SMM Base Metals Market Daily Review (2013-1-8)

SHANGHAI, Jan. 9 (SMM) –

Copper
With LME copper rallying from lows overnight, the most active SHFE 1304 copper contract started slightly RMB 20/mt up at RMB 58,290/mt Tuesday, and experienced fluctuations during the day. The contract dipped to a low of RMB 58,100/mt in the morning owing to falling Chinese A-shares, but climbed to RMB 58,480/mt after gaining technical support at the 5-day moving average. SHFE copper prices, however, fell gradually below the daily moving average amid position closings at the tail of trading, and narrowed daily gains, closing at RMB 58,300/mt, up RMB 30/mt or 0.05%. Trading volumes for the most active copper contracts added by 16,052 lots, positions increased by 1,460 lots. Longs and shorts conducted severe struggles, but SHFE copper prices stood above all recent moving averages but lacked further rising momentum.

SHFE copper prices rose after initially dropping. But Shanghai spot copper discounts were stable between negative RMB 60-150/mt in the morning business. Traded prices for standard-quality copper were between RMB 57,480-57,570/mt, and RMB 57,550-57,680/mt for high-quality copper. Traders became less willing to buy, while few downstream producers opted to enter markets, leading to limited market transactions. In the afternoon, since SHFE copper prices stayed within their previous trading range, spot copper discounts and traded prices both remained virtually flat with morning levels.
 
Aluminum
SHFE 1303 aluminum contract prices drifted lower after opening at RMB 15,290/mt on January 8 as longs exited the market after profit-taking. Finally, the March aluminum on the SHFE closed at an intraday low of RMB 15,240/mt, down RMB 55/mt or 0.36%. Positions were down 1,018 lots to 64,618 lots. The most active SHFE aluminum contract closed with losses for three consecutive days after the New Year holiday, with strong resistance at RMB 15,300/mt as longs refrained from buying at highs. The light metal is expected to test support at RMB 15,200/mt in the short term while seeking guidance from December economic indicators.

Spot aluminum was mainly traded at RMB 15,040-15,060/mt in Shanghai on Tuesday, with discounts at RMB 10-30/mt. Low-iron aluminum was traded at RMB 15,090-15,110/mt. Despite weak SHFE 1303 aluminum contract prices, cargo holders held back goods, helping spot discounts to narrow within RMB 30/mt. Downstream producers purchased as needed, leaving overall transactions modest. In the afternoon, prices of the most active SHFE aluminum contracts were mired, triggering strong wait-and-see sentiment in spot market. Few sellers and buyers entered the market, with sparse offers reported at RMB 15050-15,060/mt. Overall trading was quiet. 
 
Lead
The most active SHFE lead contract price opened at RMB 15,300/mt on Tuesday and moved between RMB 15,140-15,170/mt after a dive at around 9: 00 a.m. At the tail of trading, SHFE lead prices dropped to RMB 15,120/mt, a low last seen in late October, and finally closed at the level, down RMB 50/mt from the previous trading day.  Trading volumes were down 132 lots to 134 lots, and positions fell 56 lots to 2,288 lots.

Cargo holders in spot lead markets still held prices firm. Chihong Zn & Ge was quoted at RMB 14,770/mt, with spot discounts of RMB 380/mt over the most active SHFE lead contract price, while Nanfang was offered at RMB 14,730/mt. Quotations for Hanjiang and Mengzi were mainly at RMB 14,690-14,700/mt, and those for Shenqian remained unchanged at RMB 14,660/mt. Seller and buyers watched on the sidelines early in the month, leaving trading modest.

Zinc
LME zinc prices overnight stabilized after plunging initially. SHFE 1304 zinc contract prices opened at RMB 15,500/mt, and touched RMB 15,530/mt in the morning trading, but then reversed their increases due to falling LME zinc prices. Due to rebounding LME zinc prices and Shanghai Composite, SHFE 1304 zinc contract prices soared to RMB 15,500/mt at noon. In the afternoon, LME zinc prices slumped, and selloffs increased sharply, SHFE three-month zinc contract prices dipped to an intraday low of RMB 15,395/mt, and finally closed at RMB 15,405/mt, down RMB 135/mt. Total position increased by 666 lots to 89,816 lots.

SHFE three-month zinc contract prices inched down in the morning trading. Discounts of #0 zinc against SHFE three-month zinc contract prices were RMB 300-320/mt, with traded prices between RMB 15,150-15,180/mt. #1 zinc prices were RMB 15,130-15,140/mt. After SHFE zinc prices rebounded at noon, #0 zinc prices were around RMB 15,160/mt. A few smelters still lacked interest to move goods, while arbitrage traders released goods due to narrowing spot discounts, leading to sufficient goods supply. Although the demand to replenish stocks leading up to Chinese New Year holiday, downstream buyers were still cautious due to unacceptable prices, keeping overall transactions muted.

Tin
In Shanghai tin market, mainstream traded prices were between RMB 156,000-158,500/mt on Tuesday, but the rapid growth was not generally accepted by the market, leaving trading quiet. Traded prices for Yunxi and Yunheng were RMB 158,500-159,000/mt, while those for Yunxiang and Nanshan were RMB 156,000-167,000/mt, with goods traded at RMB 156,000/mt limited. Market players were still bullish on spot tin prices, and some producers were reluctant to move goods at low prices, tightening tin supply. This may leave upward room for spot tin prices.

Nickel
In the Shanghai nickel spot market, mainstream traded prices of nickel from Jinchuan Group were between RMB 122,200-122,300/mt, and mainstream traded prices of nickel from Russia were between RMB 121,200-121,400/mt. Due to emerge of arbitrage opportunity, transactions were brisk in the market. During the afternoon trading hours, mainstream traded prices of nickel from Jinchuan Group were between RMB 122,300-122,500/mt and mainstream traded prices of nickel from Russia were around RMB 121,500/MT. However, transaction turned quiet after price hike.