Metals News
SMM Daily Review - 2012/4/6 Base Metals Market
smm insight
Apr 9,2012

SHANGHAI, Apr. 9 (SMM) --
The most actively-traded SHFE 1207 copper contract opened RMB 390/mt higher at RMB 60,040/mt last Friday, and just fluctuated narrowly around RMB 60,000/mt during the day, without guidance from LME copper prices. Stabilizing Chinese stock markets helped the bottom end SHFE copper prices rise to RMB 59,820/mt from the prior trading day. SHFE copper prices broke the previous fluctuating range at the tail of trading as short investors closed positions, increasing to an intraday high at RMB 60,460/mt. Finally, SHFE 1207 copper contract prices settled RMB 790/mt or 1.32% higher at RMB 60,440/mt. Positions for SHFE 1207 copper contracts were up 13,984 lots, but trading volumes were down 25,374 lots. Market activity was quiet while short and long investors were awaiting the release of the US nonfarm payrolls in the evening. SHFE copper prices suffered growing resistance at RMB 60,500/mt and were unlikely to break pressures at various moving averages over the near term.

Due to a closed LME copper market, investors in spot markets kept cautious. SHFE copper prices rebounded slightly, but spot copper supply decreased sharply, helping cargo-holders quote firm prices. Quotations for spot copper discounts were thus between negative RMB 130-60/mt in the morning business Friday. Traded prices for standard-quality copper were between RMB 59,280-59,320/mt, and RMB 59,320-59,400/mt for high-quality copper. Domestic copper smelters chose to withhold goods, hoping that spot copper discounts would narrow further in the coming week. Downstream producers, though, reduced purchases significantly following large stockpiling on the previous day, leaving market activity lackluster. In the afternoon business, SHFE copper prices still showed strong resilience, boosting market optimism towards future prices. Spot copper cargo became rarely seen as a result, and caused copper discounts to narrow further. Some high-quality copper already traded at premiums of positive RMB 0/mt in the afternoon session, while traded prices edged higher to between RMB 59,320-59,450/mt. SHFE copper stocks increased by 3,278 mt to 222,092 mt in the week ending April 6th.

With the lack of direction from LME aluminum market, SHFE 1206 aluminum contract, the most active one, opened slightly up at RMB 16,115/mt on Friday. In earlier session, SHFE three-month aluminum prices climbed above the 5-day moving averages after finding support at RMB 16,100/mt. With the absence of strong long positions, SHFE three-month aluminum prices did not reach RMB 16,200/mt. Finally, SHFE aluminum prices finished at RMB 16,190/mt, up RMB 125/mt or 0.78%.

In the short term, SHFE three-month aluminum prices are expected to stabilize at the 5-day moving averages and may climb above RMB 16,200/mt, along with possibility of reserve requirement cuts in China, and rumors of production cuts at aluminum producers.

On Friday, deals in the Shanghai spot market were made between RMB 15,980-16,010/mt, with discounts and premiums between negative RMB 20- positive RMB 10/mt. There were only two trading days after the Qingming Festival, and downstream aluminum processing producers were active replenishing goods. But, some cargo-holders became unwilling to move goods, as SHFE aluminum market recouped earlier losses and the possibility of monetary loosening also boosted market confidence, helping spot aluminum prices return RMB 16,000/mt. With limited low-priced goods, market transactions dropped slightly from a day earlier due to the struggle between suppliers and buyers. 

Despite the sharp rise in LME lead prices overnight, SHFE lead prices presented limited increase on Friday. SHFE lead prices fell to RMB 15,360/mt briefly after opening at RMB 15,660/mt, and then rose to move between RMB 15,530-15,580/mt. At the tail of trading, SHFE lead prices climbed further on account of domestic stock markets to finally close at RMB 15,680/mt, up RMB 150/mt. Trading volumes decreased by 20 lots to 266 lots and positions were up 52 lots to 2,558 lots.

In domestic spot markets, lead prices moved up slightly and sellers were more willing to move goods. Quotations for Yuguang, Chihong Zn & Ge and Shuikoushan were between RMB 15,670-15,700/mt, and Shenqian was quoted at RMB 15,640/mt. Downstream buyers still purchased on an as-needed basis.

Last Friday, SHFE three-month zinc contract prices opened at RMB 15,515/mt and moved around the moving average during the day between RMB 15,450-15,500/mt. Positions increased by 30,000 lots, as large numbers of shorts left the market in the afternoon, SHFE three-month zinc contract prices rallied and finally closed at RMB 15,670/mt, up RMB 280/mt. Trading volumes increase by over 20,000 lots to 172,512 lots, and total position increased by 20,508 lots to 177,938 lots.

In domestic spot markets, discounts of #0 zinc were between RMB 240-270/mt against SHFE 1207 zinc contract prices, and traded prices were between RMB 15,200-15,250/mt. #1 zinc was traded between RMB 15,150-15,200/mt. Transactions were muted as buyers were cautious.

On Friday, transactions in SHFE tin market remained quiet without directions from LME tin prices, and mainstream transactions were made between RMB 169,000-170,000/mt. Nancang, Nanshan, Jinlong and Kaiyuan were mainly traded at RMB 169,000/mt, while traded prices of Yunshan and Xiangxi were at RMB 169,500/mt. Yunxi concluded most transactions at RMB 170,000/mt. Some goods of Nanshan, Kaiyuan and Nancang were traded at RMB 168,500/mt. Goods supply in the market was insufficient, and traders were not willing to replenish in large amounts considering the unsteady tin prices. Buying interest among downstream enterprises was low due to a lack of orders. Trading for spot tin was still light in general.

In the Shanghai nickel spot market, mainstream traded prices of nickel from Jinchuan Group were in the RMB 132800-133000/mt range, and mainstream traded prices of nickel from Russia were in the RMB 131500-132000/mt range. Overall trading activity was sluggish given weak demand and the lack of direction from LME market. 


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