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SMM Daily Review – 2012/5/18 Base Metals Market
May 21,2012 10:39CST
smm insight
SHFE 1209 copper contract still settled RMB 140/mt or 0.25% higher at RMB 55,230/mt, and the most active SHFE aluminum contract ended up RMB 20/mt or 0.13% at RMB 16,020/mt.

SHANGHAI, May 21 (SMM) –

As LME copper fell overnight, SHFE 1209 copper contract opened RMB 140/mt down at RMB 54,950/mt last Friday. LME copper prices sank after meeting resistance at USD 7,700/mt during the day, and Chinese stock markets gave up all the previous day’s gains. In this context, SHFE 1209 copper contract fluctuated in a wide band, came under pressure at the 5-day moving average of RMB 55,480/mt, but slid rapidly in the afternoon to as low as RMB 54,810/mt. Finally, SHFE 1209 copper contract still settled RMB 140/mt or 0.25% higher at RMB 55,230/mt, with trading volumes and positions increasing by 182,000 lots and 21,588 lots, respectively. The struggle at RMB 55,000/mt between longs and shorts was severe, and short-term shorts began to return to markets. SHFE copper prices were likely to test RMB 55,000/mt repeatedly for the foreseeable future in the face of selling pressures and technical resistance.  
SHFE copper prices were volatile, but cargo-holders in spot markets stabilized their sale volumes and insisted on firm price quotes, still showing reluctance to move goods at the lows. Quotations for spot copper premiums were thus between positive RMB 200-250/mt in Shanghai in the morning business. Traded prices for standard-quality copper were between RMB 55,900-56,100/mt, and RMB 55,950-56,200/mt for high-quality copper. Downstream producers stuck to the sidelines at prices above RMB 56,000/mt, but most transactions were made at above this price mark. In the afternoon session, as SHFE copper prices edged lower, and as spot copper supply decreased, spot copper premium quotes rose further to positive RMB 230-300/mt. However, traded prices fell in the afternoon, but market transactions were extremely limited. SHFE copper stocks were reported to decrease by 13,635 mt to 173,814 mt last Friday, which highlighted downstream producer strong interest in buying at the lows during the week and should support high spot copper premium levels in the coming week.

The most active SHFE aluminum contract opened at RMB 16,020/mt and settled up RMB 20/mt or 0.13% at RMB 16,020/mt. Its moving band was RMB 16,000-16,065/mt. Strong support was found at RMB 16,000/mt. Resistance at the 10-day moving average also remained strong though. Total transacted contracts of the day were only 8,332 lots.

Spot aluminum traded at RMB 15,990-16,020/mt in Shanghai, at discounts of RMB 10-40/mt over the current-month SHFE aluminum price. The trading band in Wuxi is RMB 16,010-16,030/mt and is RMB 16,000-16,020/mt in Hangzhou. The current-month SHFE aluminum contract stabilized above the 5-day moving average and trading activities were little changed. The mainstream traded price struggled at RMB 16,000/mt. Some quality ingots were traded at higher prices but also saw deals below RMB 16,000/mt. Stock replenishment demand appeared ahead of weekend but was weak. There were still buyers standing on the sidelines.

On Friday, SHFE 1208 lead contract became the most actively traded one, with prices opened RMB 100/mt lower at RMB 15,150/mt and moved between RMB 15,110-15,160/mt. In the afternoon, SHFE lead prices fell due to the falling domestic stock and finally closed at RMB 15,075/mt, down RMB 195/mt or 1.28%. Trading volumes were up 118 lots to 704 lots, while position increased by 496 lots to 1,450 lots.

In domestic spot markets, quotations Chihong Zn & Ge, Nanfang were to between RMB 15,220-15,240/mt, with premiums of nearly RMB 100/mt over the most active SHFE lead contract price. Shuangyan was quoted at RMB 15,170/mt. Offers for lead from Gejiu region were at RMB 15,160/mt. Selling interest at smelters lowered further, and transactions were still quiet.

Last Friday, SHFE three-month zinc contract prices opened at RMB 14,910/mt and moved between RMB 14,850-14,950/mt around the moving average during the day, once touching the 5-day moving average. As LME zinc prices plummeted due to rising US dollar index, SHFE three-month zinc contract prices slid after opening and hit a new low at RMB 14,785/mt, with prices paring some losses and finally closing at RMB 14,855/mt, down RMB 85/mt. Trading volumes decreased by over 8,532 lots to 95,034 lots, and total position decreased by 2,060 lots to 165,960 lots.

In domestic spot markets, discounts of #0 zinc against SHFE three-month zinc contract prices narrowed were RMB 60/mt, with traded prices between RMB 14,830-14,850/mt. Spot prices were very firm. #1 zinc prices were around RMB 14,820/mt. Traders replenished stocks at lower prices after delivery, and downstream buying interest was strong, causing transactions to improve.

Trading in Shanghai tin market remained weak on Friday, with mainstream traded prices for Nanshan, Jinlong, Yunxiang, Yunshan and Yunheng between RMB 153,000-153,500/mt. Some transactions for Nanshan and Jinlong were finally concluded at around RMB 152,700/mt. Transactions for Yunxi were mainly done between RMB 154,000-156,000/mt. Spot tin market remained bleak influenced by the unimproved LME tin prices. Most smelters were not willing to move goods, but some of them were forced to sell due to the excessive inventories. Spot tin prices are likely to drop further on account of the sluggish demand and pessimism in the market.

Last Friday, mainstream traded prices of Jinchuan nickel were between RMB 126,800-127,000/mt, while mainstream Russian nickel prices were between RMB 124,600-124,800/mt. Spot nickel prices were close to the previous day, and the Shanghai/LME nickel price ratio continued to drop. Downstream buying interest improved due to low prices, causing transactions to improve.

daily review; base metals

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