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SMM Daily Review – 2012/7/19 Base Metals Market
Jul 20,2012 10:04CST
price review forecast
SHFE 1211 copper contract ended at RMB 56,230/mt Thursday, up RMB 480/mt or 0.86%, and SHFE 1210 aluminum contract closed up RMB 70/mt or 0.45% at RMB 15,615/mt.

SHANGHAI, Jul. 20 (SMM) –

As LME copper rallied from initial lows overnight, SHFE 1211 copper contract started RMB 330/mt up at RMB 56,080/mt Thursday. After the opening, the contract edged down to RMB 56,000/mt and then fluctuated around this price point, testing a low at RMB 55,830/mt, the bottom of recent pricing range. In the afternoon however, LME copper returned above USD 7,700/mt, while the Shanghai Composite Index rose to nearly 2,200, both helping the contract increase rapidly and drift higher to RMB 56,250/mt, with a high touching RMB 56,310/mt. SHFE 1211 copper contract ended the day at RMB 56,230/mt, up RMB 480/mt or 0.86%, with trading volumes decreasing by 10,754 lots but positions increasing by 10,784 lots. As technical indicators pointed upward, SHFE copper prices stood above all moving averages and helped weaken bearish sentiment in markets.

SHFE copper prices met resistance to rebound and compelled cargo-holders in spot markets to sell for cash, keeping market supply sufficient. Spot copper offers were between premiums of positive RMB 20-100/mt in the morning business. Traded prices for standard-quality copper were between RMB 55,950-56,030/mt, and RMB 56,000-56,100/mt for high-quality copper. As there was no price gap among SHFE copper contracts, trader buying interest was restricted. Downstream producers, however, continued buying as needed, leading to modest market transactions in the morning. In the afternoon, inasmuch as SHFE copper prices rose rapidly, some hedged copper was locked, but spot copper premium quotes held to the morning levels. Traded prices climbed to RMB 56,150-56,250/mt in the afternoon, but market activity became muted as market participants generally took a on-the-fence posture following considerable copper price rebounds.  

The most actively traded SHFE aluminum contract for October delivery opened slightly higher at RMB 15,585/mt and closed up RMB 70/mt or 0.45% at RMB 15,615/mt on Thursday, after finding its low at RMB 15,540/mt. The winning streak of the Shanghai Composite Index pushed all aluminum contracts on the Shanghai Futures Exchange above RMB 15,600/mt. Support at the price has yet to be tested for a longer time, however, given weak fundamentals.

Spot aluminum traded at RMB 15,530-15,560/mt in Shanghai, at discounts of RMB 40-70/mt over current-month SHFE aluminum prices. Low-iron aluminum traded at RMB 15,610-15,620/mt. The current-month contract struggled near RMB 15,600/mt in the morning session, with spot discounts expanding to RMB 70/mt as a result of supply sufficiency and low buying interest. Branded ingots still traded at higher prices and aluminum ingots in Hangzhou were sold at prices as low as RMB 15,520/mt. Quotations rose to RMB 15,550-15,560/mt, though sparse, in the afternoon as current-month SHFE aluminum prices added gains. Deals were hardly concluded as even inquiries were rarely heard.

SHFE lead prices opened RMB 40/mt higher at RMB 14,995/mt Thursday boosted by positive US Housing Starts, and fluctuated up to hit RMB 15,075/mt since market sentiment was shored up by the rising domestic stock markets. SHFE lead prices finally closed up RMB 60/mt to RMB 15,020/mt. Trading volumes were up 66 lots to 246 lots, while positions increased 38 lots to 2,558 lots.

Spot lead prices edged up with spread among brands narrowing. Nanfang and Shuikoushan were mainly quoted between RMB 15,100-15,120/mt, with spot premiums over the most active SHFE lead price at RMB 100/mt. Quotations for Mengzi and Shenqian were between RMB 15,070-15,080/mt. Downstream buyers only made inquiries due to high prices, leaving limited deals done. In the afternoon, spot lead prices remained little changed despite the rise in futures market.

On Thursday, SHFE 1210 zinc contract prices dipped to RMB 14,790/mt after opening as large numbers of shorts sold off goods, and then fluctuated narrowly between RMB 14,800-14,820/mt. At noon, SHFE 1210 zinc contract prices rose along with LME zinc prices and touched RMB 14,870/mt, tracking the Shanghai Composite Index later in the day. Finally, SHFE 1210 zinc contract prices closed at RMB 14,830/mt, up RMB 40/mt, or 0.27%. Trading volumes decreased by 10,250 lots to 34,468 lots, and total position decreased by 4,556 lots to 141,942 lots.

In domestic spot markets, discounts of #0 zinc were around RMB 100-110/mt in the morning session, with traded prices between RMB 14,690-14,720/mt. Imported zinc was traded around RMB 14,650/mt, and #1 zinc was traded between RMB 14,640-14,650/mt. traders lacked arbitrage opportunities as discounts did not expand, while downstream buyers remained cautious. On the other hand, the market preferred imported zinc, causing transactions to improve. 

On Thursday, spot prices in Shanghai tin market were between RMB 146,500-148,000/mt, slightly down from the previous trading day, but trading remained thin. Smelters limited supply due to low prices, allowing some resilient in tin prices against the weak transactions. A few goods from Yunxi were mainly traded at RMB 147,500/mt, and transactions for Jinlong were concluded between RMB 146,300-146,500/mt. Some imported goods were traded at RMB 145,800/mt. Transactions were limited and mainly made for tin ingots supplied by Yunxi and Jinlong.

On Thursday, mainstream prices of Jinchuan nickel were between RMB 118,500-118,700/mt in the morning session, while mainstream Russian nickel prices were between RMB 116,400-116,600/mt. Transactions were made among traders as LME nickel prices rose in the morning session, but downstream buying interest was still low. Traders raised quotes in the afternoon, with Jinchuan nickel prices up to RMB 118,700-118,800/mt, and Russian nickel prices up to RMB 116,500-116,700/mt. But transactions were muted.


Shanghai base metals
SHFE base metals
trading volume

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