SMM Daily Review – 2012/9/2 Base Metals Market

SHANGHAI, Sept.3 (SMM) --

Copper

SHFE 1212 copper contract, the most active one, started RMB 10/mt up at RMB 55,430/mt Friday. After opening, the contract largely fluctuated around RMB 55,400/mt, and then fell to test RMB 55,360/mt as China stock market lacked upward momentum and presented weak performance. However, during the afternoon trading hours, SHFE 1212 copper contract regained upward momentum and moved around RMB 55,650/mt as LME copper prices rose. At the tail of the trading, SHFE copper contract fell rapidly to close flat at RMB 55,420/mt after position closing. Trading volumes of SHFE 1212 contract reduced by 149,000 lots and positions were down by 10,430 lots. Pressure can still be felt at 5-day moving average.

In Shanghai spot market, cargo holders were actively moving goods at the weekend as SHFE copper prices extended gains, leaving premiums down to RMB 0-50/mt. Traded prices for standard-quality copper were between RMB 55,900-56,000/mt, and RMB 55,950-56,050/mt for high-quality copper. Standard-quality copper was quoted at slight discounts during the afternoon trading hours recently. Traders replenished some high-quality copper, and downstream producers only purchased on an as-needed basis, with limited transaction reported. During the afternoon trading hours, premiums for spot copper were between negative-10-50/mt, and most high-quality copper was traded at premiums RMB 30/mt, with sluggish transactions reported.

Aluminum

The most active SHFE 1211 aluminum contract opened lower at RMB 15,370/mt on August 31. The contract declined dramatically, without any rising momentum in morning session. Investors stood on the sidelines after exiting market as a result. The three-month contract regained some losses at the tail of trading before finally closing at RMB 15,365/mt, down RMB 30/mt or 0.19%. Positions were down 174 lots to 90,718 lots. Markets were awaiting direction from US Federal Reserve Chairman Bernanke’s speech on Friday night. Aluminum prices are expected to remain weak in this coming week as optimistic expectations cooled and due to negative fundamentals. Latest SHFE aluminum inventories were up 4,947 mt to 369,259 mt due to sluggish consumption.
  
Spot aluminum was mainly traded between RMB 15,320-15,350/mt in Shanghai on August 31, with discounts between RMB 80-50/mt. Low-iron aluminum was traded between RMB 15,410-15,420/mt. Trading activities were lackluster in spot aluminum markets due to the slight fall of SHFE 1211 aluminum contract and cash tightness on the last trading day of August. Cargo holders became less active in moving goods, while downstream enterprises and middlemen refrained from buying. Supply of low-priced goods remained sufficient, though. Quotations dropped to RMB 15,300/mt in Wuxi, while those in Hangzhou were firm at RMB 15,350/mt.Deals were rarely done.  In the afternoon, most sellers and buyers exited markets and took a wait-and-see attitude as the weekend and September approached. Sparse quotations were seen between RMB 15,330-15,350/mt.

Lead

On Friday, market remained wary before the annual central bank meeting and Bernanke's speech which was expected to send signal on QE3. SHFE lead prices moved narrowly between RMB 15,150-15,170/mt after opening RMB 75/mt lower at RMB 15,170/mt, to end the day at RMB 15,170/mt, down RMB 75/mt from the previous trading day. Trading volumes fell 76 lots to 130 lots, while positions fell 72 lots to 1,894 lots.

In China’s spot lead markets, Nanfang was mainly quoted at RMB 15,130/mt, with spot discounts over the most active SHFE lead price at RMB 20/mt. Quotations for Dongling were RMB 15,070/mt, and for Jinli at RMB 15,040/mt. Transactions were rare with investors on the sidelines, awaiting the annual central bank meeting on Friday night.

Zinc

SHFE 1212 zinc contract, the most traded one, opened at RMB 14,705/mt on August 31 and fell to a low of RMB 14,635/mt due to the slipping LME zinc prices. SHFE zinc prices, though regaining some earlier losses, moved narrowly between RMB 14,650-14,680/mt and rose above the moving averages due to the drop of the US dollar index before closing at RMB 14,685/mt, down RMB 65/mt, or 0.44%. Investors remained cautious prior to the annual central bank meeting. Trading volumes were down 4,348 lots to 77,410 lots, and positions fell 2,454 lots to 151,166 lots.

In China’s spot zinc market, discounts of #0 zinc against SHFE three-month zinc contract prices were RMB 60-70/mt, with traded prices between RMB 14,630-14,640/mt. As SHFE zinc prices fell, discounts of #0 zinc against SHFE three-month zinc contract prices narrowed to RMB 50-60/mt, with traded prices around RMB 14,600-14,620/mt. #1 zinc prices were between RMB 14,550-14,580/mt. Smelters were unwilling to move goods due to the decline in SHFE zinc prices. In the afternoon, SHFE zinc prices fluctuated narrowly, with trading light. Traders and downstream buyers purchased at low prices on the last trading day of the week but in limited amount due to financial pressures.

Tin

 On August 31, trading in Shanghai tin market was thin, with mainstream traded prices between RMB 149,500-152,000/mt in the morning. Since consumption was boosted by the rise of tin prices early last week, downstream buyers were not interested in buying goods although prices were lower. In the afternoon, some traders lowered prices again, but only a few deals for Yunxi were made between RMB 149,000-150,000/mt. Other brands were rarely seen in the market. Downstream buyers only waited on the sidelines. Supply from smelters was still limited.

Nickel

In the Shanghai nickel spot market, mainstream traded prices of nickel from Jinchuan Group were in the RMB 115,000-115,200/mt range, and mainstream traded prices of nickel from Russia were in the RMB 113,200-113,400/mt range. Some traders slightly replenished stocks as arbitrage opportunities emerged between spot market and futures market. However, as uncertainties still prevail, cautious sentiment was still strong, leaving transactions light.