SMM Daily Review – 2012/4/24 Base Metals Market

SHANGHAI, Apr. 25 (SMM) –

Copper
As LME copper prices continued to fall overnight, the most-traded SHFE copper contract for delivery in July opened RMB 260/mt lower at RMB 57,410/mt Tuesday. Chinese stock markets tested support at the 5-day moving average during the day. SHFE copper prices lurched narrowly around RMB 57,500/mt, testing a low at RMB 57,200/mt and reaching a high at RMB 57,840/mt. SHFE 1207 copper contract prices finally ended RMB 70/mt or 0.12% lower at RMB 57,600/mt, with trading volumes increasing by 32,418 lots but positions decreasing by 35,398 lots. Positions for SHFE 1208 copper contract were up by 11,558 lots. Long and short investors struggled at levels around RMB 57,500/mt.

As SHFE copper prices experienced volatilities, the price gap among all SHFE copper contracts was reverted, leaving little speculative room. The SHFE/LME copper price ratio remained unfavorable, causing cargo-holders to reduce sale volumes. Spot copper supply thus decreased, leading spot copper discounts to be quoted between negative RMB 70-20/mt in the morning business. Traded prices for standard-quality copper were between RMB 57,380-57,560/mt, and RMB 57,420-57,680/mt for high-quality copper. Owing to cash flow problems at the month's end, both traders and downstream producers stuck to the sidelines. In the afternoon business, as SHFE copper prices continued to fluctuate in a narrow band, and as spot copper supply decreased further, spot copper discounts fell marginally to negative RMB 60-20/mt. Cargo-holders of standard-quality copper especially insisted on higher price quotations, but the highest traded price was lower than the morning business level, leaving market activity lackluster. 

Aluminum
The most active SHFE aluminum contract for July delivery started lower at RMB 16,050/mt and closed up RMB 50/mt or 0.31% at RMB 16,145/mt on Tuesday, leading gains in base metals and supported by short covering. Positions added 300 lots to 68,266 lots. Highest price during the day was RMB 16,170/mt. The contract should test support at RMB 16,100/mt in the near term after recovering the mark given weakness on the macroeconomic side.

Spot aluminum traded between RMB 16,000-16,030/mt in Shanghai, at discounts of RMB 0-30/mt over the current-month SHFE aluminum price as the bearish sentiment downstream and liquidating at month's end prevented aluminum spot from tracking futures prices. Overall traded volume was thin.

Lead
SHFE lead prices opened RMB 50/mt lower at RMB 15,715/mt on Tuesday. Later, prices fluctuated narrowly and maintained stable to finally close at RMB 15,740/mt. Trading volumes were down 148 lots to 166 lots, and positions were down 68 lots to 1,482 lots.

Trading in China's domestic spot markets was modest. Quotations for Chihong Zn & Ge and Shuangyan were between RMB 15,680-15,700/mt, with discounts of RMB 30-50/mt against the most active SHFE lead prices. Shenqian and Yunyue were quoted at around RMB 15,600/mt. Market was quiet in the afternoon with futures prices remained little changed.

Zinc
In domestic spot markets, spot discounts were firm as smelters were holding goods. Discounts of #0 zinc were between RMB 180-200/mt, with traded prices between RMB 15,330-15,350/mt. #1 zinc was traded between RMB 15,280-15,300/mt. As downstream buying interest was low at the end of the month and due to cash flow problems at traders, transactions were quiet.

Tin
Transactions in Shanghai tin market remained depressed with fewer goods circulating in the market. Mainstream traded prices were between RMB 164,000-165,000/mt. Nanshan, and Yunxiang were mainly traded between RMB 164,000-164,500/mt, and most transactions for Yunxi were concluded between RMB 164,500-165,000/mt. Low selling interest among smelters resulted in decreasing goods supply with spot market quiet. Cargo holders reflected inquiries were sparse and demand downstream was sluggish. Bearish mood prevailed in the market. Despite support from limited goods supply, tin prices were hard to rise up.

Nickel
On Tuesday, mainstream traded prices of Jinchuan nickel were between RMB 131,000-131,200/mt, and mainstream traded prices of Russian nickel were between RMB 129,500-129,700/mt. As LME nickel prices edged up during the day, and since spread between spot and ex-work prices of Jinchuan were only RMB 1,000/mt, transactions were muted. Russian nickel was popular due to lower prices compared to Jinchuan nickel.