SMM Daily Review – 2012/3/15 Base Metals Market

SHANGHAI, Mar. 16 (SMM) –

Copper
As LME copper prices fell overnight, SHFE 1206 copper contract prices, the most active one, opened RMB 630/mt lower at RMB 60,300/mt Thursday. SHFE copper prices posted weak performance during the whole trading day, fluctuating narrowly around the daily moving average of RMB 60,300/mt before the midday. In the afternoon business, as LME copper prices slid, and as Chinese stock markets closed down, SHFE copper prices drifted lower to RMB 60,100/mt, but were well supported at RMB 60,000/mt, with a low reaching RMB 60,030/mt. At the tail of trading, position closings by short investors helped SHFE copper prices return to early trading session levels, and rose further to an intraday high of RMB 60,580/mt. Finally, SHFE 1206 copper contract prices closed at RMB 60,420/mt, down RMB 510/mt, or a loss of 0.84%. Positions for SHFE 1206 copper contract were up 5,290 lots, while trading volumes were down 5,716 lots. SHFE copper prices faced great upside pressures near the daily moving average, but won solid support at RMB 60,000/mt. Hence, SHFE copper prices will continue to show resilience over the near term.

SHFE copper prices plunged, but the price gap between SHFE 1203 and 1204 copper contract held between RMB 300-400/mt. Besides, Thursday was the last trading day for SHFE 1203 copper contract. Some cargo-holders in spot markets thus were unwilling to move goods and insisted on premiums, hoping to sell at high price levels Friday. Mainstream offers were quoted between premiums of positive RMB 20-100/mt in the morning business. Traded prices for standard-quality copper were between RMB 59,420-59,520/mt during the trading day, and RMB 59,450-59,600/mt for high-quality copper. Downstream producers bought as needed at the lows, so overall market activity improved.

Aluminum
The most active SHFE aluminum contract for May delivery closed down RMB 25/mt or 0.15% at RMB 16,170/mt on Thursday while the Shanghai Composite Index dropped to 2,341 points, amid spreading worries towards industrial metals demand outlook damped by Chinese vow to maintain property curb.

Spot aluminum traded between RMB 15,920-15,960/mt in Shanghai, at discounts or premiums within RMB 20/mt over the SHFE current-month aluminum price on the last trading day before delivery date. Deals were limited as downstream buyers and middlemen stayed on the sidelines in the face of losses in the current-month SHFE aluminum price and weak demand.

Lead
On Thursday, SHFE lead prices opened slightly down at RMB 15,820/mt and followed a weak track. In the afternoon, prices fell to RMB 15,760/mt due to the dropping domestic stock markets, but gained support at the 30-day moving average. SHFE lead prices finally closed at RMB 15,850/mt, down RMB 70/mt. Traded volumes increased by 216 lots to 356 lots and positions were up 60 lots to 1,468 lots.

In domestic spot markets, spot prices fell by RMB 100/mt, quotations for brands such as Chihong Zn & Ge, Yubei were around RMB 15,850/mt, close to SHFE 1205 lead price. Prices for Dongling were between RMB 15,800-15,820/mt. In the afternoon, prices remained basically unchanged. Downstream buyers were cautious with bearish outlook, and transactions were modest.

Zinc
On Thursday, SHFE three-month zinc contract prices opened lower at RMB 15,830/mt and dipped to RMB 15,800/mt several times. As large numbers of buyers entering the market, SHFE three-month zinc contract prices fluctuated around the moving average during the day. In the afternoon, SHFE three-month zinc contract prices once dipped to RMB 15,805/mt, but rallied to close at RMB 15875/mt as the US dollar index fell, down RMB 155/mt or 0.97%. Trading volumes decreased by 67,738 lots to 161,758 lots, and total position decreased by 3,832 lots to 160,038 lots.

In domestic spot markets, discounts against SHFE three-month zinc contract prices remained around RMB 350/mt. #0 zinc was traded between RMB 15,500-15,550/mt, and #1 zinc was traded between RMB 15,450-15,500/mt. downstream buyers increased purchases, and goods supply available in the market was sufficient, with both traders and smelters actively moving goods.

Tin
Mainstream spot tin prices were little changed between RMB 173,000-174,500/mt in Shanghai on Thursday, as traders stood on the sidelines in the face of declining LME tin prices and weak demand. Nanshan, Jinlong and Guangsheng struck deals mainly at RMB 173,000/mt despite a few at RMB 172,800/mt. Feidie, Yunshan and Yunxi concluded transactions between RMB 173,500-174,000/mt. Deals at RMB 174,500/mt were also seen for low-lead Yunxi ingots.

Nickel
During Thursday's Asian trading hours, LME nickel prices fluctuated narrowly above 5-day moving average due to absence of solid news. During the European and US trading hours, although LME nickel prices were relatively weak due to strong rally of US dollar which is pointing to 81 and meeting strong resistance above after previous steady climb, LME nickel prices were resilient and did not fall sharply compared to other base metals. Currently, LME nickel prices are above 5-day and 10-day moving average, with short term support and limited room to fall further.

During the morning trading hours in the Shanghai nickel spot market, mainstream traded prices of nickel from Jinchuan Group were between RMB 137,700-138,000/mt, and mainstream traded prices of nickel from Russia were in the RMB 136,800-137,000/mt range. During the afternoon trading hours, spot nickel prices fell slightly amid LME nickel price decline and sluggish downstream demand, with traded prices of Jinchuan nickel between RMB 137,500-138,000/mt and traded prices of Russian nickel between RMB 136,600-136,900/mt. Transactions were still cautious and trading volumes were moderate.