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SMM Base Metals Market Daily Review (2012-10-17)
Oct 18,2012 09:48CST
price review forecast
LME copper prices overnight closed up. SHFE three-month copper contract prices opened slightly higher at RMB 58,830/mt, and climbed to RMB 58,980/mt in the morning trading.

SHANGHAI, Oct. 18 (SMM) –


LME copper prices overnight closed up. SHFE three-month copper contract prices opened slightly higher at RMB 58,830/mt, and climbed to RMB 58,980/mt in the morning trading. As the Shanghai Composite Index fell whilst the US dollar index rose as of 10:00 am, LME copper prices were pushed down, allowing SHFE copper prices to drop rapidly. Later in the day, SHFE did not found support until dipping to RMB 58,480/mt, and fell further in the afternoon after touching RMB 58,750/mt. Finally, SHFE three-month copper contract prices closed at RMB 58,660/mt, down RMB 100/mt. Total position increased by only 472 lots, and trading volumes increased by nearly 20,000 lots to 176,000 lots. SHFE three-month copper contract prices closed down, with strong resistance at RMB 59,000/mt.

Spot discounts of refined copper in Shanghai were RMB 80-200/mt. Traded prices for standard-quality copper were RMB 58,450-58,530/mt, and for high-quality copper were RMB 58,520-58,780/mt. SHFE copper prices opened higher but moved lower. Traders were actively moving goods at higher prices to generate cash, keeping spot copper supply ample, and with spot discounts expanding. In the second trading section, copper prices slid rapidly, and traders were holding high-quality copper, with spot discounts narrowing. But supply was still sufficient as arbitragers continued to generate cash. Standard-quality copper was sold massively with high discounts, and downstream purchases increased at lower prices. But traders were expecting increasing spot discounts. In the afternoon, SHFE copper prices were weighed down further, and spot discounts remained between RMB 80-200/mt, while spot prices fell to RMB 58,500-58,650/mt. The short momentum improved, and transactions remained quiet.


The SHFE 1212 aluminum contract opened at RMB 15,455/mt on Wednesday, moving narrowly at low prices for three consecutive trading days. Shorts and longs showed higher interest in entering the market, though trading volumes were limited. Finally, the most active contract closed at RMB 15,455/mt, down RMB 5/mt. Positions were up by 242 lots to 59,134 lots. Investors are staying guarded ahead of China’s GDP for 3Q to be released on Thursday. With fundamentals being weak, SHFE aluminum prices will extend losses if China’s 3Q GDP misses forecasts. The three-month contract is expected to lose support at RMB 15,400/mt.

Spot aluminum was mainly traded between RMB 15,280-15,300/mt in Shanghai on Wednesday, with discounts between RMB 80-100/mt. Low-iron aluminum was traded between RMB 15,350-15,360/mt. The SHFE 1212 aluminum contract was mired, dampening sentiment in spot aluminum market. Mainstream traded prices met strong resistance at RMB 15,300/mt. Supply was ample, while downstream producers generally watched from the sidelines, depressing overall trading. In the afternoon, the current-month contract saw little movement. Sparse quotations were reported between RMB 15,280-15,290/mt. Wait-and-see sentiment was strong among sellers and buyers, leaving trading light.  


SHFE lead prices opened at RMB 15,700/mt and followed a weak trend as influence from positive economic data in the US was limited. Although LME lead and Chinese stocks rose slightly, the weak demand forced SHFE lead prices to fluctuate down to a low of RMB 15,630/mt, with prices finally closing at RMB 15,655/mt, down RMB 60/mt. Trading volumes fell 84 lots to 92 lots, and positions remained unchanged.

Traders in China’s spot lead market lowered prices due to weak demand. Well-known brands including Nanfang and Chihong Zn & Ge were quoted between RMB 15,500-15,510/mt, with spot discounts overt the SHFE 1212 lead contract price at RMB 150/mt. Other brands, such as Mengzi and Dongling were offered at RMB 15,430-15,440/mt. Quotations for Shenqian were at RMB 15,360/mt. Continuous declines in lead prices prompted some cargo holders to limit sales, while downstream buyers were unwilling to purchase despite lower prices, leaving trading modest.


On Wednesday, SHFE three-month zinc contract prices opened at RMB15, 190/mt, and fell in the morning trading, and then dipped to RMB 15,065/mt, dragged down by the Shanghai Composite Index. Despite the Shanghai Composite Index rose in the midday, SHFE three-month zinc contract prices continued to fall, and fluctuated between RMB 15,105-15,135/mt in the afternoon due to low buying interest of longs. Finally, SHFE three-month zinc contract prices closed at RMB 15,120/mt, with resistance at the 5-day moving average.

In domestic spot markets, discounts of #0 zinc were between RMB 150-180/mt, with traded prices between RMB 14,970-14,980/mt. As SHFE zinc prices plummeted, spot discounts narrowed to RMB 130-150/mt, with traded prices around RMB 14,950/mt. #1 zinc prices were around RMB 14,900/mt. The overall transaction improved from the previous day as downstream buyers entered the market so as to maintain production. In the afternoon, spot prices rose to RMB 14,970-14,980/mt along with SHFE zinc prices, but with transactions were quieter than the morning trading.


Spot tin prices in Shanghai were mainly between RMB 152,500-154,500/mt on October 17. Although LME tin prices rebounded slightly Tuesday, spot prices continued to fall, with trading extremely quiet. Traders all reflected poor sales and wait-and-see sentiment increased again among downstream buyer, leaving few purchases. Yunxi was traded at RMB 154,500/mt, and Yunheng was traded at RMB 154,000/mt, deals for Yunxiang and Nanshan were mainly done at RMB 152,500-153,000/mt.


During the morning trading hours in the Shanghai nickel spot market, mainstream traded prices of nickel from Jinchuan Group were between RMB 125,100-125,300/mt and mainstream traded prices of nickel from Russia were between RMB 123,000-123,300/mt. As LME nickel prices continued to fall, wait-and-see sentiment grew and downstream demand turned even more sluggish. Traders lowered offers to promote sales, but transactions were still muted. During the afternoon trading hours, mainstream traded prices of nickel from Jinchuan Group were between RMB 124,800-125,000/mt, and mainstream traded prices of nickel from Russia were around RMB 123,000/mt.

LME copper price
Shanghai base metal price
LME base metal price
SHFE base metal price

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