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SMM Daily Review - 2012/4/20 Base Metals Market
Apr 23,2012 09:33CST
smm insight
SHFE 1207 copper contract for delivery in July opened RMB 120/mt higher at RMB 57,670/mt Friday, and the most active SHFE aluminum contract for July delivery hit RMB 16,110/mt.

SHANGHAI, Apr. 23 (SMM)–


The most-traded SHFE copper contract for delivery in July opened RMB 120/mt higher at RMB 57,670/mt Friday, and then fluctuated around the price mark. Near the midday, the Shanghai Composite Index rose rapidly and recouped 2,400, and LME copper prices also increased stably to around USD 8,100/mt, causing SHFE copper prices to surge to around RMB 58,000/mt and touch a high at RMB 57,970/mt. In the afternoon session, SHFE copper prices lurched around RMB 57,800/mt narrowly and gave up some of daily gains at the tail of trading owing to position closings before sliding swiftly to levels above RMB 57,700/mt. Finally, SHFE 1207 copper contract prices closed RMB 200/mt or 0.35% higher at RMB 57,750/mt, with positions and trading volumes decreasing by 8,730 lots and 28,538 lots, respectively. RMB 58,000/mt would be a strong resistance for short-term SHFE copper prices.

As SHFE copper kept fluctuating in a narrow band, spot copper offers remained stable between discounts of negative RMB 100-50/mt in the morning business. Spot copper supply was also stable. The price gap between standard-quality copper and low-quality hydro-copper was still limited. Both traders and downstream producers were cautious in buying. Near the midday, SHFE copper prices experienced a wave of rapid increases, up by RMB 200/mt, leading market activity to stagnate, while spot copper discounts expanded sharply. Traded prices for standard-quality copper were between RMB 57,470-57,570/mt in the morning session, and RMB 57,500-57,670/mt for high-quality copper. In the afternoon business, SHFE copper prices fluctuated at the highs, so market activity in spot markets remained weak. Mainstream offers for spot copper discounts increased to between negative RMB 120-80/mt, with discounts for the “Guixi Brand” and other high-quality copper standing at negative RMB 80/mt. Traded prices rose to between RMB 57,700-57,850/mt in the afternoon session, leaving market activity quiet. SHFE copper inventories decreased by 10,657 mt to 211,170 mt last Friday, implying there was buying at the lows among copper price rebounds following the delivery date for SHFE 1204 copper contracts, which can support copper prices over the near term.

The most active SHFE aluminum contract for July delivery hit RMB 16,110/mt on Friday after the Shanghai Composite Index returned above 2,400, but retreated a little bit before finally settling RMB 25/mt or 0.16% higher at RMB 16,080/mt. Positions added 448 lots to 67,462 lots. Trading cooled amid narrowing gaps between different contracts. SMM expects the contract to continue testing the RMB 16,100/mt mark.

Spot aluminum traded between RMB 15,990-16,030/mt in Shanghai, at discounts of RMB 20/mt to premiums of RMB 20/mt over the current-month SHFE aluminum price. Traded volumes picked up slightly as middlemen were open to deals from both sides, after the current-month contract strengthened, and some downstream businesses replenished stocks.

SHFE lead prices opened at RMB 15,660/mt on Friday and moved weakly in the morning. In the afternoon, SHFE lead prices fluctuated up to touch a high of RMB 15,760/mt due to the rising domestic stocks, but met resistance at the 30-day moving average, with prices finally closed at RMB 15,740/mt, up RMB 80/mt. Trading volumes were up 86 lots to 172 lots, and positions were down 88 lots to 1,746 lots.

In China’s domestic spot markets, quotations for well-known brands such as Chihong Zn & Ge, Nanfang and Chengyuan were between RMB 15,650-15,680/mt, with discounts of RMB 30-50/mt against the most active SHFE lead prices. Yunyue from Gejiu region was quoted at RMB 15,520/mt. In the afternoon, spot prices rose to RMB 15,700/mt as futures prices moved up. Traders purchased moderately with bullish outlook and downstream enterprises purchased on an as-needed basis. Trading improved slightly.

Last Friday, SHFE three-month zinc contract prices opened at RMB 15,495/mt, fluctuating around the moving average in the morning session. In the midday, as the Shanghai Composite Index rose, and SHFE copper prices strengthened, SHFE three-month zinc contract prices surged to RMB 15,500/mt, but meet resistance at the 20-day moving average. Finally, SHFE three-month zinc contract prices closed at RMB 15,520/mt, up RMB 65/mt. Trading volumes decreased further by nearly 10,000 lots to 99,540 lots, and total position decreased by 3,598 lots to 184,676 lots.

In domestic spot markets, discounts of #0 zinc were between RMB 180-190/mt, with traded prices between RMB 15,250-15,280/mt. Spot discounts remained despite rising SHFE zinc prices, but transactions were muted. #1 zinc was traded around RMB 15,250/mt, with downstream purchases modest. But some traders entered the market and mainly bought registered brands, with transactions mainly made among traders. Stabilized SHFE zinc prices allowed spot discounts to expand to RMB 200/mt, and downstream buying interest was low.

SHANGHAI, Apr. 23 (SMM) – In Shanghai tin market, mainstream traded prices were between RMB 164,500-165,500/mt on Friday. Goods at lower prices were fewer in the market, leaving transactions quiet. Nanshan and Yunheng were mainly traded between RMB 164,500-165,000/mt, and mainstream traded prices for Yunxi were between RMB 165,000-165,500/mt. Futures prices for Yunxi and Yunheng were at RMB 164,000/mt. Second tier smelters limited sales with low selling interest, leading to sparse low-price goods in the market. Besides, declines in LME tin prices were arrested, somewhat easing markets fears. As a result, spot prices tended to stabilize. However, demand downstream did not improve.

Last Friday, mainstream traded prices of Jinchuan were between RMB 131,000-131,300/mt, and mainstream traded prices of Russian nickel were between RMB 129,000-129,500/mt. As LME nickel prices edged up during the day, downstream buyers increased purchases at lower prices, causing transactions to improve. Jinchuan Group lowered ex-work nickel prices, so traders increased goods supply, allowing trading volumes of Jinchuan nickel to increase.


daily review; base metals

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