SMM Base Metals Market Daily Review (2013-2-20)

SHANGHAI, Feb. 21 (SMM) –

Copper
SHFE 1305 copper contract, the most active one, opened RMB 90/mt down at RMB 58,800/mt Wednesday. The contract moved narrowly around the daily moving average during the day, with a fluctuating band of merely RMB 300/mt. With resistance at RMB 58,850/mt, SHFE copper prices followed LME copper to test a low at RMB 58,540/mt in the afternoon, but pared some of declines at the tail of trading, as Chinese A-shares increased. SHFE 1305 copper contract closed RMB 230/mt or 0.39% lower at RMB 58,660/mt, with trading volumes and positions down 662 lots and 842 lots, respectively. Total trading volumes on the SHFE increased by 20,102 lots, and total positions added by 5,228 lots. The most active copper contract seemed to begin shifting. SHFE copper price drops may alleviate once gaining support at RMB 58,500/mt.

SHFE copper prices continued falling and caused hedged copper to flow into spot markets continuously. Speculators still expressed strong interest in moving goods for cash, while shipments of imported copper arrived at ports. Spot copper supply thus remained sufficient, so copper discounts expanded further to RMB 200-330/mt in the morning business. Traded prices for standard-quality copper were between RMB 58,050-58,120/mt, and RMB 58,150-58,230/mt for high-quality copper. With some downstream producers getting back to markets, transaction volumes increased slightly. However, supply surplus was still pronounced. In the afternoon, SHFE copper prices slid again, but mainstream spot copper discounts were little changed between RMB 200-320/mt. Traded prices declined to RMB 57,950-58,100/mt in the afternoon, and some downstream producers chose to buy at prices below RMB 58,000/mt.

Aluminum
SHFE 1305 aluminum contract, the most active one, briefly hit a high of RMB 15,150/mt after opening at RMB 15,130/mt on Wednesday. Later, the contract dropped below RMB 15,100/mt again as shorts aggressively increased positions. Finally, SHFE aluminum for May delivery ended the day down RMB 35/mt or 0.23% at RMB 15,080/mt. Positions were up 1,012 lots to 83,256 lots. The mild rally of the Shanghai Composite Index failed to help aluminum prices rebound. The most-traded SHFE aluminum contract should struggle at RMB 15,100/mt in the short term.  

Spot aluminum was mainly traded at RMB 14,700-14,720/mt in Shanghai on Wednesday, with discounts at RMB 150-170/mt. Low-iron aluminum was traded around RMB 14,820/mt. SHFE 1305 aluminum contract prices extended losses for a third straight day following the Chinese New Year, triggering massive short selling. Cargo holders were aggressively selling off goods, but downstream consumption remained sluggish, pushing spot aluminum prices down. Prices in Shanghai and Hangzhou temporarily held steady at RMB 14,700/mt, while prices in Wuxi dropped to RMB 14,680/mt as spot aluminum arrived after the week-long holiday exceeded warehouse capacity. Trading is expected to remain subdued until the Chinese Lantern Festival. In the afternoon, spot aluminum market was quiet. A few traders held offers at RMB 14,700-14,710/mt, but inquiries were rarely heard.   

Lead
SHFE lead prices continued to fall after opening at RMB 15,300/mt on February 20. Trading was weak with investors uninterested in entering the market and SHFE lead prices finally closed RMB 15/mt lower at RMB 15,275/mt. Trading volumes dropped 10 lots to 164 lots, while positions were up 46 lots to 2,586 lots.

Downstream demand in spot lead market was still weak, but spot lead prices in China were resilient to declines as cargo holders with full funding held quotations firm. Chihong Zn & Ge was quoted at RMB 14,920-14,930/mt with spot discounts over the most active SHFE lead contract price falling to RMB 350/mt. Quotations for Dongling and Hanjiang were RMB 14,830-14,840/mt, while those for Shenqian were at RMB 14,820/mt. Trading was still modest.

Zinc
China's stock market began to rebound to close at 2397.18 points on February 20, up 0.6%. The most active SHFE zinc contract quickly surged above 20-day moving averaged after opening at RMB 15,785/mt, and later moved between RMB 15,840-15,860/mt. At the tail of the trading, long power was strong, and SHFE 1305 zinc contract hit a high at RMB 15,980/mt and closed at RMB 15,975/mt, up RMB 175/mt, or 1.11%. Trading volumes increased by 63,006 lots to 122,144 lots, and positions added by 23,288 lots to 170,430 lots.

Traded prices for #0 zinc in spot market were largely between RMB 15,300-15,550/mt, with spot discounts over the 1305 SHFE zinc contract expanding to RMB 310-340/mt. Traded prices for #1 zinc were around RMB 15,500/mt. But spot zinc market activity remained quiet since market participants expressed low trading interest. Most downstream producers have yet to resume production, so purchases were still limited, depressing overall trading sentiment.

Tin
In Shanghai tin market, spot prices remained low on February 20 with trading muted. A few deals were made at RMB 158,000-160,000/mt in the morning and traded prices fell further to RMB 157,500/mt in the afternoon. Some downstream enterprises were still closed, leaving demand depressed. Traders were not willing to purchase as spot tin prices kept slipping.

Nickel
In the Shanghai nickel spot market, mainstream traded prices of nickel from Jinchuan Group were between RMB 123,800-124,000/mt, and mainstream traded prices of nickel from Russia were between RMB 122,800-123,000/mt. Transactions of nickel from Jinchuan Group at RMB 123,800/mt were relatively brisk, while transactions of other nickel were poorer. During the afternoon trading hours, spot prices dipper lower, but transactions were still cautiously made in limited amount.