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SMM Daily Review – 2012/4/18 Base Metals Market
Apr 19,2012 09:42CST
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The most-traded SHFE copper contract for delivery in July opened RMB 440/mt up at RMB 57,260/mt Wednesday, as LME copper prices rallied overnight.

SHANGHAI, Apr. 19 (SMM)--

The most-traded SHFE copper contract for delivery in July opened RMB 440/mt up at RMB 57,260/mt Wednesday, as LME copper prices rallied overnight. SHFE copper prices moved lower after the opening, negatively affected by LME copper price movement, testing RMB 57,000/mt and falling to a low at RMB 56,910/mt. Near the midday, the Shanghai Composite Index surged by almost 2%, sending SHFE copper prices up to a level near RMB 58,000/mt. However, SHFE copper prices met resistance near this price mark, while short covering emerged. SHFE copper prices only touched a high at RMB 57,960/mt in the afternoon session and were pressured down below RMB 58,000/mt as new short investors entered the market, posting much weaker performance than LME copper. Finally, SHFE 1207 copper contract prices closed RMB 1,000/mt or 1.76% higher at RMB 57,820/mt. Positions for SHFE 1207 copper contract were down by 14,322 lots, while trading volumes were up 242,000 lots. Positions for SHFE 1208 copper contract were up 10,790 lots. SHFE copper prices need support from LME copper to break resistance at the 5-day moving average.

As SHFE copper prices edged higher, spot copper premiums turned into discounts of RMB 0-70/mt in the morning business. Cargo-holders chose to cut sale volumes at lower price levels. Low-quality hydro-copper was rarely seen in markets, and standard-quality copper supply was also limited. Downstream producers slowed purchases as they held skeptical attitudes towards copper price rebounds. Near the midday, copper prices surged by nearly RMB 1,000/mt, incurring chaos in market quotations. A small number of cargo-holders who didn't hedge against copper offered discounts of above negative RMB 100/mt, enticing some speculators to buy. Traded prices for standard-quality copper were between RMB 56,950-57,350/mt in the morning session, and RMB 57,000-57,400/mt for high-quality copper. Wait-and-see sentiment was growing as consumption slowed further, and market activity stagnated at prices above RMB 57,200/mt in the morning business. In the afternoon session, SHFE copper prices kept fluctuating at the highs, but spot copper offers were still in chaos, with mainstream offers reported between discounts of negative RMB 150-100/mt. Traded prices increased to between RMB 57,400-57,600/mt, and some traders favored high-quality copper with large discounts.  

The most active SHFE aluminum contract for July delivery opened higher at RMB 16,085/mt and closed up RMB 40/mt or 0.25% at RMB 16,110/mt on Wednesday, amid gains in both the Shanghai Composite Index and other base metals. The light metal was somewhat stagnant, however, compared with other base metals. Positions of the contract added 874 lots to 64,346 lots. SMM expects the contract to continue struggling at the RMB 16,100/mt mark in the near term lacking real support.
Spot aluminum traded between RMB 15,960-15,990/mt in Shanghai, at discounts of RMB 20/mt to premiums of RMB 10/mt over the current-month SHFE aluminum price. The current-month contract opened lower and recovered a little bit to RMB 16,005/mt, showing relative stability against its counterparts. Goods holders showed strong selling interest at prices above RMB 16,000/mt but the wait-and-see attitude still prevailed at downstream. The traded volume nevertheless climbed a little bit.

SHFE lead prices moved narrowly after opening at RMB 15,645/mt on Wednesday. Chinese domestic stock markets staged remarkable increase since 11:00 in the morning and continued to fluctuate up in the afternoon, driving SHFE lead prices to rise to RMB 15,700/mt. SHFE lead prices then moved between RMB 15,700-15,750/mt and closed the day up RMB 135/mt to RMB 15,735/mt. Trading volumes were down 32 lots to 234 lots, and positions were down 92 lots to 1,836 lots.
In China's domestic spot markets, quotations for Chihong Zn & Ge and Shuikoushan were initially between RMB 15,680-15,700/mt. Later, as SHFE lead prices dropped to RMB 15,650/mt, the well-known brands were quoted close to SHFE lead prices. However, the quotations rose to RMB 15,700/mt again since futures prices rallied at midday. Other brands such as Yunyue were mainly quoted at RMB 15,500/mt. Prices for branded lead remained between RMB 15,650-15,670/mt in the afternoon. Downstream buyers maintained cautious despite the changes of prices.

On Wednesday, SHFE three-month zinc contract prices opened higher at RMB 15,470/mt, moving between RMB 15,400-15,450/mt in the morning session and dipping to RMB 15,340/mt. Boosted by the Shanghai Composite Index, SHFE three-month zinc contract prices rallied, but as investors left the market at the end of trading, SHFE three-month zinc contract prices finally closed at RMB 15,535/mt, up RMB 140/mt or 0.91%. Trading volumes increased by 70,000 lots to 209,726 lots, and total position decreased by 1,930 lots to 188,920 lots.

In domestic spot markets, discounts of #0 zinc were around RMB 200/mt against SHFE 1207 zinc contract prices, and traded prices were between RMB 15,200-15,250/mt. #1 zinc was traded around RMB 15,200/mt. Transactions were muted as the market was cautious due to volatile zinc prices. Imported zinc was traded around RMB 15,300/mt, while domestic zinc prices were as high as RMB 15,350/mt, with transactions quiet.

Trading remained light in Shanghai tin market on Wednesday, with prices remaining relatively stable.  Mainstream traded prices were between RMB 164,500-166,500/mt. Nanshan, Feidie and Yunshan were mainly traded between RMB 164,500-165,500/mt, transactions for Jinlong were mainly done between RMB 164,300-164,500/mt in the afternoon. Most transactions for Yunxi were concluded at RMB 165,000-165,500/mt during trading hours. Offers by Yunxi were between RMB 166,500-167,000/mt. Trading market remained modest with a few deals done at low prices. Although tin ore prices fell slightly, smelters still considered raw material prices relatively high, while tin prices were not likely to stop falling. Smelters' selling interest was low with narrowing profit margins. Meanwhile, downstream enterprises were not willing to purchase due to unstable tin prices, leaving market depressed.

In the Shanghai nickel market, mainstream traded prices for Jinchuan nickel were between RMB 131,000-131,500/mt, and RMB 129,000-129,500/mt for Russian nickel. Trading activity was brisk in the morning business, but traders became less willing to sell goods as LME nickel prices climbed, leaving rare quotations in the afternoon business.








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