SMM Daily Review – 2012/4/17 Base Metals Market

SHANGHAI, Apr. 18 (SMM)--

Copper:
The most-traded SHFE copper contract for delivery in July opened RMB 170/mt up at RMB 57,020/mt Tuesday, since LME copper prices recouped the USD 8,000/mt mark Monday. Large-scale sell-offs emerged immediately after the opening, and LME copper prices lost USD 8,000/mt again due to an increasing US dollar, both of which led SHFE copper prices to drift lower to RMB 56,850/mt, with a high only at RMB 57,090/mt. In the afternoon business, the Shanghai Composite Index slid by 1%, dragging down SHFE copper prices which gathered falling momentum at the tail of trading and slid to a low at RMB 56,490/mt. Finally, SHFE 1207 copper contract prices ended RMB 320/mt or 0.56% lower at RMB 56,530/mt, with trading volumes decreasing by 31,608 lots and positions increasing by 17,546 lots. Owing to the existing selling pressures, SHFE copper prices are likely to continue to post weak performance for the near future.

SHFE copper prices trended lower after a high open. But SHFE 1204 copper contracts had been delivered, causing spot copper premiums to narrow between positive RMB 0-50/mt in the morning business. Traded prices for standard-quality copper were between RMB 56,800-56,850/mt, and RMB 56,830-56,900/mt for high-quality copper. The price gap among all SHFE copper contracts was extremely limited, leaving nearly no speculative room. Cargo-holders hesitated in moving goods and quoted high prices. The price differential between standard- and high-quality copper was also very small. Downstream producers generally stood on the sidelines in the face of unstable prices in the morning session, brining market activity into stalemate. In the afternoon business, SHFE copper prices kept weak performance, but consumption failed to improve, which led spot copper offers to stand between discounts of negative RMB 20/mt and premiums of positive RMB 30/mt. Traded prices inched down to between RMB 56,700-56,850/mt in the afternoon session, which heightened bearish sentiment, resulting in limited market transactions.

Aluminum:
The most active SHFE aluminum contract for delivery in July opened at RMB 16,075/mt and closed down RMB 20/mt or 0.12% at RMB 16,050/mt on Tuesday, after being dragged back from RMB 16,100/mt by short selling. Positions gained 2,164 lots to 63,472 lots while transactions contracted noticeably to 8,000 lots. Though the bearish market sentiment has been preventing a rebound, the downward space is limited by production costs.
Spot aluminum traded between RMB 15,950-15,980/mt in Shanghai, at discounts of RMB 20/mt to premiums of RMB 10/mt over the current-month SHFE aluminum contract. Traders were open to deals at slight discounts after the current-month contract recovered a little bit on the heel of gapping lower due to a shift in delivery month. Downstream and middlemen only bought cheaper goods and became unwilling to spend money after spot prices climbed to near RMB 16,000/mt.

Lead:
On Tuesday, SHFE lead prices opened at RMB 15,660/mt with relatively strong resilience to declines and moved narrowly between RMB 15,610-15,650/mt with market sentiments remaining depressed. SHFE lead prices ended the day at RMB 15,600/mt. Trading volumes were up 54 lots to 266 lots, and positions were down 138 lots to 1,928 lots.
In China's domestic spot markets, quotations for Chihong Zn & Ge were between RMB 15,640/mt. Other brands such as Shuangyan and Shenqian were mainly quoted between RMB 15,550-15,580/mt. Quotations for lead from Gejiu region maintained at RMB 15,470/mt. Spot prices changed little in the afternoon. Transactions were modest on the whole.

Zinc:
On Tuesday, SHFE three-month zinc contract prices opened higher at RMB 15,410/mt, meeting resistance at the 5-day moving average. As the Shanghai Stock Exchange fell, SHFE three-month zinc contract prices plummeted to the intraday low at RMB 15,365/mt, then rallied to the moving average, but dipped to close at RMB 15,370/mt, down RMB 5/mt. Trading volumes decreased by 30,000 lots to 130,354 lots, and total position increased by 2,438 lots to 190,850 lots.

In domestic spot markets, discounts of #0 zinc were around RMB 200/mt against SHFE 1207 zinc contract prices, and traded prices were at RMB 15,200/mt. #1 zinc was traded between RMB 15,180/mt. Transactions were muted as spot transactions were only made by downstream buyers.

Tin:
In Shanghai tin market, tin prices continued to fall on Tuesday due to the slump in LME tin prices. The limited goods supply in the market failed to give strong support to prices, with mainstream traded prices between RMB 164,500-167,000/mt. Nanshan and Yunshan were mainly traded between RMB 164,500-165,000/mt, while transactions for Yunxi were mainly done between RMB 165,000-166,000/mt. Some transactions for Feidie were concluded at RMB 164,000/mt. Some goods for Yunxi were also quoted at RMB 167,000/mt. Selling interest at smelters remained low, and market was still quiet with weak demand.

Nickel:
In the Shanghai nickel market, spot prices staged sharp losses along with tumbling LME nickel prices on Tuesday. Mainstream traded prices for Jinchuan Group nickel were between RMB 130,200-130,500/mt, and RMB 128,300-128,500/mt for Russian nickel. Price declines generated some buying interest at low prices, with more inquiries reported. Trading activity, however, remained cautious due to the absence of a clear trend in the LME nickel market, resulting in quiet trading on Tuesday.