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SMM Daily Review - 2012/5/8 Base Metals Market
May 9,2012 09:55CST
industry news
LME copper prices rallied on the falling US dollar Tuesday morning.


LME copper prices rallied on the falling US dollar Tuesday morning, which helped the most actively-traded SHFE 1208 copper contract start RMB 370/mt higher at RMB 57,900/mt. However, as Chinese stock markets lowered to test support at the 5-day moving average, the contract continued to fluctuate in a narrow band of RMB 150/mt during the whole trading day, with noticeable resistance at RMB 58,000/mt. At the tail of trading, while investors closed positions, SHFE 1208 copper contract retreated below the daily moving average, but finally ended RMB 120/mt or 0.21% higher at RMB 57,650/mt. Trading volumes for the most actively-traded copper contract decreased by 21,164 lots, while positions increased by 8,200 lots. With intersection between the 10- and 20-day moving averages, SHFE copper prices faced increasing pressures near RMB 57,900/mt.

As SHFE copper prices rebounded marginally, quotations for spot copper premiums fell to positive RMB 40-80/mt in Shanghai in Tuesday’s morning business. Traded prices for standard-quality copper were between RMB 57,980-58,030/mt, and RMB 58,020-58,080/mt for high-quality copper. Some cargo-holders quoted firm prices as copper prices exhibited resilience. Spot copper supply remained stable, but market activity failed to improve in the morning. In the afternoon, SHFE copper prices moved at high levels but began to slide rapidly at the tail of trading, compelling cargo-holders in spot markets to step up sale volumes. Thus, spot copper premiums held virtually flat with the morning business levels. Traded prices were between RMB 57,980-58,100/mt in the afternoon, while market transactions remained limited.

The most active SHFE aluminum contract for August delivery opened slightly higher at RMB 16,300/mt but closed down RMB 25/mt or 0.15% at the intraday low RMB 16,240/mt on Tuesday, as shorts dominated the day’s trading. Positions added 3,664 lots to 79,842 lots. Though the contract ended its slip at the 10-day moving average, as longs lack confidence, it is expected to test support at RMB 16,200/mt in the near term.

Spot aluminum was traded between RMB 16,130-16,150/mt in Shanghai, at discounts of RMB 0-20/mt over the current-month SHFE aluminum contract. The light metal traded at RMB 16,150-16,170/mt in Wuxi and at RMB 16,120-16,150/mt in Hangzhou. The bearish market sentiment gradually strengthened as SHFE aluminum prices stagnated with the current-month contract struggling at RMB 16,150/mt. Strong selling interest and weak buying led to slightly discounted deals. Goods holders were still unwilling to lower quotations. Supplies at RMB 16,120/mt were seen but quite limited. The traded volume was light as sellers and buyers split over what the spot price should be.

SHFE lead prices hit a high of RMB 15,800/mt after opening at RMB 15,715/mt Tuesday, but fell at the tail of trading to end the day close to the opening price at RMB 15,705/mt. Trading volumes were up 108 lots to 216 lots, and positions dropped by 40 lots to 1,402 lots.

In China’s domestic markets, quotations for well-known brands including Chihong Zn & Ge were at RMB 15,710/mt, with discounts of RMB 60-90/mt against the most active SHFE lead prices, and Tongguan was quoted between RMB 15,650-15,670/mt. Shuangyan was quoted at RMB 15,600/mt, and offers for brands from Gejiu region were around RMB 15,550/mt. Buying interest were down due to the increase in lead prices, leaving transactions muted.

On Tuesday, SHFE three-month zinc contract prices opened at RMB 15,500/mt and fluctuated around the moving average during the day. Both longs and shorts entered the market, but with short momentum stronger. In the afternoon, SHFE three-month zinc contract prices plunged, dragged down by LME zinc prices, and finally closed at RMB 15,465/mt, up RMB 5/mt. Trading volumes decreased by over 10,000 lots to 71,460 lots, and total position increased by 6,308 lots to 135,484 lots.

In domestic spot markets, discounts of #0 zinc against SHFE three-month zinc contract prices were between RMB 150-170/mt, with traded prices between RMB 15,300-15,350/mt. #1 zinc prices were between RMB 15,250-15,280/mt. Prices for #1 zinc were firm due to limited imports and supply, and downstream buyers were cautious.

On Tuesday, transactions in Shanghai spot tin market remained gloomy with prices keeping falling. Mainstream traded prices were between RMB 161,500-164,000/mt in the morning, but quotations between RMB 160,500-161,000/mt were frequently heard in the afternoon due to the slack consumption and since some dealers sold goods at low prices. Deals for Yunxi, Yunheng, Nanshan, Yunxiang and Weitai were mainly concluded between RMB 160,500-163,000/mt. Quotations from Yunxi remained firm at RMB 164,000/mt. Trading kept weakening with several of dealers reporting no transaction done. Meanwhile, most enterprises downstream just waited on the sidelines with no intention to purchase, and dealers were also cautious replenishing due to low sales. Given the downtrend in spot tin market, tin prices may drop further.

On Tuesday, mainstream traded prices of Jinchuan nickel were between RMB 130,600-130,800/mt in the morning session, while mainstream Russian nickel prices were between RMB 128,500-128,800/mt. ex-work prices of Jinchuan nickel were RMB 133,000/mt, much higher than mainstream market prices, with traders unwilling to lower prices. In this context, transactions were quiet, and traders were holding goods.

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