SMM Daily Review - 2012/6/27 Base Metals Market

SHANGHAI, Jun. 28 (SMM) --

Copper

As LME copper extended weakness overnight, SHFE 1210 copper contract, the most active one, started RMB 290/mt down at RMB 53,690/mt Wednesday. Shorts continued to impose selling pressures during the day, but a rebounding Shanghai Composite Index gave a boost to the contract which moved around RMB 53,700/mt with a fluctuating band of RMB 300/mt. However, the Shanghai Composite Index slid in the afternoon, causing the contract to lower to test RMB 53,420/mt but then narrow daily declines at the tail of trading due to position closings. Finally, the most active copper contract for October delivery ended RMB 240/mt or 0.44% lower at RMB 53,740/mt, with trading volumes and positions increasing by 8,126 lots and 16,124 lots, respectively. In the face of great selling pressures, SHFE copper prices entirely came under pressure at recent moving averages, but buying emerged at the lows. Longs and shorts held divergent views at RMB 53,500/mt, which should be tested repeatedly for the near future.

SHFE copper prices extended losses, so hedged copper came into spot markets. Cargo-holders were generally eager to move goods at the month-end, choosing to cut premiums immediately following the opening. Spot copper premiums thus slipped rapidly, down to positive RMB 150/mt from positive RMB 250/mt in Shanghai in the morning business. Traded prices for standard-quality copper were between RMB 54,500-54,600/mt, and RMB 54,550-54,680/mt for high-quality copper. Downstream producers and traders were hesitant to buy owing to tight cash flows as well as bearish sentiment, leading to weak market activity in the morning. In the afternoon, SHFE copper prices trended lower, but mainstream spot copper premium quotes dipped to positive RMB 70-140/mt. Traded prices also fell to RMB 54,350-54,550/mt in the afternoon, but market activity was muted.

Aluminum

The most active SHFE aluminum contract for October delivery started lower at RMB 15,060/mt and settled down RMB 110/mt or 0.73% at RMB 15,060/mt, rebounding from a new two-year low of RMB 14,925/mt as shorts took profits. Positions added 6,236 lots to 127,344 lots. Transacted contracts broke through 180,000 lots and hit an 8-month high amid strong shorting. The contract is expected to struggle at the RMB 15,000/mt mark in the near term awaiting direction of the EU Summit.

Spot aluminum was traded at RMB 15,210-15,280/mt in Shanghai, with low-iron aluminum trading at RMB 15,360-15,380/mt. Spot prices slipped more than RMB 300/mt after the current-month contract lost support at RMB 16,200/mt. The selling interest was strong but buying interest weak, so trading was extremely light. Quotations turned sparse and were at RMB 15,220-15,230/mt in the afternoon as the current-month contract stagnated. Deals were hardly reported as buyers stayed silent.

Lead

On Wednesday, SHFE lead prices opened lower at RMB 14,475/mt investors’ doubt over the EU summit to be held this Thursday and Friday. Later, SHFE lead prices moved between RMB 14,420-14,470/mt to finally close at RMB 14,450/mt, down RMB 40/mt. Transactions were limited due to depressed market confidence. Trading volumes decreased 38 lots to 174 lots, while positions were down 12 lots to 1,994 lots.

SHFE lead prices opened lower on Wednesday. In China’s spot markets, well-known brands including Nanfang were quoted between RMB 14,620-14,630/mt, with premiums of RMB 150/mt against the most active SHFE lead price. Yubei was quoted at RMB 14,600/mt. Shenqian and Hengchang was quoted between RMB 14,550-14,560/mt. Smelters were unwilling to move goods, leaving limited supply in the market, while downstream buyers were reluctant to buy due to poor orders.

Zinc

On Wednesday, SHFE 1210 zinc contract prices opened lower and fluctuated between RMB 14,210-14,345/mt after opening. In the midday, SHFE 1210 zinc contract prices dipped to RMB 14,170/mt since SHFE zinc prices fell slightly, and rallied slightly as large numbers of buyers entered the market. In the afternoon, SHFE 1210 zinc contract prices inched down as the US dollar index surged, touching an intraday low at RMB 14,145/mt, and then rallied to close at RMB 14,245/mt, down RMB 180/mt or 1.25%. Trading volumes increased by 79,566 lots to 271,328 lots, and total position increased by 26,026 lots to 222,384 lots.

In domestic spot markets, #0 zinc prices were between RMB 14,220-14,250/mt. As SHFE zinc prices fell at noon, #0 zinc prices were between RMB 14,190-14,220/mt. #1 zinc was quoted between RMB 14,150-14,200/mt. Smelters were still holding goods as prices plunged, with transactions were mainly made among traders, while downstream buyers purchased at lower prices but limitedly.

Tin

In Shanghai tin market, traded prices were between RMB 148,000-150,000/mt, with some transactions made between RMB 147,500-147,800/mt. Although LME tin prices opened at USD 18,350/mt fluctuated up, domestic spot tin market still lacked confidence, leaving trading light. Wait-and-see sentiment still prevailed in the market. Yunheng and Nanshan were traded between RMB 147,500-148,000/mt, while Yunxi were traded between RMB 148,300-150,000/mt.

Nickel

On Wednesday, mainstream prices of Jinchuan nickel were between RMB 121,500-121,700/mt, while mainstream Russian nickel prices were between RMB 118,200-118,500/mt. LME nickel prices were steady in the morning session during Asian trading hours, and transactions of Russian nickel were brisk due to lower prices. Mainstream prices of Jinchuan nickel were around RMB 121,600/mt, with transactions muted due to pessimism. Transactions did not improve despite traders lowered prices.