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SMM Daily Review - 2012/5/3 Base Metals Market
May 4,2012 09:37CST
smm insight
As LME copper fell and tested support at the 30-day moving average, SHFE 1208 copper contract, the most active one, opened RMB 250/mt lower at RMB 58,500/mt Thursday.

SHANGHAI, May 4 (SMM) --


As LME copper prices fell and tested support at the 30-day moving average overnight, SHFE 1208 copper contract, the most active one, opened RMB 250/mt lower at RMB 58,500/mt Thursday. SHFE copper prices posted weak performance following the opening, fluctuating narrowly below their moving averages and reaching a high at only RMB 58,550/mt. In the afternoon session, SHFE copper prices slid below RMB 58,300/mt and trended lower towards RMB 58,010/mt. Finally, SHFE 1208 copper contract ended at RMB 58,100/mt, down RMB 650/mt or 1.11%, with positions increasing by 14,738 lots but trading volumes decreasing by 35,486 lots. Due to great selling pressures from short investors, SHFE copper prices may lose the 5-day moving average, but with strong support at the RMB 58,000/mt mark.

SHFE copper prices trended lower after starting down. Copper supply in spot markets was tight, stimulated by news that Jiangxi Copper and other smelters and trading firms delivered copper to the LME warehouses. As a consequence, domestic copper held price quotes firm, and premiums for high-quality copper climbed. Standard-quality copper prices were also firm owing to tight supply. Spot copper was quoted between discounts of negative RMB 20/mt and premiums of positive RMB 40/mt in Shanghai in the morning business. Traded prices for standard-quality copper were between RMB 58,280-58,340/mt, and RMB 58,320-58,400/mt for high-quality copper. Speculators bought aggressively, while downstream producers still purchased on an as-needed basis. Market suppliers and buyers showed increasing divergence, with the former trying to promote sales but the latter generally staying cautious. In the afternoon business, SHFE copper prices slid further, so spot copper premiums rose to positive RMB 50-60/mt, while traded prices retreated to RMB 58,150-58,300/mt, with tightness in high-quality copper supply.


SHFE aluminum contract for August delivery turned the most active one and closed up RMB 75/mt or 0.46% at RMB 16,345/mt on Thursday, in contrast with losses of other base metals. The light metal opened higher at RMB 16,310/mt and found its high at RMB 16,425/mt, before paring gains due to profit taking by longs. Positions of the contract surged 11,500 lots to 71,890 lots. Given strong support showed at RMB 16,300/mt, the contract is likely to test RMB 16,400/mt in the near term.

Spot aluminum prices climbed to RMB 16,150-16,180/mt in Shanghai, but discounts of RMB 0-30/mt over the current-month SHFE aluminum price were still seen on account of weak demand. Trading was light as buyers and sellers split.


SHFE lead prices opened slightly lower at RMB 15,825/mt Thursday and moved between RMB 15,850-15,880/mt in the morning. In the afternoon, SHFE lead prices fell to move around RMB 15,830/mt due to the losses of LME lead prices, but gained support at the 5-day moving average to finally end at RMB 15,830/mt, down RMB 115/mt. Trading volumes were up 16 lots to 524 lots, and positions were up 76 lots to 1,492 lots.

In China’s domestic markets, quotations for Chihong Zn & Ge were mainly at around RMB 15,780/mt, with discounts at RMB 100/mt against the most active SHFE lead prices. Shuangyan was quoted at RMB 15,650/mt, and brands from Gejiu region were quoted around RMB 15,620/mt. In the afternoon, quotations for branded lead were lowered to RMB 15,720-15,730/mt. However, trading was still light despite lower prices.


On Thursday, SHFE three-month zinc contract prices opened lower at RMB 15,600/mt and inched down from the moving average during the day. In the afternoon, SHFE three-month zinc contract prices found support at the 20-day moving average and finally closed at RMB 15,535/mt, down RMB 145/mt. Trading volumes decreased by nearly 20,000 lots to 41,330 lots, and total position decreased by 8,544 lots to 138,784 lots. Positions of SHFE 1208 zinc contract increased by 8,610 lots to 111,680 lots.

In domestic spot markets, discounts of #0 zinc against SHFE three-month zinc contract prices were between RMB 150-160/mt, with traded prices around RMB 15,450/mt. Spot prices fell to RMB 15,400/mt at noon as SHFE zinc prices plummeted. #1 zinc prices held firm around RMB 15,400/mt due to tight supply. Downstream buyers increased purchases due to falling prices, and transactions improved.


In Shanghai tin market, spot tin prices fell Thursday due to increased goods supply and stronger wait-and-see sentiment caused by the losses of LME tin prices, with mainstream traded prices between RMB 163,500-165,000/mt. Jinlong, Nanshan, and Yunxiang were mainly traded between RMB 163,500-164,000/mt, while most deals for Yunheng and Yunxi were done between RMB 164,500-165,000/mt. The remaining weak demand downstream and falling LME tin prices depressed market sentiments, dragging down spot tin prices.


On Thursday, mainstream traded prices of Jinchuan nickel were between RMB 130,500-130,700/mt in the morning session, while mainstream Russian nickel prices were between RMB 128,800-129,000/mt. In the afternoon, mainstream traded prices of Jinchuan nickel rose to RMB 130,700-131,000/mt as LME nickel prices climbed, and mainstream Russian nickel prices were between RMB 129,000-129,500/mt. The market purchased at lower prices in the morning session, but trading volumes decreased as prices rose later in the day.


base metals

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