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SMM Daily Review - 2012/3/20 Base Metals Market
Mar 21,2012 09:23CST
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SHFE 1206 copper contract prices, the most active one, opened RMB 310/mt higher at RMB 60,660/mt Tuesday.

SHANGHAI, Mar. 21 (SMM) –


SHFE 1206 copper contract prices, the most active one, opened RMB 310/mt higher at RMB 60,660/mt Tuesday. After the opening, SHFE copper prices slid immediately after fluctuating briefly, and only touched a high at RMB 60,790/mt. As a large number of short investors entered the market, positions increased to nearly 13,000 lots. SHFE copper prices thus drifted lower continuously, retreating to around RMB 60,200/mt in the afternoon session, but eased the falling momentum after touching the previous day’s low of RMB 60,120/mt. At the tail of trading, SHFE copper prices followed LME copper prices to rally above the daily moving average. However, due to position closings and as the Shanghai Composite Index fell by 1.4%, SHFE 1206 copper contract prices ended flat at RMB 60,350/mt. Positions for SHFE 1206 copper contracts were up 7,404 lots, and trading volumes were up 79,260 lots. SHFE copper prices would fluctuate near current values over the near term, due to unclear guidance from technical indicators but support at the low-end.

SHFE copper prices trended down after a high open, and SHFE 1204 copper contract prices also fell after initially increasing. Spot copper supply remained sufficient, so copper discounts failed to narrow, remaining between negative RMB 330-230/mt in the morning business. Traded prices for standard-quality copper were between RMB 59,450-59,600/mt, and RMB 59,550-59,850/mt for high-quality copper. Downstream producers increased buying at lower price levels, but wait-and-see sentiment still overshadowed markets. Market transactions remained limited as a result in the morning session. In the afternoon business, SHFE copper prices eased the falling momentum and rallied from the lows, so spot copper discounts expanded to between negative RMB 350-250/mt. Traded prices held flat with the morning business levels, but market transactions were fewer than the morning session levels, with both traders and downstream producers having no buying interest. 


The most active SHFE aluminum contract opened higher at RMB 16,180/mt on Tuesday following overnight gains of LME tin, but closed little changed from the previous trading day as the falling Shanghai Composite Index damped market confidence. SMM expects the contract to continue narrowly fluctuating above RMB 16,150/mt in the near term as a result of light trading and quietness on the macroeconomic side.

Spot aluminum traded between RMB 15,970-16,000/mt in Shanghai, at discounts of RMB 50-80/mt over the SHFE current-month aluminum price. Goods holders showed strong liquidating interest at high end prices but light trading indicates little consensus from the buyer side.


On Tuesday, SHFE lead prices opened slightly higher at RMB 15,905/mt but fluctuated down to move between RMB 15,820-15,860/mt later. At the tail of trading, SHFE lead prices found buying support and regained earlier losses to close at RMB 15,860/mt. Trading volumes decreased by 60 lots to 268 lots and positions were up 48 lots to 16,00 lots.

Spot prices in domestic markets changed little compared with the previous trading day. Quotations for brands such as Yubei and Shuikoushan were between RMB 15,820-15,850/mt. Lead supply from Yuguang increased with prices mainly around RMB 15,850/mt. In the afternoon, quotations for Shuikoushan were at RMB 15,790/mt due to the falling SHFE lead prices. Downstream buyers mainly made inquiries and transactions were limited.


On Tuesday, SHFE three-month zinc contract prices opened at RMB 15,925/mt and touched RMB 15,970/mt in the morning session, and plummeted below the 5-day moving average as large numbers of shorts sold goods. As LME zinc prices surged at the end of trading, SHFE three-month zinc contract prices rallied to close at RMB 15,885/mt, up RMB 15/mt. Trading volumes increased by nearly 60,000 lots to 180,810 lots, and total position decreased by 3,964 lots to 157,688 lots.

In domestic spot markets, discounts of #0 zinc were around RMB 300/mt against SHFE three-month zinc contract prices, with traded prices between RMB 15,580-15,600/mt. As SHFE zinc prices dropped, spot discounts narrowed to RMB 270-280/mt, with traded prices around RMB 15,550/mt. #1 zinc was traded between RMB 15,450-15,470/mt. Spot discounts expanded as SHFE zinc prices rose in the afternoon, with discounts of #0 zinc around RMB 350/mt against SHFE three-month zinc contract prices, but with transactions quiet.


Spot tin shed more losses to trade between RMB 171,000-173,000/mt on Tuesday. Nanshan, Yunshan, Jinhai, Feidie and Jinlong contributed deals between RMB 171,000-172,000/mt while Yuxi concluded most transactions between RMB 172,500-173,000/mt. A few deals at RMB 170,500/mt were seen in the afternoon in the face of volatile LME tin prices. Stock replenishments were rarely seen as downstream stayed on the sidelines.


On Tuesday, mainstream traded prices for Jinchuan nickel were between RMB 135,200-135,400/mt, and RMB 134,300-134,500/mt for Russian nickel in the Shanghai nickel market. LME nickel prices remained weak, and downstream demand was sluggish, resulting in limited transactions. In the afternoon session, no significant changes were reported in traded prices and volumes.

base metals
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