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SMM Base Metals Market Daily Review (2013-1-17)
Jan 18,2013 10:27CST
price review forecast
SHFE 1304 copper contract ended RMB 250/mt or 0.43% lower at RMB 57,740/mt Thursday, and SHFE 1303 aluminum contract closed unchanged from Wednesday at RMB 15,155/mt.

SHANGHAI, Jan. 18 (SMM) –

With LME copper prices slipping further overnight, SHFE 1304 copper contract, the most active one, started RMB 100/mt down at RMB 57,890/mt Thursday. The contract continued falling following the opening as LME copper prices remained weak, and since Chinese A-shares retreated 1%, with prices testing a low at RMB 57,570/mt. However, SHFE copper prices rallied above the daily moving average at the tail of trading after gaining technical support. SHFE 1304 copper contract finally ended RMB 250/mt or 0.43% lower at RMB 57,740/mt, with trading volumes decreasing 31,910 lots but positions adding by 118 lots. SHFE copper prices fluctuated lower and found weak support at the 30-day moving average. With wait-and-see sentiment growing and technical indicators pointing down, markets are pessimistic over future copper outlook.

As SHFE copper prices slipped, copper discounts shrank to negative RMB 120-180/mt in the morning business. Traded prices for standard-quality copper were between RMB 57,250-57,280/mt, and RMB 57,280-57,350/mt for high-quality copper. Cargo-holders showed little reluctance in moving goods at lows, leading to a drop in market supply. Prices of domestic standard-quality copper held firm, so the price gap between standard and high-quality copper was limited. With wait-and-see sentiment dominating markets, downstream producers still sourced to need, resulting in market oversupply. In the afternoon, SHFE copper prices stabilized, but spot copper supply decreased further, helping copper discounts narrow slightly to negative RMB 100-170/mt. Traded prices were RMB 57,270-57,370/mt in the afternoon, but actual market deals were limited.

SHFE 1303 aluminum contract prices drifted lower to RMB 15,120/mt after opening at RMB 15,140/mt on January 17. Finally, the March aluminum on the SHFE closed unchanged from the previous trading day at RMB 15,155/mt. Positions were down 862 lots to 60,660 lots. The Shanghai Composite Index remained in correction, triggering strong bearish sentiment. The most-traded SHFE aluminum contract is expected to test support at RMB 15,100/mt while awaiting China's 4Q GDP due today for guidance.

Spot aluminum was mainly traded at RMB 14,920-14,940/mt in Shanghai on Thursday, with discounts at RMB 100-120/mt. Low-iron aluminum was traded at RMB 15,020-15,030/mt. SHFE 1303 aluminum contract prices dropped below RMB 15,000/mt, aggravating market bearishness. SHFE aluminum prices recovered some earlier losses, but cargo holders remained anxious to sell. Downstream producers and middlemen were uninterested in buying, causing spot discounts to expand above RMB 100/mt. Sellers and buyers were pessimistic towards future prices, depressing overall trading. In the afternoon, prices of the most active SHFE aluminum contracts remained weak. A few cargo holders remained active in selling, with offers at RMB 14,920/mt. Few buyers were seen, leaving overall trading muted.

The SHFE 1303 lead contract price opened lower at RMB 15,130/mt on January 17 influenced by the slump in LME lead prices overnight. Prices then fell to a low of RMB 15,035/mt as investors booking profits which caused selling pressures. The contract for March delivery was finally settled at RMB 15,100/mt after hovering between RMB 15,080-15,120/mt, down RMB 70/mt. Trading volumes were down 8 lots to 116 lots, and positions fell 8 lots to 2,174 lots.

Cargo holders in China's spot lead market remained firm. Chihong Zn & Ge was quoted at around RMB 14,740/mt, with spot discounts of RMB 360/mt over the 1303 SHFE lead contract price. Quotations for Dongling and Hanjiang were mainly at RMB 14,650/mt, while those for Shenqian were lower at RMB 14,630/mt. Some downstream buyers became more willing to purchase, believing room for decline in lead prices will be limited.

LME zinc prices overnight rebounded after dipping to a record low at the end of trading. SHFE 1304 zinc contract prices opened at RMB 15,245/mt, touching RMB 15,275/mt and then inching down below moving averages, and then fluctuating narrowly between RMB 15,225-15,240/mt. SHFE 1304 zinc contract prices rebounded after dipping to USD 15,195/mt in the afternoon, but met resistance at RMB 15,265/mt, and finally closed at RMB 15,265/mt, up RMB 20/mt. The price range of SHFE 1304 zinc contract prices was RMB 80/mt during the day, showing investors were very cautious before the release of China's major economic data. Total position decreased by 1,504 lots to 101,786 lots.

SHFE three-month zinc contract prices fluctuated narrowly. Discounts of #0 zinc against SHFE three-month zinc contract prices remained between RMB 210-230/mt, with traded prices RMB 15,020-15,040/mt. #1 zinc prices were RMB 15,010/mt. Good supply was very tight due to major producers holding goods, and forced some purchasers to switched to imported zinc. Some mainstream brand producers still lacked interest to move goods, and traders stood on the sidelines. Downstream buyers purchased modestly, keeping transactions quiet.

Trading in Shanghai tin market was quiet on Thursday with mainstream traded prices at RMB 160,000-160,500/mt. Traded prices for several leading brands fell to RMB 160,000/mt due mainly to the correction in LME tin prices and lower prices offered in Wuxi. Transactions were mainly made for Yunxi, Yunheng, Yunxiang, and Kaiyuan. In the afternoon, prices remained low. Yunxiang was traded at RMB 159,800/mt, and Guangsheng was mainly traded at RMB 159,500/mt.

During the morning trading hours in the Shanghai nickel spot market, mainstream traded prices of nickel from Jinchuan Group were in the RMB 123,500-123,700/mt range, and mainstream traded prices of nickel from Russia were in the RMB 122,500-122,700/mt range. Supply of goods was relatively ample at the delivery date of domestic electronic exchange. Traders lowered quotation, but still failing to boost transactions.


SHFE base metals
Shanghai base metals
SHFE copper
SHFE aluminum
SHFE zinc
SHFE lead
SHFE nickel

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