SMM Daily Review – 2012/2/24 Base Metals Market

SMM Insight 10:00:12AM Feb 27, 2012 Source:SMM

SHANGHAI, Feb. 27 (SMM)--

Copper:
As LME copper prices rallied slightly overnight, SHFE 1205 copper contract prices, the most active one, opened RMB 130/mt up at RMB 60,370/mt Friday. After the opening, the SHFE copper contract for delivery in May moved lower all the way and only reached a high at RMB 60,580/mt, as LME copper prices fell to test USD 8,300/mt due to the surging US dollar. SHFE copper prices fell to as low as RMB 59,600/mt in the afternoon session after losing RMB 60,000/mt in the morning. Finally, SHFE 1205 copper contract prices settled at RMB 59,620/mt, down RMB 620/mt or 1.03%. Positions for SHFE 1205 copper contracts were up 13,560 lots, and trading volumes were up 103,000 lots. With growing selling pressures, SHFE copper prices lost support at recently moving averages and would likely lose the 30-day moving average.

SHFE copper prices moved lower after a high open, and transactions were restricted at RMB 61,000/mt. Spot copper supply decreased slightly, helping spot copper discounts move between negative RMB 430-300/mt in Friday's morning business. Traded prices for standard-quality copper were between RMB 59,250-59,450/mt, and RMB 59,350-59,550/mt for high-quality copper. Domestic standard-quality copper cargo-holders remained unwilling to move goods, during the whole trading day. High-quality copper was more favored by traders, but overall market activity was very light in the morning session. In the afternoon session, as SHFE copper prices slipped further, spot copper discounts fell to between negative RMB 380-280/mt, while traded prices declined to between RMB 58,950-59,200/mt. Some traders of hedged copper increased sale volumes, and both downstream producers and traders increased buying at below RMB 59,000/mt, causing market transactions to rise in the afternoon business. SHFE copper inventories were down 1,056 mt to 216,086 mt in the week ending February 24th, which may be a signal of improved consumption.

Aluminum:    
The most active SHFE aluminum contract for delivery in May opened lower and closed down RMB 65/mt or 0.4% at RMB 16,160/mt last Friday, despite strong performance of the Shanghai Composite Index. SHFE aluminum prices slide for two consecutive days and transactions dropped to below 7,000 lots. SMM expects the most active SHFE aluminum contract to test support at RMB 16,100/mt in the near term. SHFE aluminum stocks climbed 15,672 mt to 327,769 mt last week as a result of weak demand.

Spot aluminum traded between RMB 15,870-15,900/mt last Friday, at discounts of RMB 120-150/mt over the SHFE current-month aluminum price. While spot discounts narrowed slightly due to losses in SHFE aluminum prices, spot aluminum still faces heavy pressure at RMB 15,900/mt. Aluminum supply in Wuxi turned tight as a result of decreased inbound shipments, which helped mainstream traded spot aluminum price climb a little bit in the region. Light trading was still a prominent feature, however.

Lead:
On Friday, SHFE lead prices rose after opening at RMB 15,950/mt and moved around RMB 16,000/mt. In the afternoon, Pitch Ratings downgraded ratings for three Australian banks, the US dollar index rose slightly as a result, and LME lead prices hovered around RMB 2,150/mt. Thus, SHFE lead prices moved below the moving averages with resistance and dipped to RMB 15,970/mt. However, SHFE lead prices were relatively resilient to declines compared with other base metals and closed at RMB 15,990/mt, up RMB 105/mt. Trading volumes increased by 64 lots to 412 lots and positions were down 54 to 2,024 lots.

In China's domestic spot markets, initial quotation for well-known brands such as Chihong Zn & Ge were at RMB 15,900/mt, while Nanfang and Shuikoushan were quoted at RMB 15,880-15,900/mt, with discounts against the most active SHFE lead contract price at RMB 90-100/mt. At about 10:30 a.m., quotations for several brands decreased to RMB 15,850/mt. Quotations for Shenqian lead from Fujian were between RMB 15,760-15,780/mt. Prices remained basically unchanged in the afternoon. With lead prices starting to stabilize, smelters were cautiously moving goods over bullish outlook, while downstream buyers were more actively making inquiries.

Zinc:
Last Friday, SHFE three-month zinc contract prices opened at RMB 15,850/mt, touching RMB 15,965/mt in the morning session, but meeting resistance to fall below the moving average. As a large number of shorts sold goods in the midday, SHFE three-month zinc contract prices inched down in the afternoon to close at RMB 15,805/mt, down RMB 30/mt. Trading volumes increased by over 30,000 lots to 195,742 lots, and positions decreased by lots to 1,094 lots to 187,360 lots.

