SMM Daily Review - 2012/2/15 Base Metals Market

SMM Insight 09:15:01AM Feb 16, 2012 Source:SMM

SHANGHAI, Feb 16 (SMM) –

Copper
SHFE 1205 copper contract prices, the most active one, opened slightly higher by RMB 10/mt at RMB 60,260/mt Wednesday. After the opening, SHFE three-month copper contract prices continued to fluctuate weakly around the daily moving average of RMB 60,300/mt. During major trading hours for spot copper, as Chinese stock markets increased, and as LME copper prices climbed to USD 8,500/mt, SHFE three-month copper contract prices surged to an intraday high of RMB 61,000/mt. In the afternoon business, SHFE three-month copper contract prices moved at the highs around RMB 60,800/mt, posting firm performance, but gave up daily gains at the tail of trading as resistance at recent two moving averages emerged due to position closings. Finally, SHFE 1205 copper contract prices ended at RMB 60,430/mt, up RMB 180/mt or 0.3%. Positions for SHFE 1205 copper contracts were up 3,216 lots, and trading volumes were up 41,910 lots. Owing to great upside pressures and a lack of substantial buying support, the increase was limited for SHFE copper prices, which would continue to test support at the 20-day moving average.

In the spot market, SHFE copper prices surged after initially falling, and the price gap between SHFE 1202 and 1203 copper contracts remained around RMB 500/mt despite the delivery date for SHFE 1202 copper contracts Wednesday, propelling cargo-holders to believe spot copper prices would rise Thursday even if discounts emerged again and hold back goods. Therefore, spot copper offers were reported between discounts of negative RMB 20/mt and premiums of positive RMB 50/mt in Wednesday’s morning business. Traded prices for standard-quality copper were between RMB 59,400-59,700/mt, and RMB 59,450-59,750/mt for high-quality copper. Downstream producers were wary of purchasing since copper prices slipped for three consecutive days, leaving transaction volumes light. In the afternoon session, SHFE copper prices moving at highs, limited market supply owing to cargo-holders’ wait-and-see sentiment, as well as sluggish consumption constrained spot copper premiums, keeping copper offers virtually unchanged from the morning business levels. However, traded prices rose to between RMB 59,600-59,800/mt in the afternoon session. 

Aluminum
The most active SHFE three-month aluminum contract previously hit RMB 16,270/mt but closed with a slight RMB 5/mt or 0.03% gain at RMB 16,220/mt on Wednesday, mainly due to concerns towards sluggish demand. SMM expects the contract to experience further volatility and is likely to present some losses in the near term.

Spot aluminum traded between RMB 15,870-15,900/mt in Shanghai, at discounts of RMB 20-50/mt over the SHFE current-month aluminum price. The current-month SHFE aluminum contract was heavily pressured at the 5-day moving average on the last trading day before delivery, leading to slight losses in spot prices. Spot discounts over the contract consequently failed to hit zero. Goods holders’ were touting deals at slight discounts before the latter widen after shift of the current-month contract. Overall traded volume was limited though.

Lead
On Wednesday, SHFE 1204 lead contract become the most active one with prices opening down at RMB 15,825/mt and following a weak track. Despite the rebound along with the rising domestic stocks after 10:30, prices later fell slightly to surrender earlier gains with resistance at the 20-day moving average. SHFE lead prices finally closed at RMB 15,890/mt, up RMB 20/mt. Positions increased by 334 lots to 1,608 lots, trading volumes increased by 118 lots to 572 lots.

In Shanghai spot markets, well-known brands such as Chihong Zn & Ge, Chengyuan and Nanfang were initially quoted between RMB 15,750-15,800/mt, and then quotations rose to RMB 15,850/mt along with the SHFE lead prices, with discounts against the most active SHFE lead contract price at RMB 50-100/mt. Quotations for lead from Gejiu were at RMB 15,650/mt at first, but increased to around RMB 15,700/mt. Despite the increasing lead prices, downstream buyers were still cautious, leaving transactions unimproved.

Zinc
On Wednesday, SHFE 1205 zinc contract prices opened at RMB 15,950/mt, falling to the 20-day moving average in the morning session. Boosted by the Shanghai Composite Index, SHFE 1205 zinc contract prices gained back previous losses after dipping to an intraday low RMB 15,875/mt, touching RMB 16,080/mt in the afternoon. But as a large number of longs left the market with profit-taking, SHFE three-month zinc contract prices rolled back intraday gains to close at RMB 15,945/mt, down RMB 20/mt.

