SMM Base Metals Market Daily Review (2013-1-15)

SHANGHAI, Jan. 16 (SMM) –

Copper
As LME copper prices lowered to test USD 8,000/mt overnight, SHFE 1304 copper contract, the most active one, started RMB 260/mt down at RMB 58,220/mt Tuesday. The contract hovered narrowly around RMB 58,200/mt following the opening, with long and short investors conducting severe struggles. However, LME copper prices lost USD 8,000/mt point in the afternoon, causing SHFE copper prices to slip below RMB 58,000/mt, down to test RMB 57,680/mt. SHFE 1304 copper contract finally ended RMB 780/mt or 1.33% lower at RMB 57,700/mt, with trading volumes and positions up 44,656 lots and 8,216 lots, respectively. Falling to levels seen in late December 2012 and with technical indicators pointing down, SHFE copper prices found weak support at the 20-day moving average and will test RMB 58,000/mt repeatedly for the near future.

As SHFE copper prices slid by around RMB 300/mt, hedged copper flew into spot markets and dominated spot copper supply. Cargo-holders insisted on firm prices during the last trading day for SHFE 1301 copper contracts, helping copper premiums increase during the second trading session. Shanghai spot copper offers were largely between discounts of negative RMB 20/mt and premiums of positive RMB 100/mt in the morning business. Traded prices for standard-quality copper were between RMB 57,470-57,510/mt, and RMB 57,550-57,630/mt for high-quality copper. The price differential between SHFE 1301 and 1302 copper contracts was still roughly RMB 300/mt. Some traders took advantages to enter markets, while downstream producers bought as needed at lows, resulting in modest market transactions. In the afternoon, SHFE copper prices extended losses, but copper consumption remained slack, restricting upside room in copper premiums which were positive RMB 20-120/mt. Traded prices declined to RMB 57,300-57,550/mt in the afternoon.

Aluminum
SHFE 1303 aluminum contract prices gapped lower at RMB 15,190/mt on January15. The most active contract briefly touched a high of RMB 15,235/mt in early morning session, but later slid to RMB 15,130/mt due to short selling, falling the most among base metals. The contract rebounded mildly in the afternoon, but still met strong resistance at RMB 15,200/mt. Finally, the March aluminum on the SHFE closed at an intraday low of RMB 15,130/mt, down RMB 110/mt or 0.72%. Positions were up 1,684 lots to 64,054 lots. SHFE aluminum prices tracked LME aluminum down, despite rising Shanghai Composite Index. Downside space should be limited, though. The most-traded SHFE aluminum contract should temporarily test support at RMB 15,100/mt in the near term.

Spot aluminum was mainly traded at RMB 14,930-14,950/mt in Shanghai on Tuesday, with premiums at RMB 0-20/mt. Low-iron aluminum was traded at RMB 15,050-15,060/mt. SHFE 1303 aluminum contract prices bucked the trend and lost support at RMB 15,000/mt, souring market sentiment. Mainstream traded prices of spot aluminum dropped RMB 100/mt as a result. Traders were in a hurry to sell at the same price as the current-month contract. Downstream producers purchased only as needed, with only middlemen active in bargain-hunting. Trading was brisk at RMB 14,930/mt. In the afternoon, wait-and-see sentiment dominated the spot market. Sparse offers were reported at RMB 14,940/mt and overall trading was subdued.  

Lead
The SHFE 1303 lead contract price gapped lower at RMB 15,220/mt on Tuesday as LME lead prices closed down overnight. Prices then remained between RMB 15,180-15,210/mt and fell in the afternoon with LME lead dipping below USD 2,300/mt to finally end the day at RMB 15,130/mt, losing RMB 140/mt. Trading volumes were up 48 lots to 270 lots, and positions were up 20 lots to 2,190 lots.

In China's spot lead market, supply was ample on January 15 with spot lead prices for well-known brands firm. Chihong Zn & Ge was quoted at RMB 14,750/mt, with spot discounts of RMB 430/mt over the 1303 SHFE lead contract price. Quotations for Dongling, Hanjiang and Mengzi were mainly at RMB 14,650-14,660/mt, and those for Shenqian were around RMB 14,630/mt. Baiyin was quoted lower at RMB 14,600/mt. Downstream buyers still purchased as needed. In the afternoon, SHFE lead prices fell along with LME lead prices, but quotations in spot market remained firm.

Zinc
LME zinc prices overnight plunged. SHFE 1304 zinc contract prices opened lower at RMB 15,365/mt, and generally fluctuated around RMB 15,370/mt in the morning trading. But as LME zinc prices slumped at noon, and since short momentum strengthened, SHFE 1304 zinc contract prices slipped below the 60-day moving average, dipping to an intraday low of RMB 15,165/mt after vacillating briefly around RMB 15,240/mt. Finally, SHFE 1304 zinc contract prices closed at RMB 15,175/mt, down RMB 240/mt or 1.56%. Total position increased by 15,366 lots to 110,838 lots.

SHFE three-month zinc contract prices opened lower and then fluctuated today. Discounts of #0 zinc against SHFE three-month zinc contract prices narrowed to RMB 270-290/mt, with traded prices between RMB 15,070-15,090/mt. As SHFE zinc prices inched up at noon, #0 zinc prices rose to RMB 15,100/mt, and #1 zinc prices were RMB 15,060-15,070/mt. Smelters were unwilling to move goods due to rallying zinc prices, and arbitrage traders sold goods actively due to narrowing spot discounts, while downstream buyers took a wait-and-see attitude, with overall transactions improving.

Tin
Spot tin prices in Shanghai were mainly between RMB 160,000-161,000/mt on Tuesday. Some cargo holders softened while offering prices due to the limited increase in LME tin and depressed consumption, but prices remained stable on the whole. Yunxiang and Nanshan were traded around RMB 160,000/mt. Yunxi and Yunheng were mainly traded at RMB 160,500-161,000/mt. Transactions were mainly made between traders.

Nickel
On January 15, mainstream prices in Shanghai spot nickel market for nickel from Jinchuan were between RMB 123,600-123,800/mt in the morning trading session, while deals for nickel from Russia were mainly made at RMB 122,600-122,800/mt. Some traders held prices firm but buyers considered the prices unacceptable, driving traded prices to return to normal levels. Downstream buyers stayed on the sidelines given the falling LME nickel prices, leaving trading muted.