In domestic spot markets, #0 zinc prices were RMB 330-350/mt lower than SHFE three-month zinc contract prices, between RMB 15,500-15,550/mt, with transactions limited at the high end. #1 zinc was traded between RMB 15,450-15,500/mt. Downstream buyers were cautious, despite sufficient supply in the market, transactions were still muted.

Tin:
Spot tin was traded between RMB 172,500-175,500/mt in Shanghai last Friday, with the low end climbing a little bit and the high end staying unchanged. Nanshan, Kaiyuan and Jinlong branded ingots struck deals between RMB 172,500-173,000/mt. Goods holders lifted quotations to RMB 173,000/mt in the afternoon following active trading at RMB 172,500/mt in the morning. Yunshan and Yunxiang branded ingots mostly were traded between RMB 173,000-173,500/mt. Traded prices of Yunxi and Yunheng branded ingots were between RMB 174,000-175,500/mt. Deals were only slightly active at the low end price. Tin supply dropped as smelters withheld goods when prices were low.

Nickel:
Boosted by data from IFO, the euro versus the US dollar advanced to hit 2.5-month high. Meanwhile, Shanghai Composite Index also rallied to 2440 points. However, upbeat economic data still failed to boost LME nickel prices, with LME nickel prices falling slightly during Friday's Asian trading hours. During the European and the US trading hours, LME nickel prices met strong resistance at 5-day moving average and 10-day moving average to advance further, with weak upward momentum in the short term. However, the euro versus the US is expected to advance further in the short term, which will support LME nickel prices to certain extent.
 
In the Shanghai nickel spot market, mainstream traded prices of nickel from Jinchuan Group were between RMB 139,500-139,800/mt, and mainstream traded price of nickel from Russia were between RMB 138,800-139,000/mt during the morning trading hours. During the afternoon trading hours, domestic spot prices did not change much as LME nickel prices still in fluctuation trend. Since current nickel prices were relatively low, some downstream producers had willingness to replenish stocks, resulting in brisk transactions in the market. Trading volumes in the Shanghai and Tianjin market both increased, and nickel inventories in South China were also down.


 

 

 

 

 

 

 


 

SMM Daily Review – 2012/2/24 Base Metals Market

SMM Insight 10:00:12AM Feb 27, 2012 Source:SMM

SHANGHAI, Feb. 27 (SMM)--

Copper:
As LME copper prices rallied slightly overnight, SHFE 1205 copper contract prices, the most active one, opened RMB 130/mt up at RMB 60,370/mt Friday. After the opening, the SHFE copper contract for delivery in May moved lower all the way and only reached a high at RMB 60,580/mt, as LME copper prices fell to test USD 8,300/mt due to the surging US dollar. SHFE copper prices fell to as low as RMB 59,600/mt in the afternoon session after losing RMB 60,000/mt in the morning. Finally, SHFE 1205 copper contract prices settled at RMB 59,620/mt, down RMB 620/mt or 1.03%. Positions for SHFE 1205 copper contracts were up 13,560 lots, and trading volumes were up 103,000 lots. With growing selling pressures, SHFE copper prices lost support at recently moving averages and would likely lose the 30-day moving average.

SHFE copper prices moved lower after a high open, and transactions were restricted at RMB 61,000/mt. Spot copper supply decreased slightly, helping spot copper discounts move between negative RMB 430-300/mt in Friday's morning business. Traded prices for standard-quality copper were between RMB 59,250-59,450/mt, and RMB 59,350-59,550/mt for high-quality copper. Domestic standard-quality copper cargo-holders remained unwilling to move goods, during the whole trading day. High-quality copper was more favored by traders, but overall market activity was very light in the morning session. In the afternoon session, as SHFE copper prices slipped further, spot copper discounts fell to between negative RMB 380-280/mt, while traded prices declined to between RMB 58,950-59,200/mt. Some traders of hedged copper increased sale volumes, and both downstream producers and traders increased buying at below RMB 59,000/mt, causing market transactions to rise in the afternoon business. SHFE copper inventories were down 1,056 mt to 216,086 mt in the week ending February 24th, which may be a signal of improved consumption.

Aluminum:    
The most active SHFE aluminum contract for delivery in May opened lower and closed down RMB 65/mt or 0.4% at RMB 16,160/mt last Friday, despite strong performance of the Shanghai Composite Index. SHFE aluminum prices slide for two consecutive days and transactions dropped to below 7,000 lots. SMM expects the most active SHFE aluminum contract to test support at RMB 16,100/mt in the near term. SHFE aluminum stocks climbed 15,672 mt to 327,769 mt last week as a result of weak demand.

