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SMM Daily Review – 2012/5/15 Base Metals Market
May 16,2012 09:46CST
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The most active SHFE 1208 copper contract opened RMB 1,080/mt down at RMB 55,600/mt Tuesday, since LME copper prices slumped overnight.

SHANGHAI, May 16 (SMM)--

The most active SHFE 1208 copper contract opened RMB 1,080/mt down at RMB 55,600/mt Tuesday, since LME copper prices slumped overnight. As LME copper prices hovered around USD 7,800/mt during the whole trading day, and since Chinese stock markets slid by more than 1%, SHFE 1208 copper contract came under pressure and swung weakly around the daily moving average, with a fluctuating band of RMB 400/mt and reaching a low at RMB 55,280/mt. At the tail of trading, SHFE 1208 copper contract pared the daily drops due to large-scale position closings, climbed to a high at RMB 56,090/mt, and finally ended at RMB 55,950/mt, down RMB 730/mt or a loss of 1.29%. Positions and trading volumes for the most active contract decreased by 14,440 lots and 134,000 lots, respectively, while those for SHFE 1209 copper contract added by 16,660 lots and 2,514 lots, respectively. This indicated the shift of the most active copper contract. Owing to weakening buying support, SHFE copper prices made corrections following the previous two days' considerable declines.

SHFE copper prices sank by nearly 2%, and there was almost no price gap between SHFE 1205 and1206 copper contract, inasmuch as Tuesday was the last trading day for SHFE 1205 copper contract. Hedged copper cargo-holders sold aggressively and led to an increase in spot copper supply. However, spot copper premium quotes remained firm between positive RMB 60-120/mt in Shanghai in the morning business. Traded prices for standard-quality copper were between RMB 56,100-56,220/mt, and RMB 56,150-56,300/mt for high-quality copper. Downstream producers opted to enter the market following significant drops in copper prices, allowing market transactions to improve. In the afternoon session, SHFE copper prices stabilized and began to rally at the tail of trading, but actual traded prices in spot markets were virtually flat with the morning business levels.

The most active SHFE aluminum contract for August delivery opened lower at RMB 15,960/mt and slipped to RMB 15,920/mt before recovering slightly to settle at RMB 16,010/mt, down RMB 25/mt or 0.16%. The K-line ended its 6-day losing streak and positions dropped 1,114 lots to 101,410 lots. As the bearish sentiment eased, near-month contracts recovered the RMB 16,000/mt mark and may present a technical correction following the recent plunge.

Spot aluminum traded at RMB 15,960-15,990/mt in Shanghai, at premiums of RMB 0-20/mt over the current-month SHFE aluminum contract. The trading band is RMB 15,980-16,000/mt in Wuxi and RMB 15,980-16,000/mt in Hangzhou. Spot aluminum prices lost support at RMB 16,000/mt after the current-month contract slipped. Goods holders, however, held quotations in line with current-month prices. As buying at low prices was weak, trading turned light after futures rebounded slightly. Resistance at RMB 16,000/mt was also felt though.

SHFE lead prices opened lower at RMB 15,410/mt Tuesday and moved narrowly between RMB 15,440-15,550/mt, with prices finally closing at RMB 15,520/mt, down RMB 10/mt. Trading volumes were down 34 lots to 344 lots, and positions increased by 48 lots to 1,082 lots.

Lead prices in China's domestic spot markets fell, with quotations for well-known brands such as Chihong Zn & Ge, Shuikoushan mainly around RMB 15,500/mt, close to the most active SHFE lead contract price. Tongguan was quoted at RMB 15,420/mt. Prices for lead from Gejiu region remained low at around RMB 15,320/mt, but some dealers were reluctant to move goods at low prices. Enterprises downstream were still not willing to buy due to poor orders, leaving trading light.

On Tuesday, SHFE three-month zinc contract prices opened lower at RMB 14,900/mt and dipped to a new low for the year at RMB 14,840/mt. As large numbers of longs entered the market, but SHFE three-month zinc contract prices rallied to the moving average and fluctuated between RMB 14,900-15,000/mt, and finally closed at RMB 15,025/mt, down RMB 30/mt. Trading volumes decreased by 33,620 lots to 112,858 lots, and total position decreased by 3,008 lots to 167,562 lots.

In domestic spot markets, discounts of #0 zinc against SHFE three-month zinc contract prices were between RMB 50-80/mt, with traded prices between RMB 14,850-14,900/mt. #1 zinc prices were between RMB 14,840-14,880/mt. Downstream buying interest was low, and arbitragers which bought the previous day were holding goods as prices fell further.

In Shanghai tin market, transactions remained quiet on Tuesday. Nanshan, Jinlong, Yunxiang and Yunshan were mainly traded at RMB 156,000/mt, while mainstream traded prices for Yunheng and Yunxi were between RMB 156,500-159,000/mt. In the afternoon, cargo holders were eager to move goods in response to the falling LME tin prices, and transactions for goods quoted around RMB 155,500/mt improved slightly. Wait-and-see sentiment was still strong among enterprises downstream, and tin consumption remained soft, so the declines in domestic tin prices were expected to continue.

On Tuesday, Jinchuan Group lowered ex-work prices by RMB 4,000/mt, to RMB 126,000/mt. Mainstream traded prices of Jinchuan nickel were between RMB 127,300 -127,500/mt in the morning session, while mainstream Russian nickel prices were between RMB 125,000-125,300/mt. The average price of #1 nickel was RMB 126,250/mt, down RMB 1,650/mt. Mainstream traded prices of Jinchuan nickel were between RMB 126,600-126,800/mt in the afternoon, while mainstream Russian nickel prices were between RMB 124,700-125,000/mt. Transactions for nickel have been sluggish recently, but some market players entered the market at lower prices.








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