SMM Daily Review - 2012/4/10 Base Metals Market

SHANGHAI, Apr. 11 (SMM) --
Copper
The most actively-traded SHFE 1207 copper contract opened RMB 500/mt lower at RMB 59,610/mt Tuesday, as LME copper prices opened down. However, after the opening, SHFE copper prices followed LME copper prices to move higher, but began to fall after suffering resistance at the 5-day moving average of RMB 60,000/mt. Near the midday, China announced its copper import and export data fell in March MoM, which heightened selling pressures and caused SHFE copper prices to gather falling momentum. In the afternoon session, the sliding momentum of SHFE copper prices slowed after gaining support near the previous low of RMB 59,270/mt, with prices then fluctuating narrowly around RMB 59,500/mt. Finally, SHFE 1207 copper contract prices settled at RMB 59,370/mt, down RMB 740/mt or 1.23%. Positions for SHFE 1207 copper contracts were up 7,948 lots, and trading volumes were up 141,000 lots. Due to unclear technical indicators and stronger upside resistance, selling pressures for SHFE copper were increasing.

SHFE copper prices trended lower after a low open, helping spot copper offers turn to premiums of positive RMB 0-60/mt in the morning business. Traded prices for standard-quality copper were between RMB 59,100-59,280/mt, and RMB 59,150-59,350/mt for high-quality copper. Near the midday, China announced the latest copper import and export data slid from the previous month, sending SHFE current-month copper contract prices down towards RMB 59,000/mt. Traders and downstream producers in spot markets thus increased purchases significantly at lower price levels. In the afternoon session, as SHFE current-month copper contract prices lurched weakly around the RMB 59,000/mt mark, cargo-holders withheld goods at the lows, leading spot copper premiums to rise to between positive RMB 30-70/mt. Traded prices slid to between RMB 59,000-59,200/mt in the afternoon business, but most market players took a wait-and-see stance.  

Aluminum
The most active SHFE aluminum contract for June delivery opened lower at RMB 16,150/mt and closed down RMB 40/mt or 0.25% at the intraday low RMB 16,135/mt on Tuesday, as longs cleared their positions following report of a contraction in March imports. The highest price was RMB 16,185/mt. The slowing Chinese economy reignited a bearish market sentiment, with the most active SHFE aluminum contract being pressured at the 5-day moving average. SMM expects the contract to test support at the RMB 16,100/mt mark in the near term.

Spot aluminum traded between RMB 16,000-16,030/mt in Shanghai, at discounts of RMB 10/mt to premiums of RMB 20/mt over the current-month SHFE aluminum price. Most traders used current-month futures prices as their quotations and increased supply. Downstream buying was still weak, however, limiting expansion of spot premiums. Most deals were done at RMB 16,010/mt while the overall traded volume stayed light.

Lead
On Tuesday, market was depressed by the release of China’s March CPI data, with SHFE lead prices opening slightly lower at RMB 15,525/mt. Later, prices moved between RMB 15,625-15,660/mt with the rise of domestic stock markets, and fell at the tail of trading to finally close at RMB 15,600/mt, up RMB 20/mt. Trading volumes increased by 218 lots to 446 lots and positions were down 218 lots to 2,340 lots.

In domestic spot markets, prices changed little from the previous trading day. Quotations for Chihong Zn & Ge and Nanfang were between RMB 15,670-15,700/mt, and Hexing was quoted at RMB 15,630/mt. Transactions did not improve with both sellers and buyers remaining cautious.

Zinc
On Tuesday, SHFE three-month zinc contract prices opened at RMB 15,590/mt, and touched RMB 15,730/mt after opening, boosted by LME zinc prices overnight. In the midday, SHFE three-month zinc contract prices plunged with SHFE copper prices, and rolled back previous gains, dipping to an intraday low RMB 15,570/mt in the afternoon, with prices finally closing at RMB 15,595/mt, down RMB 70/mt.

In domestic spot markets, discounts of #0 zinc were between RMB 300-320/mt against SHFE 1207 zinc contract prices, with mainstream traded prices between RMB 15,370-15,400/mt. At noon, discounts narrowed to RMB 300/mt as SHFE plummeted, and traded prices of #0 zinc fell to RMB 15,350/mt. #1 zinc prices were around RMB 15,330/mt, and held firm at RMB 15,300/mt. downstream buyers were cautious since zinc prices did not stabilize.

Tin
Trading in Shanghai tin market remained light on Tuesday despite the falling prices, with mainstream traded prices between RMB 167,500-169,500/mt. Nanshan, Kaiyuan and Nancang were traded mainly between RMB 167,500-168,000/mt, while Yunxi, Yunshan and Yunxiang concluded most transactions at RMB 168,500-169,500/mt. Yunxi was quoted at RMB 170,000/mt by a few sellers, but transactions were few at the price level. Tin prices were dragged down as some sellers lowered prices this week. Since smelters were unwilling to move goods due to higher costs, while traders were cautiously purchasing due to soft consumption. Downstream buyers only purchased on an as-needed basis with weak demand, leaving strong wait-and-see sentiment in the market.

Nickel
In the Shanghai nickel market, mainstream traded prices for Jinchuan nickel were between RMB 132,600-132,800/mt, and RMB 130,800-131,500/mt for Russian nickel. In the afternoon business, domestic spot nickel prices fell back following LME nickel price trends, and mainstream traded prices for Jinchuan nickel slipped to near RMB 132,500/mt, while mainstream traded prices for Russian nickel fell to RMB 130,500-130,600/mt. Market demand was boosted after traders cut quotations, but some traders became reluctant to sell goods and even stopped selling in the afternoon business as the price range significantly squeezed their profit margins. Therefore, market demand failed to improve significantly, and overall trading activity was quiet as well.