compared with the previous two trading days. In the afternoon business, As SHFE copper prices continued to move lower, and as cargo-holders became unwilling to move goods at low price levels, spot copper discounts fell to between negative RMB 300-160/mt. Traded prices lost RMB 59,000/mt in the afternoon session, but transaction volumes were very limited.

Aluminum

While China Federation of Logistics and Purchasing reported a 0.2 percentage point gain in its China PMI for January to 50.5%, HSBC’s measure stayed below 50 the equilibrium line, which reads at 48.8, despite of a slight jump. Investors provided mixed responses to the two readings, with the Shanghai Composite Index surging and dropping on Wednesday. The most active SHFE three-month aluminum contract tracked movements of the Shanghai Composite Index and closed down RMB 90/mt or 0.55% at RMB 16,215/mt. Transactions dropped another 290 lots to 9,116 lots while total positions decreased 826 lots to 58,454 lots. The contract got barely enough support to stay above the RMB 16,200/mt mark as good news has been limited.

Spot aluminum traded between RMB 15,930-15,960/mt in Shanghai, at discounts of RMB 100-130/mt over the SHFE current-month aluminum price. Low-iron aluminum traded between RMB 15,980-16,010/mt. Traded prices of spot aluminum in Wuxi were between RMB 15,880-15,920/mt. Despite lower quotations due to gradually increasing supply, the traded volume was light as downstream demand still has not picked up. Some traders said spot aluminum will see discounts stay at present levels and aluminum price won’t be able to stay above RMB 16,000/mt in the near term as downstream demand needs time to recover.

Lead

On Wednesday, SHFE lead prices opened slightly lower at RMB 16,100/mt, and then rose to touch RMB 16,130/mt briefly due to the better-than-expected PMI data released by China’s National Bureau of Statistics. Later, however, prices fell to fluctuate between RMB 16,000-16,080/mt for a lack of upward momentum, and finally closed at RMB 15,995/mt, down RMB 165/mt, a decline of 1.02%. Trading volumes increased by 36 lots to 312 lots, and positions decreased by 50 lots to 1,842 lots.

In domestic spot markets, transactions were limited due to weak demand. Quotations for well-known brands such as Chihong Zn&Ge, Shuikoushan and Chengyuan were between RMB 15,950-16,000/mt, with discounts against the most active SHFE lead contract prices at RMB 60-100/mt. Other brands including lead from Yunnan Province were quoted at around RMB 15,850/mt. In the afternoon, spot prices decreased by RMB 20/mt, prices for most branded lead were below RMB 16,000/mt. Production at smelters and downstream enterprises did not fully restart, wait-and-see sentiment still dominated the markets.

Zinc

SHFE three-month zinc contract prices fell slightly on Wednesday. China’s official Purchasing Managers Index (PMI) for the manufacturing sector in January 2012 stood above 50% after removing the Chinese New Year holiday factor, which was better than expected, but the HSBC January manufacturing PMI for China released later was disappointing, causing markets to be more cautious. As a result, SHFE three-month zinc contract prices mainly moved around the daily moving average, and later fell below the daily moving average in the afternoon session due to significant declines in LME zinc prices, with prices finally closing at RMB 15,775/mt, down RMB 235/mt or 1.47%. 

In the spot market, #0 zinc was traded at discounts between RMB 310-320/mt over SHFE three-month zinc contract prices, with actual traded prices between RMB 15,600-15,650/mt. Traded prices for imported zinc fell below RMB 15,600/mt, while #1 zinc was traded around RMB 15,500/mt, with discounts of RMB 400-420/mt. Downstream consumers gradually entered the market, helping improve overall trading activity.

Tin

Mainstream Yunxi, Yunheng, Tianti, Feidie and Jinlong branded tin traded between RMB 184,000-185,000/mt on Wednesday, little changed from Tuesday, as losses in LME metals and increased supply after more suppliers resumed operation damped market confidence. The traded volume stayed light. A few deals at RMB 183,000/mt were seen in the afternoon.

Nickel

During Wednesday’s Asian trading hours, the euro extended downward momentum against the US dollar, and hit a low of 1.3026 as of 4:00 pm. Generally speaking, LME nickel prices were negatively affected decline in China’s stock market and the slump in the US dollar, without strong upward momentum. The Greek debt crisis still lacked effective solution. Coupled with 17% yields rate of Portugal’s 10-year government bond, expanding balance sheet of European Central Bank and disappointing EU summit, the euro was weighed down. What’s more, the highly-expected US economic data also disappointed market players as well. In this context, LME nickel prices may be weighed down further. As of 5:00 pm on Wednesday, LME nickel prices rebounded to USD 20,850/mt. LME nickel prices have closed with losses for two consecutive days, and are weighed below 10-day moving average. Technically, LME nickel prices are tend to slip. LME nickel inventories were up by 1,086 mt to 95,598 mt.

In the Shanghai nickel spot market, mainstream traded prices of nickel from Jinchuan Group were between RMB 144,000-144,500/mt, and mainstream traded prices of nickel from Russia were between RMB 142,500-143,000/mt during the morning trading hours. As LME nickel prices were weak, spot nickel prices fell slightly as well. In response, mainstream traded prices of nickel from Jinchuan Group slipped to RMB 143,500-144,000/mt, and mainstream traded prices of nickel from Russia were in the RMB 142,000-142,500/mt range during afternoon trading hours. Since downstream producers still had some raw material inventories, overall trading sentiment was not brisk in spot market. However, some suppliers initially lowered price along with LME nickel price decline, despite that Jinchuan Group did not cut its ex-works nickel prices, which attracted bargain hunters and increased trading volumes compared to two days earlier.