SMM Daily Review - 2012/3/8 Base Metals Market

Shanghai, Mar. 9 (SMM) --

Copper

As LME copper prices rallied overnight, SHFE 1206 copper contract prices, the most active one, opened RMB 290/mt higher at RMB 59,670/mt Thursday. Both LME copper prices and Chinese stock prices rose stably during the whole trading day, but SHFE copper prices failed to break out technical resistance and only fluctuated around the daily moving average of RMB 59,600/mt due to a lack of buying support, with an intraday high at RMB 59,800/mt and low at RMB 59,430/mt. Finally, the most actively-traded copper contract closed at RMB 59,500/mt, up RMB 120/mt or 0.2%. Positions for SHFE 1206 copper contract were down 138 lots, and trading volumes were down 25,062 lots. Investors mainly conducted intraday operations, and their speculative interest weakened. Hence, SHFE copper prices would face resistance at RMB 60,000/mt over the near term.
 
In spot markets, as SHFE copper prices rebounded marginally, cargo-holders for hedge trading were eager to move goods, depressing spot copper premiums. Some high-quality copper even traded at slight discounts, so the price gap between standard-quality and high-quality copper was extremely small. Mainstream copper offers were quoted between discounts of negative RMB 50/mt and premiums of positive RMB 20/mt in the morning business. Traded prices for standard-quality copper were between RMB 58,850-58,980/mt during the whole trading day, and RMB 58,920-59,050/mt for high-quality copper. The supply of low-quality copper was limited, highlighting cargo-holders’ unwillingness in sales given discounts. Market activity was modest as downstream producers made fewer transaction volumes than the previous day.

Aluminum

Despite the climbing Shanghai Composite Index, the most active SHFE aluminum contract for May delivery closed lower at RMB 16,140/mt on Thursday due to stop-loss of longs. Transacted contracts dropped to 3,098 lots while positions fell 288 lots to 51,190 lots. SMM expects the contract to move in the narrow range between the 5-day and 30-day moving averages.
 
Spot aluminum traded between RMB 15,900-15,930/mt in Shanghai, at discounts of RMB 40-70/mt over the SHFE current-month aluminum price. Low-iron aluminum traded between RMB 16,000-16,020/mt. Spot aluminum prices in Wuxi were between RMB 15,900-15,930/mt. After the high-end of SHFE aluminum prices climbed slightly, deals increased, but stayed light due to excessive supply.

Lead

On Thursday, SHFE 1204 lead contract price opened at RMB 15,700/mt and fluctuated up to move around RMB 15,750/mt. Later, SHFE lead prices moved up due to increasing LME lead prices and finally closed at RMB 15,810/mt, up RMB 145/mt. Traded volumes decreased by 376 lots to 202 lots and positions were down 32 lots to 1,306 lots.
In China’s domestic spot markets, quotation for well-known brands such as Chihong Zn & Ge, Yuguang were around RMB 15,700/mt, with discounts over the most active SHFE lead contract price at RMB 50-80/mt. Other brands were quoted at RMB 15,650/mt. In the afternoon, quotations for Yuguang and Chihong Zn & Ge rose to RMB 15,720-15,730/mt along with SHFE lead prices. Smelters sold goods in limited amounts, and downstream buyers were willing to buy goods at lower prices, with transactions improving in general.

Tin

Spot tin prices were between RMB 169,000-171,000/mt in Shanghai on Thursday, little changed from the previous trading day, as market players stood on the sidelines in the face of weak demand which has failed to pick up as expected and waiting for final results of Greek debt swap. Nanshan and small amounts of Jinlong branded ingots struck deals at the low-end RMB 169,000/mt. Feidie and Yunxi concluded transactions between RMB 170,000-171,000/mt.

Nickel

During Thursday’s Asian trading hours, LME nickel prices advanced to USD 19,275/mt after a slight high open at USD 190,210/mt on positive development of Greek debt issue. However, LME nickel prices shall continue to fluctuate as it takes time to tell whether nor not the debt swap will go smoothly.

During the morning trading hours in Shanghai nickel spot market, mainstream traded prices of nickel from Jinchuan Group were in the RMB 135,000-135,300/mt range, and mainstream traded prices of nickel from Russia were in the RMB 135,000-135,200/mt range, with moderate transactions reported. During the afternoon trading hours, offers of spot nickel advanced. It was reported that Jinchuan nickel was offered at RMB 135,800/mt and Russian nickel was offered at RMB 135,300/t, with muted transactions reported.