SMM Daily Review - 2012/6/6 Base Metals Market

SHANGHAI, Jun. 7 (SMM) –

Copper
The most active SHFE copper contract for September delivery started slightly RMB 50/mt higher at RMB 53,530/mt Wednesday. After the opening, the contract sank rapidly to around the previous session’s low of RMB 53,230/mt, but then was pushed higher by longs who bought at the lows. Nevertheless, SHFE 1209 copper contract met short selling at the RMB 54,000/mt point and began to slide following resistance at RMB 53,950/mt. At the tail of trading, as the Shanghai Composite Index lowered to test support at 2,300, and since investors closed positions on a large scale, SHFE 1209 copper contract retreated further,  fluctuating around the daily moving average of RMB 53,750/mt before finally ending at RMB 53,820/mt, still a gain of RMB 350/mt or 0.65%. Trading volumes for the most active copper contract added by 74,120 lots, while positions decreased by 14,794 lots. SHFE copper prices stopped falling and began stabilizing for a second straight day, but suffered great resistance at the 5-day moving average, and both shorts and shorts were wary of operations in the context of copper price rebounds. SMM believes selling pressures at the highs and buying at the lows will help domestic copper prices extend the fluctuating trend over the near term.

SHFE copper prices stopped falling and began stabilizing, enticing downstream producers in spot markets to step up purchase volumes at lower price levels. Cargo-holders kept moving goods aggressively for cash, leading to sufficient market supply. Spot copper premiums were quoted between positive RMB 250-300/mt in Shanghai in the morning business. Traded prices for standard-quality copper were between RMB 54,700-54,820/mt, and RMB 54,730-54,850/mt for high-quality copper. The proportion of imported copper supply to overall supply was increasing, while the price gap between standard-quality imported and domestic copper widened. Traders opted opportunities to enter markets, helping boost market activity in the morning. In the afternoon session, as SHFE copper prices came under pressure, spot copper premiums became steady. Traded prices, however, fell to RMB 54,650-54,800/mt.

Aluminum
The most active SHFE aluminum contract for September delivery started at RMB 15,955/mt and closed down RMB 30/mt or 0.19% at RMB 15,915/mt on Wednesday, after struggling at RMB 15,910/mt. Total positions added 828 lots to 101,076 lots while transacted contracts dropped 1,586 lots to 7,990 lots. Cautious trading led to a narrowing moving band and the contract was still at the low end. SMM expects the contract to remain weak amid stabilizing signals from overseas and general weakness.

Spot aluminum was traded at RMB 15,890-15,920/mt in Shanghai, with low-iron aluminum trading at RMB 15,980-16,000/mt. Bearishness in aluminum increased as losses were seen against gains of other base metals. Buying from both middlemen and downstream was still weak even at low-end prices. Most deals were still slightly discounted and aluminum price stagnated near RMB 15,900/mt. Overall deals were limited.Lead
On Wednesday, SHFE lead prices, influenced by LME lead prices, opened higher at RMB 15,070/mt and stabilized to rise to RMB 15,110/mt. Later, however, SHFE lead prices met resistance at the 10-day moving average and fell to RMB 15,060/mt at midday, with prices finally closing at RMB 15,045/mt. Trading volumes fell by 30 lots to 152 lots, while positions were up 36 lots to 2,128 lots.

Well-known brands in domestic spot market, including Nanfang and Chihong Zn & Ge, were mainly quoted between RMB 15,150-15,160/mt, and Shuikoushan was quoted at RMB 15,120/mt. Offers for Hengchang remained relatively low at RMB 15,000/mt. Quotations for branded lead increased but transactions were still modest.

Lead
On Wednesday, SHFE lead prices, influenced by LME lead prices, opened higher at RMB 15,070/mt and stabilized to rise to RMB 15,110/mt. Later, however, SHFE lead prices met resistance at the 10-day moving average and fell to RMB 15,060/mt at midday, with prices finally closing at RMB 15,045/mt. Trading volumes fell by 30 lots to 152 lots, while positions were up 36 lots to 2,128 lots.

Well-known brands in domestic spot market, including Nanfang and Chihong Zn & Ge, were mainly quoted between RMB 15,150-15,160/mt, and Shuikoushan was quoted at RMB 15,120/mt. Offers for Hengchang remained relatively low at RMB 15,000/mt. Quotations for branded lead increased but transactions were still modest.

Zinc
On Wednesday, SHFE 1209 zinc contract prices opened higher at RMB 14,780/mt and finally closed at RMB 14,815/mt, up RMB 130/mt or 0.89%. Trading volumes increased by 488 lots to 101,882 lots, and total position increased by 4,632 lots to 170,726 lots.

In domestic spot markets, discounts of #0 zinc against SHFE three-month zinc contract prices were between RMB 50-70/mt, with traded prices between RMB 14,680-14,700/mt. #1 zinc was quoted between RMB 14,670-14,690/mt, but transactions were muted. As SHFE zinc prices rebounded, traders actively moved goods, while downstream buying interest was low, keeping transactions modest.

Tin
In Shanghai tin market, mainstream traded prices were between RMB 151,500－153,500/mt Wednesday. Transactions remained modest. Weitai, Jinlong, Yunxiang, and Yunshan were mainly traded between RMB 151,500－152,000/mt, and most transactions for Yunxi were concluded between RMB 152,000－153,000/mt. Downstream consumption was still soft as traders purchased cautiously. Selling interest at smelters was rather low. Tin market should continue the weak trend in short term.

Nickel
On Wednesday, mainstream prices of Jinchuan nickel were between RMB 121,800-122,000/mt, while mainstream Russian nickel prices were between RMB 118,300-118,500/mt. In the afternoon, Jinchuan nickel prices fell slightly to RMB 121,800/mt, and Russian nickel prices slid to RMB 118,200/mt. Traders buying Russian nickel increased recently, especially price spread between Russian nickel and Jinchuan nickel expanded to RMB 3,500/mt after goods arrivals flew into the market.