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SMM Daily Review – 2012/4/19 Base Metals Market
Apr 20,2012 09:30CST
data analysis
The most-traded SHFE copper contract for delivery in July opened RMB 150/mt lower at RMB 57,310/mt Thursday.

SHANGHAI, Apr. 20 (SMM)--

The most-traded SHFE copper contract for delivery in July opened RMB 150/mt lower at RMB 57,310/mt Thursday. A falling US dollar during the day helped LME copper prices stand above USD 8,000/mt, which caused SHFE copper prices to stabilize around RMB 57,500/mt with an intraday low only at RMB 57,300/mt. At the tail of trading, as short investors were wary of building positions, SHFE copper prices surged to an intraday high of RMB 57,740/mt, which was lower than the prior day’s level, however, since the Shanghai Composite Index closed down. Finally, SHFE 1207 copper contract closed at RMB 57,670/mt, up RMB 210/mt or 0.37%. Trading volumes and positions for SHFE 1207 copper contract decreased by 266,000 lots and 6,080 lots, respectively, but positions for SHFE 1208 copper contract increased by 10,232 lots. SHFE copper prices won support at the 5-day moving average, but struggle between long and short investors existed. Coupled with limited bargain hunting when copper prices rebounded for two days in a row, sustainability of rebounds needed to be tested further.

SHFE copper prices extended rebounds. Spot copper supply increased as some warehouse warrants came into markets after SHFE 1204 copper contract was delivered. Spot copper discounts were thus quoted between negative RMB 100-50/mt in the morning business. Daily traded prices for standard-quality copper were between RMB 57,350-57,450/mt, and RMB 57,400-57,500/mt for high-quality copper. The price gap among all SHFE copper contracts expanded, but due to limited discounts, speculative activity was restricted, while downstream producers were also skeptical about copper price rebounds, leading market transactions to remain sluggish.

The most active SHFE aluminum contract for July delivery opened lower at RMB 16,060/mt and recovered a little bit to settle at RMB 16,075/mt on Thursday, down RMB 35/mt or 0.22%. Transactions dropped 2,102 lots to 10,136 lots while positions added 2,668 lots to 67,014 lots. Strong resistance still exists at the 5-day moving average. Difference between the most actively traded and current-month contracts dipped to a new low of RMB 40/mt.
Spot aluminum traded between RMB 15,970-16,000/mt in Shanghai, at discounts of RMB 0-20/mt over the current-month SHFE aluminum contract which have been unable to break through the RMB 16,000/mt mark. Selling interest was high but buying stayed light in the face of weak demand.

SHFE lead prices opened at RMB 15,665/mt on Thursday and rose to RMB 15,700/mt with buying support. In the afternoon, SHFE lead prices dropped to RMB 15,630/mt due to the falling Chinese domestic stocks, but regained the losses at the tail of trading to end the day at RMB 15,660/mt. Trading volumes were down 148 lots to 86 lots, and positions were down 2 lots to 1,834 lots.
In China’s domestic spot markets, lead prices changed little from the previous day. Quotations for Chihong Zn & Ge were initially at around RMB 15,700/mt. At midday, quotations for branded lead were lowered to RMB 15,670/mt. Shuangyan was quoted at RMB 15,600/mt and Yunyue from Gejiu region was quoted at RMB 15,480/mt. Quotations for branded lead were around RMB 15,650/mt in the afternoon. Traders and downstream enterprises were cautious and only purchased moderately.

On Thursday, SHFE three-month zinc contract prices opened at RMB 15,455/mt, and struggled around the moving average during the day, between RMB 15,450-15,500/mt. Both longs and shorts took a wait-and-see attitude due to the resistance at RMB 15,500/mt level. Boosted by SHFE copper prices, SHFE three-month zinc contract prices rose to close at RMB 15,470/mt, up RMB 10/mt. Trading volumes decreased by 100,000 lots to108,920 lots, and total position decreased by 646 lots to 188,274 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 15,250-15,280/mt. #1 zinc was traded between RMB 15,200-15,250/mt. Some goods flowed to spot markets post delivery, while downstream buyers were still cautious, but some traders entered the market.

In Shanghai tin market, spot tin prices fell on Thursday due to the declining LME tin prices, but the decrease was limited as prices gained support from insufficient goods supply. Mainstream traded prices were between RMB 164,000-165,500/mt and trading was modest. Kaiyuan, Jinlong and Nancang were mainly traded at RMB 164,000/mt. In the afternoon, some goods of Nancang were traded at RMB 163,500/mt. Most transactions for Yunxi and Yunheng were concluded between RMB 165,000-165,500/mt, and some transactions for Yunheng were made at between RMB 164,500/mt. Traders were unwilling to purchase due to uncertain market. As LME tin prices followed a weak trend and orders at downstream enterprises remained sluggish, market was dominated by pessimism.

Jinchuan Group cut ex-works nickel prices by RMB 4,000/mt to RMB 130,000/mt yesterday. In the Shanghai nickel market, mainstream traded prices for Jinchuan nickel were between RMB 131000-131300/mt, and RMB 129000-129500/mt for Russian nickel. Markets were cautious toward transactions due to uncertain risk event, keeping overall trading volumes low.








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