In domestic spot markets, spot discounts against SHFE 1205 zinc contract prices were RMB 300/mt, with spot prices between RMB 15,550-15,600/mt. As SHFE zinc prices rose, spot discounts expanded to RMB 340-350/mt, and traded prices were pushed up to RMB 15,650-15,700/mt, while #1 zinc was traded between RMB 15,500-15,570/mt. A large number of traders entered the market but downstream buyers were cautious, keeping transactions quiet.

Tin
Spot tin prices stabilized between RMB 176,000-180,000/mt on Wednesday, with supply at the low-end price dropping slightly. Small amounts of Jiangxi supplies were traded at RMB 175,500/mt. The buying interest has been low as stocks are still being consumed due to low operating rates downstream. Mainstream tin brands of the day were Yunxi, Yunxiang, Nanshan and Jinlong. Recent losses in domestic tin prices were mainly induced by dropping LME tin prices which damped goods holders’ confidence to hold quotations.

Nickel
During Wednesday’s Asian trading hours, LME nickel prices rebounded to certain extent after declining for three consecutive days. As of 3:00 pm, LME nickel advanced to around 30-day moving average, meeting strong resistance to climb further. During the European and the US trading hours, the Federal Reserve decided to announce January 24-25 monetary policy meeting minutes on 03:00 am Beijing time. According to the minutes, the US Fed decided to keep ultra-low interest rate unchanged, continue to implement “twist operation” and control yields of government bond. Fed’s decision may boost the US dollar index which has been relatively strong at present and may weigh on risk assets, including LME nickel.

In the Shanghai nickel spot market, mainstream traded prices of nickel from Jinchuan Group were between RMB 141,500-142,000/mt, and mainstream traded prices of nickel from Russia were between RMB 140,800-141,000/mt during the morning trading hours. As LME nickel prices advanced to certain extent during the afternoon trading hours, mainstream traded prices of nickel from Jinchuan Group were around RMB 142,500, and mainstream traded prices of nickel from Russia were between RMB 141,000-141,500/mt. Some downstream producers believed that LME nickel prices still had room to fall further, so they were reluctant to replenish stocks. Some traders were unwilling to move goods, believing that LME nickel prices will rebound in the near term. Amid mixed market sentiment, overall trading sentiment was cautious, and trading volumes were down from a day earlier.
 

SMM Daily Review - 2012/2/15 Base Metals Market

SMM Insight 09:15:01AM Feb 16, 2012 Source:SMM

SHANGHAI, Feb 16 (SMM) –

Copper
SHFE 1205 copper contract prices, the most active one, opened slightly higher by RMB 10/mt at RMB 60,260/mt Wednesday. After the opening, SHFE three-month copper contract prices continued to fluctuate weakly around the daily moving average of RMB 60,300/mt. During major trading hours for spot copper, as Chinese stock markets increased, and as LME copper prices climbed to USD 8,500/mt, SHFE three-month copper contract prices surged to an intraday high of RMB 61,000/mt. In the afternoon business, SHFE three-month copper contract prices moved at the highs around RMB 60,800/mt, posting firm performance, but gave up daily gains at the tail of trading as resistance at recent two moving averages emerged due to position closings. Finally, SHFE 1205 copper contract prices ended at RMB 60,430/mt, up RMB 180/mt or 0.3%. Positions for SHFE 1205 copper contracts were up 3,216 lots, and trading volumes were up 41,910 lots. Owing to great upside pressures and a lack of substantial buying support, the increase was limited for SHFE copper prices, which would continue to test support at the 20-day moving average.

In the spot market, SHFE copper prices surged after initially falling, and the price gap between SHFE 1202 and 1203 copper contracts remained around RMB 500/mt despite the delivery date for SHFE 1202 copper contracts Wednesday, propelling cargo-holders to believe spot copper prices would rise Thursday even if discounts emerged again and hold back goods. Therefore, spot copper offers were reported between discounts of negative RMB 20/mt and premiums of positive RMB 50/mt in Wednesday’s morning business. Traded prices for standard-quality copper were between RMB 59,400-59,700/mt, and RMB 59,450-59,750/mt for high-quality copper. Downstream producers were wary of purchasing since copper prices slipped for three consecutive days, leaving transaction volumes light. In the afternoon session, SHFE copper prices moving at highs, limited market supply owing to cargo-holders’ wait-and-see sentiment, as well as sluggish consumption constrained spot copper premiums, keeping copper offers virtually unchanged from the morning business levels. However, traded prices rose to between RMB 59,600-59,800/mt in the afternoon session. 

