SMM Base Metals Market Daily Review (2013-1-9)

SHANGHAI, Jan. 10 (SMM) –

Copper
LME copper prices stayed within their previous trading range overnight. SHFE 1304 copper contract, the most active one, opened slightly RMB 30/mt up at RMB 58,350/mt Wednesday, and fluctuated narrowly during the day. With heavy pressure, the contract touched a high at RMB merely 58,360/mt, and a low at RMB 58,160/mt, looking support at the RMB 58,000/mt level. SHFE 1304 copper contract settled RMB 20/mt or 0.02% higher at RMB 58,340/mt, with trading volumes and positions down 66,832 lots and 912 lots, respectively. Total trading volumes on the SHFE decreased 90,148 lots, but total positions increased 1,270 lots. Speculative interest of both long and short investors abated, but with good support at the 5-day moving average, SHFE copper prices will continue fluctuating at current levels ahead of the releases of China's economic figures.

Since SHFE copper prices fluctuated near current values, 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 57,480-57,520/mt, and RMB 57,550-57,600/mt for high-quality copper. The price differential between SHFE 1301 and 1302 copper contract was still around RMB 200/mt. Cargo-holders moved goods stably, but transactions for high-quality copper were a little better. Downstream producers generally opted to stay out of markets, while a falling number of speculators chose to enter markets, resulting in muted market activity. In the afternoon, with SHFE copper prices extending fluctuating range, both copper discounts and traded prices remained basically flat with morning levels, but market activity became more lackluster.

Aluminum
Prices of SHFE 1303 aluminum contracts, the most active one, opened at RMB 15,255/mt on January 9 and stagnated at this mark in the session. Trading activity was thin, with trading volumes contracting to 3,710 lots. Finally, the March aluminum on the SHFE shed RMB 15/mt or 0.10% to finish at RMB 15,245/mt. Positions were down 1,840 lots to 62,778 lots. The most-traded SHFE aluminum contract closed with losses for four consecutive sessions as longs and shorts chose to stand on the sidelines ahead of the release of China’s December economic data.  The light metal should test support at RMB 15,200/mt in the near term, with limited downside room.

Spot aluminum was mainly traded at RMB 15,040-15,060/mt in Shanghai on Wednesday, with discounts at RMB 10-30/mt. Low-iron aluminum was traded at RMB 15,090-15,110/mt. SHFE 1303 aluminum contract prices were rangebound, prompting cargo holders to move goods at prices flat with the current-month contracts prior to the delivery date of the 1301 aluminum contracts. Low buying interest from downstream producers and middlemen brought traded prices down. Cloudy market direction depressed overall trading. In the afternoon, trading activity was even thinner in spot aluminum market, with sparse offers reported at RMB 15,020-15,060/mt. Inquiries were rarely heard among downstream producers and middlemen, leaving overall trading quiet. 
 
Lead
The most active SHFE lead contract price opened at a new low for the year of RMB 15,100/mt on January 9 influenced by the LME lead price movement overnight. The most traded contract price then moved narrowly between RMB 15,100-15,130/mt. Investors remained cautious due to a lack of economic reports, and SHFE lead prices ended at RMB 15,125/mt. Trading volumes were down 10 lots to 124 lots, and positions fell 78 lots to 2,210 lots.

On January 9, spot lead prices in China remained little changed from the previous trading day. Chihong Zn & Ge was quoted at RMB 14,780/mt, with spot discounts of RMB 350/mt over the most active SHFE lead contract price, while Nanfang was offered at RMB 14,740/mt. Quotations for Dongling and Mengzi were mainly at RMB 14,680/mt, and those for Shenqian and Hanjiang were around RMB 14,650/mt. Downstream buyers only purchased as needed and smelters reported normal supply, leaving trading moderate.

Zinc
LME zinc prices overnight plunged and then stopped falling at the end of trading, and rebounded slightly, but closed with declines. SHFE 1304 zinc contract prices opened at RMB 15,405/mt, falling immediately after touching RMB 15,470/mt in the morning trading. As long momentum mounted, SHFE 1304 zinc contract prices inched up to RMB 15,450/mt. As the Shanghai Composite entered downward track in the afternoon, SHFE 1304 zinc contract prices fell to RMB 15,420/mt, and then dipped to RMB 15,400/mt, and finally closed at RMB 15,415/mt, down RMB 50/mt. Total position increased by 1,600 lots to 91,416 lots.

SHFE three-month zinc contract prices fluctuated today. Discounts of #0 zinc against SHFE three-month zinc contract prices were RMB 300-320/mt, with traded prices between RMB 15,120-15,140/mt. #1 zinc prices were RMB 15,090-15,100/mt. Goods supply was tight. 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
Spot tin prices in Shanghai continued to rise on January 9 to RMB 157,000-159,500/mt, but trading was lighter against the increasing quotations. Yunxi and Yunheng were traded at RMB 159,000-159,500/mt, while Yunxiang and Nanshan were quoted at RMB 157,500-168,500/mt with actual traded prices mainly at RMB 157,000/mt. Quotations from producers showed a sign of decline, and the increase in spot tin prices is expected to be arrested if quotes were further lowered.

Nickel
In the Shanghai nickel spot market, 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 between RMB 121,300-121,500/mt. Transactions improved during the morning trading hours, but reduced during the afternoon trading hours after traders rolled back goods by hiking offers.