SMM Base Metals Daily Review (2012-12-25)

SHANGHAI, Dec. 26 (SMM) --

Copper

With LME copper slipping overnight, SHFE 1303 copper contract opened RMB 230/mt down at RMB 56,700/mt Tuesday. The contract continued fluctuating following the opening but was driven higher to RMB 57,000/mt near the midday when the Shanghai Composite Index rebounded 2.6% to break 2,200. SHFE copper prices touched a high at RMB 57,130/mt in the afternoon, but moved narrowly around 57,050/mt after suffering resistance at the 5-day moving average. SHFE 1303 copper contract settled RMB 90/mt or 0.16% higher at RMB 57,020/mt. SHFE 1304 copper contract reached an intraday high at RMB 57,300/mt and closed RMB 160/mt or 0.28% up at RMB 57,120/mt. Trading volumes for SHFE 1303 copper contract added by 19,572 lots, but positions decreased by 10,600 lots. Trading volumes and positions for SHFE 1304 copper contract rose by 59,532 lots and 18,600 lots, respectively. The most active copper contract was shifted to SHFE 1304 copper contract. Despite pressures at the 5 and 60-day moving averages, SHFE copper prices tended to increase without guidance from LME copper.

SHFE copper prices fell slightly, but spot copper market activity remained quiet. Spot copper discounts continued, and were largely quoted between negative RMB 230-350/mt in the morning business. Traded prices for standard-quality copper were between RMB 56,280-56,360/mt, and RMB 56,350-56,480/mt for high-quality copper. Supply of standard-quality copper decreased, so the price gap between standard and high-quality copper narrowed. As downstream producers reduced purchase volumes, overall market transactions were limited in the morning. With SHFE copper prices moving higher, spot copper discounts expanded in the afternoon, up to negative RMB 300-370/mt. Traded prices increased marginally to RMB 56,450-56,550/mt, and market activity remained muted.

Aluminum

As LME market is closed from December 25 to 26 and since New Year is drawing near, most investors are standing on the sidelines after exiting the market, leaving overall trading activity muted. SHFE 1303 aluminum contract prices started the day slightly higher at RMB 15,280/mt on December 25, but later rose to break through RMB 15,300/mt as the Shanghai Composite Index climbed to 2,200 points. Finally, the March aluminum on the SHFE advanced RMB 15/mt or 0.10% at RMB 15,315/mt. Positions were up 300 lots to 63,520 lots. SHFE aluminum prices found strong support at the lower end due to bullish stock market, but still lacked upward momentum. The SHFE 1303 aluminum contract is expected to struggle at RMB 15,300/mt in the short term.

Spot aluminum was mainly traded at RMB 15,010-15,040/mt in Shanghai on Tuesday, with discounts between RMB 70-100/mt. Low-iron aluminum was traded at RMB 15,070-15,090/mt. The Shanghai Composite Index rose to 2,200 points, but SHFE aluminum prices failed to follow up. Sluggish consumption at year-end in spot aluminum market resulted in a discount of RMB 100/mt. Only Wuxi reported an increase in trading volumes, supporting aluminum prices at RMB 15,020/mt, higher than those in Shanghai and Hangzhou. Overall trading was light. In the afternoon, the current-month aluminum contract on the SHFE held steady. Some traders were still anxious to destock, with sparse deals done at RMB 15,000-15,010/mt. Most producers will not enter the market until next year and a few traders will take the holiday in advance.

Lead

The 1302 SHFE lead contract price remained weak after opening RMB 50/mt lower at RMB 15,210/mt on December 25 although LME lead prices showed a strong trend. Investors rarely entered the market in the morning and positions changed little. In the afternoon, the increase in A-shares exceeded 2.5%, driving the most active SHFE lead contract price to rise to RMB 15,250/mt to end at RMB 15,265/mt. Trading volumes were down 48 lots to 62 lots, and positions dropped 34 lots to 2,408 lots.
In China’s spot lead market, goods supply declined, and cargo holder continued to hold prices firm. Quotations of Chihong Zn & Ge were mainly at RMB 14,780/mt, with spot discounts of RMB 450/mt over the 1302 SHFE lead contract price. Mengzi and Dongling were quoted at RMB 14,650-14,660/mt, little changed from the previous trading day. Downstream buyers still purchased in limited amounts, with trading modest.

Zinc

The 1302 SHFE lead contract price remained weak after opening RMB 50/mt lower at RMB 15,210/mt on December 25 although LME lead prices showed a strong trend. Investors rarely entered the market in the morning and positions changed little. In the afternoon, the increase in A-shares exceeded 2.5%, driving the most active SHFE lead contract price to rise to RMB 15,250/mt to end at RMB 15,265/mt. Trading volumes were down 48 lots to 62 lots, and positions dropped 34 lots to 2,408 lots.
In China’s spot lead market, goods supply declined, and cargo holder continued to hold prices firm. Quotations of Chihong Zn & Ge were mainly at RMB 14,780/mt, with spot discounts of RMB 450/mt over the 1302 SHFE lead contract price. Mengzi and Dongling were quoted at RMB 14,650-14,660/mt, little changed from the previous trading day. Downstream buyers still purchased in limited amounts, with trading modest.

Tin

In Shanghai tin market, mainstream traded prices were between RMB 150,000-151,500/mt on Tuesday, with a few goods traded at RMB 149,500-149,800/mt. Transactions were mainly made for Yunxi, Yunheng, Yunxiang, and Nanshan. Trading improved slightly from the previous trading day as downstream enterprises replenished goods ahead of the New Year holiday. Yunxi halted production for a 35-day maintenance, giving support to tin prices.

Nickel

In the Shanghai nickel spot market, mainstream traded prices of nickel from Jinchuan Group were in the RMB 118,800-119,000/mt range, and mainstream traded prices of nickel from Russia were in the RMB 117,600-117,800/mt range. Lacking of guidance from LME market, domestic electronic exchange fluctuated mildly, and spot transactions were quiet.