Aluminum
The most active SHFE three-month aluminum contract previously hit RMB 16,270/mt but closed with a slight RMB 5/mt or 0.03% gain at RMB 16,220/mt on Wednesday, mainly due to concerns towards sluggish demand. SMM expects the contract to experience further volatility and is likely to present some losses in the near term.

Spot aluminum traded between RMB 15,870-15,900/mt in Shanghai, at discounts of RMB 20-50/mt over the SHFE current-month aluminum price. The current-month SHFE aluminum contract was heavily pressured at the 5-day moving average on the last trading day before delivery, leading to slight losses in spot prices. Spot discounts over the contract consequently failed to hit zero. Goods holders’ were touting deals at slight discounts before the latter widen after shift of the current-month contract. Overall traded volume was limited though.

Lead
On Wednesday, SHFE 1204 lead contract become the most active one with prices opening down at RMB 15,825/mt and following a weak track. Despite the rebound along with the rising domestic stocks after 10:30, prices later fell slightly to surrender earlier gains with resistance at the 20-day moving average. SHFE lead prices finally closed at RMB 15,890/mt, up RMB 20/mt. Positions increased by 334 lots to 1,608 lots, trading volumes increased by 118 lots to 572 lots.

In Shanghai spot markets, well-known brands such as Chihong Zn & Ge, Chengyuan and Nanfang were initially quoted between RMB 15,750-15,800/mt, and then quotations rose to RMB 15,850/mt along with the SHFE lead prices, with discounts against the most active SHFE lead contract price at RMB 50-100/mt. Quotations for lead from Gejiu were at RMB 15,650/mt at first, but increased to around RMB 15,700/mt. Despite the increasing lead prices, downstream buyers were still cautious, leaving transactions unimproved.

Zinc
On Wednesday, SHFE 1205 zinc contract prices opened at RMB 15,950/mt, falling to the 20-day moving average in the morning session. Boosted by the Shanghai Composite Index, SHFE 1205 zinc contract prices gained back previous losses after dipping to an intraday low RMB 15,875/mt, touching RMB 16,080/mt in the afternoon. But as a large number of longs left the market with profit-taking, SHFE three-month zinc contract prices rolled back intraday gains to close at RMB 15,945/mt, down RMB 20/mt.

In domestic spot markets, spot discounts against SHFE 1205 zinc contract prices were RMB 300/mt, with spot prices between RMB 15,550-15,600/mt. As SHFE zinc prices rose, spot discounts expanded to RMB 340-350/mt, and traded prices were pushed up to RMB 15,650-15,700/mt, while #1 zinc was traded between RMB 15,500-15,570/mt. A large number of traders entered the market but downstream buyers were cautious, keeping transactions quiet.

Tin
Spot tin prices stabilized between RMB 176,000-180,000/mt on Wednesday, with supply at the low-end price dropping slightly. Small amounts of Jiangxi supplies were traded at RMB 175,500/mt. The buying interest has been low as stocks are still being consumed due to low operating rates downstream. Mainstream tin brands of the day were Yunxi, Yunxiang, Nanshan and Jinlong. Recent losses in domestic tin prices were mainly induced by dropping LME tin prices which damped goods holders’ confidence to hold quotations.

Nickel
During Wednesday’s Asian trading hours, LME nickel prices rebounded to certain extent after declining for three consecutive days. As of 3:00 pm, LME nickel advanced to around 30-day moving average, meeting strong resistance to climb further. During the European and the US trading hours, the Federal Reserve decided to announce January 24-25 monetary policy meeting minutes on 03:00 am Beijing time. According to the minutes, the US Fed decided to keep ultra-low interest rate unchanged, continue to implement “twist operation” and control yields of government bond. Fed’s decision may boost the US dollar index which has been relatively strong at present and may weigh on risk assets, including LME nickel.

In the Shanghai nickel spot market, mainstream traded prices of nickel from Jinchuan Group were between RMB 141,500-142,000/mt, and mainstream traded prices of nickel from Russia were between RMB 140,800-141,000/mt during the morning trading hours. As LME nickel prices advanced to certain extent during the afternoon trading hours, mainstream traded prices of nickel from Jinchuan Group were around RMB 142,500, and mainstream traded prices of nickel from Russia were between RMB 141,000-141,500/mt. Some downstream producers believed that LME nickel prices still had room to fall further, so they were reluctant to replenish stocks. Some traders were unwilling to move goods, believing that LME nickel prices will rebound in the near term. Amid mixed market sentiment, overall trading sentiment was cautious, and trading volumes were down from a day earlier.