Spot aluminum traded between RMB 15,870-15,900/mt last Friday, at discounts of RMB 120-150/mt over the SHFE current-month aluminum price. While spot discounts narrowed slightly due to losses in SHFE aluminum prices, spot aluminum still faces heavy pressure at RMB 15,900/mt. Aluminum supply in Wuxi turned tight as a result of decreased inbound shipments, which helped mainstream traded spot aluminum price climb a little bit in the region. Light trading was still a prominent feature, however.

Lead:
On Friday, SHFE lead prices rose after opening at RMB 15,950/mt and moved around RMB 16,000/mt. In the afternoon, Pitch Ratings downgraded ratings for three Australian banks, the US dollar index rose slightly as a result, and LME lead prices hovered around RMB 2,150/mt. Thus, SHFE lead prices moved below the moving averages with resistance and dipped to RMB 15,970/mt. However, SHFE lead prices were relatively resilient to declines compared with other base metals and closed at RMB 15,990/mt, up RMB 105/mt. Trading volumes increased by 64 lots to 412 lots and positions were down 54 to 2,024 lots.

In China's domestic spot markets, initial quotation for well-known brands such as Chihong Zn & Ge were at RMB 15,900/mt, while Nanfang and Shuikoushan were quoted at RMB 15,880-15,900/mt, with discounts against the most active SHFE lead contract price at RMB 90-100/mt. At about 10:30 a.m., quotations for several brands decreased to RMB 15,850/mt. Quotations for Shenqian lead from Fujian were between RMB 15,760-15,780/mt. Prices remained basically unchanged in the afternoon. With lead prices starting to stabilize, smelters were cautiously moving goods over bullish outlook, while downstream buyers were more actively making inquiries.

Zinc:
Last Friday, SHFE three-month zinc contract prices opened at RMB 15,850/mt, touching RMB 15,965/mt in the morning session, but meeting resistance to fall below the moving average. As a large number of shorts sold goods in the midday, SHFE three-month zinc contract prices inched down in the afternoon to close at RMB 15,805/mt, down RMB 30/mt. Trading volumes increased by over 30,000 lots to 195,742 lots, and positions decreased by lots to 1,094 lots to 187,360 lots.

In domestic spot markets, #0 zinc prices were RMB 330-350/mt lower than SHFE three-month zinc contract prices, between RMB 15,500-15,550/mt, with transactions limited at the high end. #1 zinc was traded between RMB 15,450-15,500/mt. Downstream buyers were cautious, despite sufficient supply in the market, transactions were still muted.

Tin:
Spot tin was traded between RMB 172,500-175,500/mt in Shanghai last Friday, with the low end climbing a little bit and the high end staying unchanged. Nanshan, Kaiyuan and Jinlong branded ingots struck deals between RMB 172,500-173,000/mt. Goods holders lifted quotations to RMB 173,000/mt in the afternoon following active trading at RMB 172,500/mt in the morning. Yunshan and Yunxiang branded ingots mostly were traded between RMB 173,000-173,500/mt. Traded prices of Yunxi and Yunheng branded ingots were between RMB 174,000-175,500/mt. Deals were only slightly active at the low end price. Tin supply dropped as smelters withheld goods when prices were low.

Nickel:
Boosted by data from IFO, the euro versus the US dollar advanced to hit 2.5-month high. Meanwhile, Shanghai Composite Index also rallied to 2440 points. However, upbeat economic data still failed to boost LME nickel prices, with LME nickel prices falling slightly during Friday's Asian trading hours. During the European and the US trading hours, LME nickel prices met strong resistance at 5-day moving average and 10-day moving average to advance further, with weak upward momentum in the short term. However, the euro versus the US is expected to advance further in the short term, which will support LME nickel prices to certain extent.
 
In the Shanghai nickel spot market, mainstream traded prices of nickel from Jinchuan Group were between RMB 139,500-139,800/mt, and mainstream traded price of nickel from Russia were between RMB 138,800-139,000/mt during the morning trading hours. During the afternoon trading hours, domestic spot prices did not change much as LME nickel prices still in fluctuation trend. Since current nickel prices were relatively low, some downstream producers had willingness to replenish stocks, resulting in brisk transactions in the market. Trading volumes in the Shanghai and Tianjin market both increased, and nickel inventories in South China were also down.