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SMM Daily Review - 2012/5/29 Base Metals Market
May 30,2012 10:37CST
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The most active SHFE copper contract for September delivery started RMB 30/mt lower at RMB 55,890/mt Tuesday.

SHANGHAI, May 30 (SMM) --


The most active SHFE copper contract for September delivery started RMB 30/mt lower at RMB 55,890/mt Tuesday. After the opening, the contract lurched around RMB 55,800/mt as shorts imposed selling pressures, testing a low at RMB 55,680/mt. In the afternoon however, as LME copper rose to USD 7,700/mt again on a rapidly falling US dollar index, and since the Shanghai Composite Index surged by 1.3%, SHFE 1209 copper contract gained rising momentum after hovering narrowly around RMB 56,100/mt, touching a high at RMB 56,230/mt at the tail of trading. Nevertheless, owing to large-scale position closings, the most active copper contract pared daily gains before finally ending RMB 160/mt or 0.29% higher at RMB 56,080/mt, with trading volumes increasing by 30,140 lots but positions decreasing by 5,468 lots. Positions for all SHFE copper contracts fell by 15,620 lots. Longs chose to take profit-taking at the highs during the day, and combined with a lack of substantive support, SHFE copper prices faced the risk to slide further over the near term.

SHFE copper prices fluctuated and met resistance to rebound. Spot copper supply remained stable. Spot copper premiums were quoted between positive RMB 140-200/mt in Shanghai in the morning business. Traded prices for standard-quality copper were between RMB 56,550-56,600/mt, and RMB 56,580-56,700/mt for high-quality copper. High-quality copper dominated the market supply. The price differential between standard and high-quality copper was still limited. Downstream producers and traders were still hesitant to buy. Coupled with cash flow problems, market transaction volumes were light in the morning. In the afternoon, as SHFE copper prices reversed early losses, spot copper premium quotes fell to positive RMB 100-170/mt. Traded prices inched up to RMB 56,680-56,750/mt in the afternoon. Copper price movement took a V shape for two consecutive days, but prices rose abruptly in the afternoon. However, owing to cash flow issues at the month-end, spot copper premiums were smaller than earlier. Copper consumption was also not seen to improve noticeably.


The most active SHFE aluminum contract for September delivery started at RMB 16,035/mt and closed unchanged from the previous trading day at RMB 16,030/mt on Tuesday. The light metal found its low at RMB 16,005/mt and rebounded with the help of bargain hunting. Profit-taking by longs dragged it down from RMB 16,055/mt, the intraday high. Positions added 514 lots to 92,234 lots. It showed strong resilience on both sides and speculation activities dominated trading. SMM expects the contract to test pressure at RMB 16,050/mt in the near term awaiting a clear direction.

Aluminum spot was traded at RMB 15,970-16,000/mt in Shanghai, at discounts of RMB 0-30/mt over the current-month SHFE aluminum contract. The trading band was RMB 15,990-16,010/mt in Wuxi and RMB 15,980-16,000/mt in Hangzhou. SHFE aluminum stagnated near RMB 16,000/mt during spot trading hours, adding pressure on aluminum spot at RMB 16,000/mt. Goods holders showed strong selling interest and quoted at slight discounts. Trading stayed thin as buying remained weak.


On Tuesday, SHFE lead prices opened slightly lower at RMB 15,230/mt and rallied from an intraday low of RMB 15,200/mt to RMB 15,280/mt. Later, SHFE lead prices moved between RMB 15,230-15,280/mt to finally close at RMB 15,250/mt, up RMB 5/mt. Trading volumes were up 26 lots to 200 lots, while positions increased to 1,906 lots, up 100 lots.

On Tuesday, lead prices in China’s domestic spot market remained stable compared with the previous trading day, quotations for Chihong Zn & Ge and Shuikoushan were at RMB 15,280/mt, with premiums of RMB 30/mt over the most active SHFE lead contract price, but . Hanjiang was quoted around RMB 15,210/mt, and Shenqian was quoted at RMB 15,160/mt. Most investors expected prices should increase. Transactions were modest in the market with both supply and demand weak.


On Tuesday, SHFE 1209 zinc contract prices opened at RMB 14,960/mt and fluctuated between RMB 14,935-14,990/mt in the morning session. As the Shanghai Composite Index surged at noon, SHFE three-month zinc contract prices rose and once touched an intraday high at RMB 15,040/mt and finally closed at RMB 15,020/mt, up RMB 75/mt or 0.5%. Trading volumes decreased by 7,222 lots to 96,348 lots, and total position increased by 10,766 lots to 163,956 lots.

In domestic spot markets, discounts of #0 zinc against SHFE 1208 zinc contract prices were between RMB 120-150/mt, with traded prices between RMB 14,810-14,830/mt. #1 zinc prices were between RMB 14,760-14,800/mt. As SHFE zinc prices rose at noon, #0 zinc prices were pushed up to RMB 14,850/mt, while #1 zinc prices remained unchanged due to unpopularity. Transactions were muted due to uncertainty of prices and cash flow problems at the end of the month. Good supply available was from traders.


In Shanghai tin market, transactions were quiet on Tuesday due to weak demand. Mainstream traded prices for Yunxi were between RMB 154,500-155,500/mt. Some transactions for Nanshan, Jinlong and Kaiyuan were made between RMB 154,000-154,500/mt. Sellers were facing a tough situation due to the dampened consumption, and trading did not show any improvement despite lower prices. With the approach of traditional off-season, transactions did not turn better although goods supply was limited.


On Tuesday, mainstream traded prices of Jinchuan nickel were between RMB 124,500-124,700/mt, while mainstream Russian nickel prices were between RMB 126,500-126,800/mt. Transactions were muted recently and inquiries decreased. But since Chinese government is expected to release some policies stimulating economic growth, some market players are optimistic.


base metals

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