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SMM Daily Review – 2012/5/11 Base Metals Market
May 14,2012 10:42CST
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The most active SHFE 1208 copper contract started RMB 120/mt higher at RMB 57,680/mt Friday, as LME copper prices pared losses overnight.

SHANGHAI, May 14 (SMM)--

The most active SHFE 1208 copper contract started RMB 120/mt higher at RMB 57,680/mt Friday, as LME copper prices pared losses overnight. After the opening, SHFE copper prices met resistance at the 20-day moving average and then drifted lower to RMB 57,500/mt along with selling pressures, only touching a high at RMB 57,720/mt. In the afternoon, the Shanghai Composite Index lost 2,400, which sent SHFE copper prices down to around RMB 57,350/mt before sliding to as low as RMB 57,250/mt. Finally, SHFE 1208 copper contract ended RMB 220/mt or 0.38% lower at RMB 57,340/mt, with trading volumes and positions increasing by 37,798 lots and 12,834 lots, respectively. Positions for 1209 copper contract added by 13,068 lots. SHFE copper prices still found support at RMB 57,000/mt but faced increasing selling pressures.

SHFE copper prices were volatile, but spot copper supply remained stable. Spot copper premiums thus fell gradually to between positive RMB 20-80/mt in Shanghai in the morning business. Traded prices for standard-quality copper were between RMB 57,720-57,820/mt, and RMB 57,750-57,880/mt for high-quality copper. Cargo-holders held divergent views towards volatile copper prices, while downstream producers were still wary of purchases, keeping market activity modest in the morning session. In the afternoon business, SHFE copper prices drifted lower, so spot copper premiums inched up to positive RMB 40-100/mt, but traded prices fell marginally to RMB 57,700-57,800/mt, with limited market transactions. SHFE copper stocks decreased by 9,178 mt to 187,449 mt last Friday, as downstream producers conducted bargain hunting at prices below RMB 58,000/mt, and since domestic copper smelters and trading firms stepped up efforts in delivering copper to the LME warehouses.

The most active SHFE aluminum contract for August delivery settled down RMB 70/mt or 0.43% at RMB 16,065/mt on Friday, after opening lower at RMB 16,120/mt. Transacted contracts climbed to 20,000 lots. SHFE aluminum futures prices dropped continually last week, with the most actively traded contract slipping toward RMB 16,000/mt. The weak CPI data has weakened expectations of demand in the conventionally peak season. Aluminum prices have shown relative stability, though, with strong support at RMB 16,000/mt. SMM expects the light metal to struggle at RMB 16,100/mt in the near term. Latest SHFE aluminum stocks dropped 4,171 mt to 347,032 mt.
Spot aluminum traded at RMB 16,020-16,040/mt in Shanghai, at discounts or premiums within RMB 10/mt over the current-month SHFE aluminum price. A slight drop in April's CPI and weak economy added to expectations of stimulus. Spot aluminum tracked SHFE aluminum and dropped to near RMB 16,000/mt. Goods holders' selling interest was quite weak at low-end prices and deals were done at current-month SHFE aluminum prices. Stocks replenishments from downstream were rarely seen. Purchases were still made on an as-needed basis. The wait-and-see sentiment was strong. The overall traded volume was flat. In the afternoon, goods movements were hardly seen. A few traders entered the market but were unable to find supply at low-end prices. Quotations were sparse and fell into RMB 16,030-16,050/mt. Deals were hardly concluded as the wait-and-see sentiment was strong.

SHFE lead prices opened at RMB 15,650/mt Friday and rose to RMB 15,680/mt briefly influenced by China's slower CPI growth for April. Later, SHFE lead prices fell to RMB 15,555/mt due to a lack of upward momentum and falling domestic stocks, to finally close at RMB 15,600/mt, down RMB 50/mt. Trading volumes were down 124 lots to 264 lots, and positions dropped by 32 lots to 992 lots.

On Friday, quotations for well-known brands such as Chihong Zn & Ge and Nanfang were initially at RMB 15,580/mt, but rose to RMB 15,620/mt along with SHFE lead prices due to the release of China's slower CPI growth in April. Other brands including Shuangyan, Tongguan and Shuikoushan were quoted between RMB 15,530-15,550/mt. Transactions remained quiet.

Last Friday, SHFE three-month zinc contract prices opened lower at RMB 15,295/mt and plummeted to the moving average in the morning session. China's CPI for April fell in line with expectations, but SHFE three-month zinc contract prices only rallied to the moving average and dipped to a record low for the year, and finally closed at RMB 15,115/mt, down RMB 180/mt or 1.18%. Trading volumes increased by over 8,000 lots to 144,326 lots, and total position increased by 334 lots to 166,804 lots.
In domestic spot markets, discounts of #0 zinc against SHFE three-month zinc contract prices narrowed to RMB 100/mt, with traded prices between RMB 15,100-15,130/mt. Spot prices were very firm. #1 zinc prices were around RMB 15,100/mt. Downstream buying interest was low, and traders dared not replenish stocks, keeping transactions quiet.

In Shanghai tin market, spot prices continued to fall Friday. Mainstream traded prices were between RMB 157,500-161,000/mt with some transactions traded at RMB 157,000/mt. Nanshan, Jinlong and Feidie were mainly traded between RMB 157,000-157,500/mt. Most transactions for Yunxiang and Yunxi were concluded between RMB 157,000-161,000/mt. Enterprises downstream stayed out of the market due to the falling tin prices, and buyers mainly purchased at low prices. Cargo holders were more willing to move goods due to inventory pressures, but trading remained light.

Last Friday, mainstream traded prices of Jinchuan nickel fell to RMB 130,200-130,400/mt in the morning session, while mainstream Russian nickel prices were between RMB 127,800-128,000/mt. Downstream buying interest was low due to pessimism, while traders dared not replenish stocks, keeping transactions quiet.








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