SMM Daily Review - 2012/6/26 Base Metals Market

SHANGHAI, Jun. 27 (SMM) --

Copper

As LME copper rallied overnight, SHFE 1210 copper contract, the most active one, opened RMB 160/mt higher at RMB 54,330/mt Tuesday. The Shanghai Composite Index continued to slip, causing the contract to come under downward pressures after briefly touching a high of RMB 54,480/mt. In the afternoon, SHFE copper prices fell below RMB 54,000/mt under the influence of slumping LME copper prices and dipped to as low as RMB 53,480/mt, experiencing two rounds of dives amid short selling. Finally, the most active SHFE copper contract ended at RMB 53,620/mt, down RMB 550/mt or 1.02%. Trading volumes and positions increased 114,000 lots and 93,352 lots, respectively. Given the downtrend of technical indicators and selling pressures, the support at RMB 53,500/mt for SHFE copper prices was weak.

SHFE copper prices were under downward pressures, so cargo-holders in spot markets were eager to sell goods for cash as June ends. Imported and domestic copper flowed into the market as a result, creating great pressures on spot copper markets and causing spot premiums to keep narrowing all the way. Spot copper premium quotes were between positive RMB 250-330/mt in Shanghai in the morning business Tuesday. Traded prices for standard-quality copper were between RMB 55,180-55,240/mt, and RMB 55,240-56,320/mt for high-quality copper. Near the midday, premiums for high-quality copper nearly lost positive RMB 300/mt, and some dealers with adequate liquidity took the chance to purchase, but downstream buyers were still unwilling to buy, leaving supply exceeding demand. In the afternoon, SHFE copper prices gathered the falling momentum, but spot copper market activity virtually stagnated. Spot copper premium offers fell to positive RMB 200-300/mt, while traded prices were between RMB 54,800-55,050/mt, losing the RMB 55,000/mt point. Market pessimism grew after copper prices dived, so spot copper prices are likely to be dampened further as the end of the month approaches.

Aluminum

The most active SHFE aluminum contract for October delivery started lower at RMB 15,530/mt and lost an heavy RMB 485/mt or 3.12% closing at RMB 15,065/mt, as a result of strong short-selling following announcement of power subsidy polices in Henan and Guizhou. It found its low at RMB 14,900/mt. Positions surged 25,480 lots to 121,108 lots. The most active SHFE aluminum contracts have lost nearly RMB 900/mt in June as output increases and power rate drops. Pressure from the two factors has been largely been digested and support at RMB 15,000/mt should be tested for the near term.

Spot aluminum traded at RMB 15,530-15,560/mt in Shanghai, with low-iron aluminum trading at RMB 15,620-15,680/mt. Some aluminum producers in Henan now enjoy power bill deferrals of RMB 0.08/kwh while smelters in Guizhou have a 10% cut in power rates. Spot discounts over the current-month SHFE aluminum price expanded to RMB 20/mt and the strengthening bearish market sentiment led to lighter trading. Trading activity was only slightly active after prices dropped to RMB 15,530/mt. Deals were quite sparse in the afternoon after the current-month contract slipped to RMB 15,200/mt as market players moved to the sidelines. Quotations were few and within RMB 15,300-15,400/mt.

Lead

On Tuesday, SHFE lead prices extended declines as market remained cautious before the EU summit. In the morning, SHFE lead prices opened at RMB 14,770/mt and fluctuated down to move between RMB 14,700-14,730/mt. In the afternoon, SHFE lead prices plummeted and dipped to a low of RMB 14,490/mt and finally ended down RMB 300/mt or down 2% to RMB 14,490/mt. Trading volumes decreased 54 lots to 212 lots, while positions were down 38 lots to 2,006 lots.

In China’s spot markets, well-known brands including Nanfang were quoted at RMB 14,880/mt, with premiums of RMB 150/mt against the most active SHFE lead price. Mengzi and Yubei were quoted at RMB 14,840/mt. Shenqian was quoted at RMB 14,820/mt. Some downstream buyers purchased branded lead in limited amounts at lower prices. In the afternoon, SHFE lead prices slumped and dealers were less willing to move goods. Transactions were worse than the previous trading day in general.

Zinc

On Tuesday, SHFE lead prices extended declines as market remained cautious before the EU summit. In the morning, SHFE lead prices opened at RMB 14,770/mt and fluctuated down to move between RMB 14,700-14,730/mt. In the afternoon, SHFE lead prices plummeted and dipped to a low of RMB 14,490/mt and finally ended down RMB 300/mt or down 2% to RMB 14,490/mt. Trading volumes decreased 54 lots to 212 lots, while positions were down 38 lots to 2,006 lots.

In China’s spot markets, well-known brands including Nanfang were quoted at RMB 14,880/mt, with premiums of RMB 150/mt against the most active SHFE lead price. Mengzi and Yubei were quoted at RMB 14,840/mt. Shenqian was quoted at RMB 14,820/mt. Some downstream buyers purchased branded lead in limited amounts at lower prices. In the afternoon, SHFE lead prices slumped and dealers were less willing to move goods. Transactions were worse than the previous trading day in general.

Tin

On Tuesday, mainstream traded prices in Shanghai tin market were between RMB 149,000-150,000/mt, some transactions were made at RMB 148,500/mt as trading remained light. Nanshan, Jinlong and Jinhai were traded between RMB 148,500-149,000/mt, while transactions for Yunheng and Yunxi were mainly concluded at RMB 149,000/mt. Quotations from Yunxi was RMB 150,500/mt. Given the sinking LME tin prices and sluggish demand, domestic tin prices kept falling. The shrinking orders at downstream enterprises dampened demand for raw materials, coupled with the inflow of imported resources, demand for spot tin was at rock bottom. Dealers reported poor sales as buyers were reluctant to purchase. Wait-and-see sentiment prevailed in the market, leaving transactions quiet.

Nickel

On Tuesday, Jinchuan Group lowered nickel prices to RMB 121,000/mt, down RMB 3,000/mt. Mainstream prices of Jinchuan nickel were between RMB 122,000-122,300/mt, while mainstream Russian nickel prices were between RMB 118,800-122,000/mt. In the midday, mainstream prices of Jinchuan nickel fell to RMB 121,800-122,000/mt, while Russian nickel prices were still between RMB 118,800-120,000/mt. Transactions did not improve.