SMM Daily Review - 2012/4/12 Base Metals Market

SHANGHAI, Apr. 13 (SMM) --
Copper
The most-traded July copper contract on the SHFE opened RMB 20/mt lower at RMB 58,010/mt Thursday and fluctuated briefly around RMB 58,150/mt after the opening. However, as LME copper prices trended down, SHFE copper prices slid to RMB 57,950/mt and then a low at RMB 57,860/mt. In the afternoon session, the Shanghai Composite Index surged by 1.8%, and LME copper prices broke through USD 8,100/mt, both of which helped SHFE copper prices advance to an intraday high of RMB 58,390/mt. Finally, the most-traded SHFE copper contract closed at RMB 59,250/mt, up RMB 220/mt or 0.38%, with positions up by 1,718 lots but trading volumes down by 66,604 lots. SHFE copper prices would continue to test RMB 58,000/mt due to divergence between long and short investors.

SHFE near-term copper contract prices were higher than SHFE forward contract prices, so activities of buying spot copper and selling SHFE copper contracts were discontinuous, leading spot copper supply to decrease sharply from the previous day. Cargo-holders who didn’t conduct hedge trading therefore chose to hold offers around premiums of positive RMB 100/mt. Mainstream spot copper premiums were quoted between positive RMB 60-120/mt in the morning business. Traded prices for standard-quality copper in spot markets were between RMB 57,720-57,820/mt in the morning session, and RMB 57,760-57,950/mt for high-quality copper, both falling below RMB 58,000/mt completely amid the sliding SHFE copper prices. As a result, downstream producers made purchases actively. In the afternoon business, SHFE copper prices increased, so spot copper premiums fell slightly to between positive RMB 30-80/mt. Both traders and downstream producers increased purchases when copper prices slid in the afternoon session, with overall trading sentiment similar with that in the morning business.

Aluminum
The most active SHFE aluminum contract for July delivery climbed RMB 75/mt or 0.47% to RMB 16,175/mt on Thursday, tracking gains in the Shanghai Composite Index. Strong resistance at the 5-day moving average had dragged the contract back from RMB 16,190/mt the intraday high. The recovery followed a plunge on Wednesday and was constrained by a drop in transactions to below 10,000 lots. SMM expects low possibility for the contract to break through the RMB 16,200/mt mark in the near term.

Spot aluminum traded between RMB 15,960-15,990/mt in Shanghai, at discounts of RMB 10/mt to premiums of RMB 20/mt over the SHFE current-month aluminum contract which failed to rebound as other contracts did. The selling interest was strong but buying stayed weak, inducing discounted deals. Most deals were done between RMB 15,960-15,980/mt.
 
Lead
On Thursday, SHFE lead prices opened slightly higher at RMB 15,580/mt and maintained stable around moving averages in the morning session. In the afternoon, Chinese domestic stocks jumped, boosting SHFE lead prices to hit a high of RMB 15,845/mt and finally close at RMB 15,665/mt, up RMB 205/mt, a growth of 1.33%. Trading volumes increased by 210 lots to 344 lots and positions were down 122 lots to 2,218 lots.

In China’s domestic spot markets, quotations for Chihong Zn & Ge and Nanfang were between RMB 15,650-15,660/mt, and lead of Yunyue from Gejiu region was quoted at RMB 15,580-15,600/mt. Selling interest improved with the increase of lead prices, but downstream consumption remained soft.

Zinc
On Thursday, SHFE three-month zinc contract prices opened at RMB15, 460/mt and fluctuated between RMB 15,450-15,500/mt, around the moving average. Boosted by the Shanghai Composite Index, SHFE three-month zinc contract prices surged in the afternoon, and finally closed at RMB 15,550/mt, up RMB 115/mt or 0.75%. Trading volumes decreased by nearly 30,000 lots to 157,280 lots, and total position decreased by 2,070 lots to 176,398 lots.

In domestic spot markets, discounts of #0 zinc were between RMB 210-220/mt against SHFE 1207 zinc contract prices, with mainstream traded prices between RMB 15,200-15,250/mt. #1 zinc prices were between RMB 15,180-15,200/mt, and held firm at RMB 15,300/mt. Buying interest improved as zinc prices began to stabilize. SHFE zinc prices rose in the afternoon, but discounts struggled between RMB 220-240/mt due to the lack of goods supply. Spot prices rose to RMB 15,300/mt, but purchases were muted. 
 
Tin
On Thursday, spot prices in Shanghai tin market continued to fall with transactions remaining quiet. Mainstream traded prices were between RMB 166,500-169,000/mt. Nanshan, Kaiyuan, Yunxiang and Xiangxi were mainly traded between RMB 166,500-167,000/mt, while most deals for Yunshan and Yunxi were concluded at RMB 167,300-168,000/mt. Transactions for Yunxi done at RMB 169,000/mt were also reported. Trading for low-price goods improved moderately. During this week, transactions turned relatively brisk due to falling tin prices. However, trading sentiment still maintained modest. Meanwhile, many smelters were not willing to move goods on account of lower tin prices.

Nickel
In the Shanghai nickel market, mainstream traded prices for Jinchuan nickel were between RMB 131,300-131,500/mt, and RMB 129,500-129,800/mt for Russian nickel. In the afternoon business, traders became unwilling to sell goods in the face of continuous rises in LME nickel prices. As a result, overall transaction volumes were still limited despite more downstream inquiries.