SMM Base Metals Market Daily Review (2012-10-18)

SHANGHAI, Oct. 19 (SMM) --

Copper

SHFE 1301 copper contract, the most active one, increased immediately after starting marginally up at RMB 58,900/mt Thursday, and hovered between RMB 59,150-59,250/mt before climbing to RMB 59,340/mt before 10 am. After 10 am, China’s GDP for 3Q was in line with market expectation, so SHFE copper prices edged down as some longs and shorts closed positions, but maintained above the daily moving average during the day. SHFE 1301 copper contract closed RMB 420/mt higher at RMB 59,130/mt, with positions down by 2,794 lots but trading volumes up slightly by 1,456 lots. SHFE copper’s bottom price drifted higher and tended to break through the 20-day moving average.

Mainstream spot copper discounts were negative RMB 100-250/mt in Shanghai in the morning business. Traded prices for standard-quality copper were between RMB 58,900-58,960/mt, and RMB 59,000-59,150/mt for high-quality copper. SHFE copper prices rebounded and hovered at the highs, so spot copper supply was diversified and cargo-holders were eager to move goods for cash at the highs. But downstream producers expressed low interest in entering markets, and lead to muted market activity. Spot copper discounts expanded considerably, and the price gap between standard and high-quality copper reached RMB 150/mt. Speculators were also unwilling to make purchases owing to no speculative opportunities, resulting in oversupply. In the afternoon, as SHFE copper prices remained little changed, spot copper discounts were also basically flat with morning levels. Market activity was also not seen to improve, although traded prices fell slightly to RMB 58,850-59,070/mt.

Aluminum

The SHFE 1212 aluminum contract opened slightly higher at RMB 15,510/mt on Thursday. The most active contract hovered near RMB 15,500/mt in the session as longs and shorts exited the market after taking profits. Finally, the three-month contract gained RMB 65/mt to close at RMB 15,510/mt. Positions were down 1,276 lots to 57,858 lots. China’s 3Q GDP was line with expectations, but uncertainty on whether the Chinese economy has hit bottom soured sentiment. The most-traded contract rose above RMB 15,500/mt, but support at the mark should be very weak.

Spot aluminum was mainly traded between RMB 15,310-15,350/mt in Shanghai on Thursday, with discounts between RMB 70-110/mt. Low-iron aluminum was traded between RMB 15,390-15,400/mt. The most active SHFE aluminum contract rose steadily as China’s 3Q GDP was in line with expectations. Spot aluminum prices climbed above RMB15,300/mt as a result. Cargo holders generally moved goods at discounts of less than RMB 100/mt, with prices for some deliverable brand aluminum firm at RMB 15,350/mt. Downstream producers purchased only modestly at lower prices, dragging traded prices to RMB 15,310/mt. In the afternoon, the SHFE 1212 aluminum contract edged up, but bearish sentiment was strong in spot market due to sluggish consumption. Quotations were lowered to RMB 15,300-15,320/mt, while downstream producers and middlemen showed little buying interest, leaving trading light.

Lead

SHFE lead prices opened higher at RMB 15,770/mt as positive news from Europe and the US added to risk appetite. Later, China’s GDP was reported at 7.4%, a 3-year low, but in line with market expectations, so market showed mild response. SHFE lead prices moved narrowly between RMB 15,760-15,780/mt and finally closed at RMB 15,755/mt, up RMB 100/mt. Investors were not willing to enter market. Trading volumes fell 36 lots to 56 lots, and positions were down 4 lots to 1,172 lots.
In China’s spot lead market, prices were deprived of momentum to rise due to sluggish demand. Well-known brands including Nanfang and Chihong Zn & Ge were quoted at RMB 15,550/mt, with spot discounts overt the SHFE 1212 lead contract price at RMB 200/mt. Mengzi and Dongling were offered at RMB 15,450-15,470/mt. Quotations for Hanjiang and Shenqian were at RMB 15,430/mt and RMB 15,400/mt. Downstream buyers were still on the sidelines, believing increase in lead prices were limited, while cargo holders moved goods actively. Transactions remained modest.

Zinc

On Thursday, SHFE three-month zinc contract prices opened at RMB15, 205/mt, and touched RMB 15,275/mt in the morning trading as some longs entered the market. But since China’s 3Q GDP was 7.4%, lower than forecasts, SHFE zinc prices were pushed down and moved between RMB 15,200-15,250/mt during the day. At the end of trading, SHFE three-month zinc contract prices fell below the moving average and closed at RMB 15,210/mt, up RMB 90/mt.
In domestic spot markets, discounts of #0 zinc were between RMB 190-200/mt, with traded prices between RMB 15,020-15,050/mt. #1 zinc prices were RMB 15,000-15,020/mt due to tight supply. Downstream buyers took a wait-and-see attitude since they had built stocks the previous day, and traders lacked arbitrage opportunity as spot discounts did not expand, with transactions muted.

Tin

Spot tin prices were mainly at RMB 152,500-154,000/mt in Shanghai Thursday. Trading was still thin despite slight rebound in LME tin prices. In the afternoon, some goods were quoted at RMB 152,000/mt, some transactions were made among traders due to low prices and a few downstream buyers purchased moderately. Yunxi was traded at RMB 154,000/mt, and Jinhai was traded at RMB 153,000/mt. Deals for Nancang, Nanshan, and Yunxiang were made at RMB 152,000/mt.

Nickel

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.