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SMM Daily Review - 2012/5/4 Base Metals Market
May 7,2012 09:26CST
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As LME copper prices continued to absorb negative news overnight, SHFE 1208 copper contract opened RMB 300/mt lower at RMB 58,000/mt Friday.


As LME copper prices continued to absorb negative news overnight, SHFE 1208 copper contract opened RMB 300/mt lower at RMB 58,000/mt Friday. After the opening, SHFE copper prices were pushed up rapidly after falling by RMB 100/mt, drifting narrowly higher along with moving averages but failing to reach RMB 58,250/mt near the midday. In the afternoon, SHFE copper prices inched down but then rose again before hitting an intraday high at RMB 58,350/mt. SHFE 1208 copper contract finally ended the day at RMB 58,310/mt, up RMB 210/mt or 0.36%, paring some of the prior day’s losses and testing support at the 20-day moving average. Trading volumes for SHFE 1208 copper contract fell by 22,920 lots, and positions slid by 5,532 lots. Both long and short investors kept cautious ahead of the US non-farm payrolls report. Short investors closed positions actively in the afternoon, and SHFE copper showed resilience but legged behind LME copper.
SHFE copper prices moved higher after a low open, exhibiting strong resilience, Spot copper was quoted between premiums of positive RMB 30-100/mt in Shanghai in the morning business. Traded prices for standard-quality copper were between RMB 58,150-58,280/mt, and RMB 58,180-58,320/mt for high-quality copper. Quotations for spot copper premiums slid after initially increasing. A premium near positive RMB 100/mt restricted speculative interest, while downstream producers still bought as needed given limited drops in copper prices. Market activity was comparatively modest at the lows in the morning, but become sluggish as copper prices moved higher. In the afternoon session, traded prices rose to RMB 58,250-58,350/mt, while spot copper premiums held firm. Owing to sufficient supply, market transactions improved some.  

The most active SHFE aluminum contract for August delivery opened lower at RMB 16,305/mt and closed down RMB 30/mt or 0.18% at RMB 16,335/mt on Friday, with transacted contracts dropping by half. The contract consolidated at the RMB 16,300/mt mark, however, showing more stability than other base metals.

Spot aluminum traded between RMB 16,150-16,180/mt in Shanghai, at discounts of RMB 0-30/mt over the current-month SHFE aluminum contract. Stock replenishment did not show up ahead of the weekend due to weak demand. Goods holders held quotations at RMB 16,150/mt and deals were done mostly at the low end.

SHFE lead prices opened RMB 50/mt lower at RMB 15,795/mt Friday and moved narrowly between RMB 15,770-15,800/mt. In the afternoon, the rising Chinese domestic stocks failed to buoy SHFE lead markets, with prices finally closing at RMB 15,800/mt, down RMB 30/mt. Trading volumes were down 312 lots to 212 lots, and positions were down 88 lots to 1,404 lots.

In China’s domestic markets, quotations for Chihong Zn & Ge were mainly at around RMB 15,700/mt, with discounts at RMB 80-100/mt against the most active SHFE lead prices. Shuangyan was quoted at RMB 15,630/mt, and brands from Gejiu region were mainly quoted around RMB 15,600/mt. Transactions were poor ahead of the weekend.

Last Friday, SHFE three-month zinc contract prices opened lower at RMB 15,460/mt and fluctuated around the moving average during the day. In the afternoon, SHFE three-month zinc contract prices stabilized and tds-7ouched the 20-day moving average with rising Shanghai Composite Index, and finally closed at RMB 15,540/mt, down RMB 45/mt. Trading volumes decreased further to 20,918 lots, and total position decreased by 3,682 lots to 135,102 lots.

In domestic spot markets, discounts of #0 zinc against SHFE three-month zinc contract prices narrowed to RMB 140-150/mt, with traded prices around RMB 15,360-15,380/mt. Spot prices were very firm. #1 zinc prices were around RMB 15,350/mt. Downstream buyers increased purchases due to falling prices, but goods supply available in the market was tight. 

In Shanghai tin market, tin prices fell sharply Friday due to the losses of LME tin prices, with mainstream traded prices between RMB 163,000-164,500/mt in the morning. In the afternoon, low-end price was reported at RMB 162,500/mt in response to increasing low-priced goods supply. Jinlong, Nanshan were mainly traded between RMB 162,500-163,000/mt, while most deals for Yunxiang were done at RMB 163,000/mt. Traded prices for Yunxi and Yunheng were mainly between RMB 163,500-164,000/mt, with several of transactions for Yunxi made at RMB 164,500/mt. Quotations from Yunxi remained firm at RMB 167,000/mt. Trading was light since falling LME tin prices depressed market confidence.

On Friday, mainstream traded prices of Jinchuan nickel were between RMB 130,500-130,800/mt in the morning session, while mainstream Russian nickel prices were between RMB 128,600-129,000/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. Downstream buying interest was low as prices rose, keeping transactions quiet.


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