SMM Daily Review – 2012/3/9 Base Metals Market

SHANGHAI, Mar. 12 (SMM) –

Copper
SHFE 1206 copper contract prices, the most active one, opened RMB 80/mt higher at RMB 59,690/mt Friday. After the opening, as Chinese stock markets rose following the release of China's falling CPI data from the National Bureau of Statistics, SHFE copper prices trended higher stably, breaking the 5-day moving average before meeting upward resistance at near RMB 60,400/mt. SHFE copper prices fluctuated narrowly at above RMB 60,200/mt in the afternoon session, and rose further to a high RMB 60,560/mt at the tail of trading as short investors closed positions. Finally, SHFE 1206 copper contract prices ended at RMB 60,520/mt, up RMB 910/mt or 1.53%. Positions for SHFE 1206 copper contract were up 212 lots, while trading volumes were up 80,640 lots. Due to profit-taking by long investors and unclear technical indicators, SHFE copper prices would look for support. 

In spot markets, SHFE copper prices moved higher after a high open as China's CPI growth data for February fell as markets expected. Cargo-holders, though, refused to offer big discounts as the delivery date for SHFE 1203 copper contract approaches. Mainstream offers therefore were quoted between discounts of negative RMB 80-0/mt in the morning business. Traded prices for standard-quality copper were between RMB 59,250-59,400/mt, and RMB 59,300-59,500/mt for high-quality copper. Downstream producers chose to stay away from markets amid rebounding copper prices, so consumption failed to improve. High-quality copper was not seen to trade at premiums, and market activity stagnated. In the afternoon business, SHFE copper prices moved at the highs, but cargo-holders were optimistic about copper prices after the delivery date and thus narrowed discount offers to between negative RMB 50-0/mt. However, traded prices surged to between RMB 59,400-59,550/mt in the afternoon session, while consumption remained weak. Copper inventories monitored by the SHFE increased by 3,294 mt to 224,781 mt in the week ending March 9th, highlighting the delivery date nears, but that consumption failed to improve.

Aluminum
The most active SHFE aluminum contract for May delivery closed up RMB 30/mt or 0.19% at RMB 16,195/mt with a lower-than-expected February CPI growth and a 0.79% gain in the Shanghai Composite Index. The contract found its high at RMB 16,230/mt after opening at RMB 16,155/mt. Transacted contracted increased slightly to 5,804 lots while total positions climbed 324 lots to 51,514 lots. SMM expects the contract to test resistance at the 30-day moving average as longs provide more support.

Spot aluminum traded between RMB 15,920-15,940/mt, at discounts of RMB 40-60/mt over the SHFE current-month aluminum price, in Shanghai. Despite support from lower consumer prices, weak demand has been limiting the trading band.

Lead
On Friday, SHFE lead prices opened at RMB 15,900/mt and fluctuated up due to the increase in LME lead prices. In the morning, as China's February CPI growth was 3.2% according to National Bureau of Statistics, within expectations, SHFE lead prices were promoted and continued to rise. SHFE lead prices finally closed at the intraday high of RMB 15,970/mt, up RMB 190/mt, or 1.2%. Traded volumes decreased by 110 lots to 92 lots and positions were down 8 lots to 1,298 lots.

In China's domestic spot markets, quotation for well-known brands such as Chihong Zn & Ge, Nanfang were around RMB 15,850/mt, with discounts over the most active SHFE lead contract price at RMB 50/mt. Yubei lead was quoted between RMB 15,780-15,830/mt, and quotations for Shenqian were at RMB 15,700/mt. In the afternoon, spot lead was quoted higher along with the increasing SHFE lead prices, with quotations for Chihong Zn & Ge up to RMB 15,890/mt, and Yubei up to RMB 15,870/mt. Traded prices changed little, and a few transactions for lead from Gejiu region were made at RMB 15,730/mt. With lead prices stabilizing, smelters sold goods in limited amounts, and downstream buyers purchased moderately with bullish outlook. Transactions remained flat from previous trading day.

Zinc
Last Friday, SHFE three-month zinc contract prices dipped to the intraday low at RMB 15,765/mt after opening, and rallied to the moving average following LME zinc prices. As China's CPI rose 3.2% in February, in line with market speculations, risk appetite improved. SHFE three-month zinc contract prices edged up to touch RMB 15,905/mt, and finally closed at RMB 15,890/mt, up RMB 170/mt. Trading volumes decreased by 23,704 lots to 148,042 lots, and total position decreased by 6,400 lots to 153,338 lots.

In domestic spot markets, discounts of #0 zinc remained between RMB 230-250/mt against SHFE 1206 zinc contract prices, with traded prices around RMB 15,500/mt. Transactions were mostly made in the morning session. #1 zinc was traded around RMB 15,450/mt. Downstream buying interest was strong initially, but reduced purchases after SHFE zinc prices rose.

Tin
Spot tin prices rebounded slightly to RMB 170,000-172,000/mt last Friday in Shanghai, backed by a bullish market sentiment and somewhat tight supply. Mainstream tin brands appeared in the day were Yunxi, Yunheng, Feidie, Nanshan and Jinlong. The bullish atmosphere also led to some stock replenishments by downstream and middlemen.

Nickel
During last Friday's Asian trading hours, LME nickel prices advanced to USD 19,078/mt after opening at USD 18,775/mt. However, investors were largely cautious amid steady price decline, so LME nickel prices pared certain gains later. Close attention should be paid to the US non-farm employment data, which will guide LME base metal price performance. LME nickel inventories were 97,146 mt, down 780 mt.

In the 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 134,700-135,000/mt range during the morning trading hours. Downstream buying interest was low, and purchases were largely made on an as-needed basis. During the afternoon trading hours, traded prices of Jinchuan nickel were around RMB 135,000/mt, and traded prices of Russian nickel were between RMB 134,600-134,700/mt, with quiet trading sentiment reported.