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SMM Base Metals Market Daily Review (2013-2-21)
Feb 22,2013 09:42CST
price review forecast
SHFE 1305 copper contract opened at RMB 58,080/mt to close at RMB 57,620/mt Thursday, and SHFE 1305 aluminum contract gapped lower at RMB 15,010/mt to end at RMB 14,965/mt.

SHANGHAI, Feb. 22 (SMM) –

As LME copper lost USD 8,000/mt overnight, SHFE 1305 copper contract, the most active one, opened RMB 690/mt down at RMB 58,080/mt Thursday. The contract extended losses following the opening and slipped all the way amid growing selling pressures for forward contracts, with a high at merely RMB 58,050/mt. In the afternoon, with LME copper losing USD 7,900/mt and the Shanghai Composite Index retreating to around 2,300, SHFE copper prices were sent to a low of RMB 57,220/mt, but pared some of declines at the tail of trading. SHFE 1305 copper contract finally closed RMB 1,080/mt or 1.84% lower at RMB 57,620/mt, with trading volumes up 108,000 lots but positions down 22,640 lots. Total trading volumes on the SHFE increased by 239,000 lots, but total positions fell by 4,506 lots. The most active copper contract continued to shift. SHFE copper prices have dropped below all recent moving averages and are unlikely to reverse drops over the short term.

SHFE copper prices dropped by around RMB 1,000/mt and caused hedged copper to flow into spot markets. Imported copper supply also increased in the face of improving SHFE/LME copper price ratio. Overall spot copper supply remained sufficient as a result. High-quality copper was favored. Shanghai spot copper discounts were largely between RMB 150-270/mt in the morning business. Traded prices for standard-quality copper were between RMB 57,080-57,180/mt, and RMB 57,180-57,300/mt for high-quality copper. With the low-end SHFE copper price falling further near the midday, copper discounts shrank marginally. Buying from both speculators and downstream producers increased slightly, but markets were still dominated by pessimism. In the afternoon, high-quality copper supply decreased and markets were dominated by standard-quality copper, but discounts saw small changes, mainly between RMB 130-250/mt. Traded prices dropped to RMB 56,900-57,050/mt in the afternoon, heightening market pessimism, but buying was not seen at lows. 

SHFE 1305 aluminum contract, the most active one, gapped lower at RMB 15,010/mt on February 21. The contract dived to RMB 14,900/mt as massive shorts entered the market. In the afternoon, the light metal recovered some losses, thanks to buying from large aluminum enterprises including Aluminum Corporation of China and China Power Investment. Finally, SHFE aluminum for May delivery ended the day down RMB 125/mt or 0.83% at RMB 14,965/mt. Positions were up 5,276 lots to 88,532 lots. A 3% decline in the Shanghai Composite Index triggered strong bearish sentiment. Shorts should continue to dominate the market, which will cap the most-traded SHFE aluminum contract under RMB 15,000/mt in the short term.  

Spot aluminum was mainly traded at RMB 14,550-14,570/mt in Shanghai on Thursday, with discounts at RMB 130-150/mt. Low-iron aluminum was traded around RMB 14,660/mt. SHFE 1305 aluminum contract prices lost more than 1%, causing spot aluminum prices to slid RMB 150/mt to RMB 14,550/mt. Spot discounts narrowed slightly, but traders remained active in moving goods. Downstream producers and middlemen refrained from entering markets, leaving trading muted. In the afternoon, some traders lowered offers to RMB 14,530/mt. A mild rally in SHFE aluminum contracts for May delivery attracted middlemen to go bargain-hunting, allowing traders to raise quotations to RMB 14,560/mt, but overall trading was extremely thin.

The most active SHFE lead contract price gapped RMB 125/mt lower at RMB 15,150/mt on Thursday due to the slump in LME lead prices overnight. Later, as the A-shares tumbled nearly 3%, SHFE lead prices fell further to RMB 15,040-15,070/mt to finally end at RMB 15,040/mt, down RMB 235/mt or 1.54% from the previous trading day. Trading volumes increased 106 lots to 270 lots, while positions were down 152 lots to 2,434 lots.

Spot lead prices in China fell along with SHFE lead prices. Quotations for Jinsha were around RMB 14,840/mt, with spot discounts over the most active SHFE lead price narrowing to RMB 270/mt, but traded prices were mainly at RMB 14,800/mt. Hanjiang was offered at RMB 14,770-14,780/mt, some goods from Chengyuan and Shuangyan were also seen in the market, but downstream buyers were not willing to purchase given the falling prices, leaving transactions muted.

The most active SHFE zinc contract opened slightly lower at RMB 15,885/mt due to overnight LME zinc price decline. Later, SHFE zinc prices were weighed down to struggle around RMB 15,700/mt. During the Asian stock market, China's stock market plunged to lose support at 20-day moving average and 30-day moving average, down 2.97%, paring early gains. At the tail of the trading, SHFE zinc prices extended losses to lose support at RMB 157,000/mt and hit a low at RMB 15,525/mt. Later, SHFE zinc prices regained some losses to close at RMB 15,640/mt, down RMB 260/mt from a day earlier. Trading volumes increased by 65,518 lots to 187,662 mt. Positions increased by 32,182 lots to 139,248 lots.

Traded prices for #0 zinc in spot market were largely between RMB 15,390-15,410/mt, with spot discounts over the 1305 SHFE zinc contract between RMB 290-310/mt. Traded prices for #1 zinc were in the RMB 15,330-15,350/mt. SHFE zinc prices plunged, narrowing spot discount, which facilitated outflow of arbitrage goods. Supply of goods was relatively ample in market. In this context, supply of goods was relatively ample. Dip buying from downstream produces also increased, improving transactions. However, as downstream producers did not fully resumed production, downstream demand was still considered weak.

On February 21, mainstream traded prices in Shanghai tin market were between RMB 156,500-158,000/mt in the morning with trading still weak. In the afternoon, quotations fell further to RMB 155,500-156,000/mt as LME tin prices continued to slip, but transactions remained depressed with downstream demand showing no improvement.

During the morning trading session in the Shanghai nickel spot market, mainstream traded prices of nickel from Jinchuan Group were in the RMB 118,800-119,000/mt range, and mainstream traded prices of nickel from Russia were in the RMB 117,800-118,000/mt range. Market transactions were quiet. During the afternoon trading hours, mainstream traded prices of nickel from Jinchuan Group fell to RMB 118,500/mt and mainstream traded prices of nickel from Russia fell drifted lower to RMB 117,300-117,500/mt, as LME nickel prices fell further during the afternoon trading hours. The price decline dampened market confidence, depressing transactions.

SHFE base metals
Shanghai base metals
SHFE base metals trading
SHFE base metals positions

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