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SMM Base Metals Market Daily Review (2013-2-22)
Feb 25,2013 19:10CST
price review forecast
As LME copper continued weakness overnight, SHFE 1305 copper contract, the most active one, opened slightly RMB 40/mt down at RMB 57,570/mt Friday.

SHANGHAI, Feb. 25 (SMM) –

As LME copper continued weakness overnight, SHFE 1305 copper contract, the most active one, opened slightly RMB 40/mt down at RMB 57,570/mt Friday. The contract stabilized gradually amid some buying support with a low at merely RMB 57,360/mt but a high at RMB 57,780/mt. In the afternoon, as Chinese stock markets dropped, SHFE copper prices fluctuated near current levels. SHFE 1305 copper contract ended at RMB 57,620/mt, up RMB 20/mt or a gain of 0.02%, with trading volumes and positions down 121,000 lots and 7,038 lots, respectively. Total trading volumes on the SHFE decreased by 191,000 lots, but total positions added by 25,584 lots. The most active copper contract continued to shift. With the divergence between long and short investors increasing, SHFE copper prices are likely to look for support at much lower prices.

SHFE copper prices fluctuated at current levels, but spot copper supply remained ample. Shanghai spot copper discounts were largely between RMB 120-260/mt in the morning business. Traded prices for standard-quality copper were between RMB 57,120-57,180/mt, and RMB 57,220-57,320/mt for high-quality copper. Some speculators entered markets in the morning, with high-quality copper favored. In this context, the price gap between standard and high-quality copper continued expanding. Downstream producers also bought at lows, so market transactions improved. In the afternoon, with SHFE copper hovering narrowly, spot copper discounts held flat with morning levels, but traded prices inched higher to RMB 57,200-57,350/mt. SHFE copper stocks increased by 11,010 mt to 207,709 mt in the week ending February 22 due to the Chinese New Year holiday factor and since imported copper arrived at ports.

SHFE 1305 aluminum contract opened slightly lower at RMB 14,920/mt on February 22. The contract staged a mild rally due to dip-buying from some longs, advancing to RMB 14,975/mt. The most active contract moved within narrow ranges as longs were cautious about buying at higher prices, and finally gained RMB 25/mt or 0.17% at RMB 14,960/mt. Positions were up 2,602 lots to 91,134 lots. SHFE aluminum for May delivery bounced back following four consecutive days of declines, but upside space was limited as markets remained bearish. The most-traded SHFE aluminum contract should continue to meet resistance at RMB 15,000/mt this week. 

Spot aluminum was mainly traded at RMB 14,560-14,590/mt in Shanghai last Friday, with discounts at RMB 150-170/mt. Low-iron aluminum was traded around RMB 14,680/mt. A mild rally in SHFE 1305 aluminum contract prices attracted some middlemen to actively purchase branded deliverable aluminum ingot. Offers of deliverable aluminum ingot were firm due to tight supplies. Prices of non-deliverable aluminum ingot, on the other hand, were stagnant due to oversupply. Downstream consumption remained sluggish, but overall trading did improve from a day earlier. In the afternoon, the upcoming weekend and a mild rally in SHFE aluminum prices triggered wait-and-see sentiment. Cargo holders held back goods, with sparse offers at RMB 14,580/mt. No inquiries were reported, leaving overall trading subdued.  

The most active SHFE lead contract price dipped to a low of RMB 15,030/mt after opening at RMB 15,090/mt on Friday, but later stabilized to move around RMB 15,080/mt. At the tail of trading, SHFE lead prices showed a sign of rebounding but still lacked impetus due to depressed stock markets to finally close at RMB 15,115/mt, up RMB 75/mt from the previous trading day. Trading volumes increased 1306 lots to 400 lots, while positions were down 102 lots to 2,332 lots.

Quotations for Chihong Zn & Ge in China’s spot lead market were around RMB 14,880/mt, with spot discounts over the most active SHFE lead price narrowing to RMB 200/mt, driving some arbitrage traders liquidated positions. Shuangyan was offered at RMB 14,780/mt, while Dongling and Hanjiang were quoted at RMB 14,730-14,740/mt. Quotations for Shenqian were lower at RMB 14,720/mt. Downstream buyers only purchased as needed due to limited orders and unclear outlook.

The most active SHFE zinc 1305 contract quickly fell to RMB 15,600/mt after opening at RMB 15,660/mt, but later lurched higher to RMB 15,690-15,700/mt. During the afternoon trading hours, stronger LME zinc prices boosted SHFE zinc prices to hit a high at RMB 15,750/mt, but decline in China’s stock market later weighed down SHFE zinc prices to close at RMB 15,700/mt, up RMB 30/mt, or up 0.19% from a day earlier. Trading volumes reduced sharply by 121,000 lots to 66,330 lots. Positions reduced by 4,410 lots to 135,038 lots.
Traded prices for #0 zinc in spot market were largely between RMB 15,390-15,400/mt, with spot discounts over the 1305 SHFE zinc contract around RMB 300/mt. SHFE zinc market saw sharp price decline and position contract, and still corrected around low level, with quiet trading sentiment reported. As downstream producers have not fully resumed production, operating rate was still low and demand for zinc ingots was still sluggish. Nonetheless, transactions slightly improved from a day earlier.

On February 22, mainstream traded prices in Shanghai tin market were between RMB 155,500-157,500/mt, and cargo holders reflected limited inquiries. As LME tin prices stopped falling, spot tin prices gained certain support with cargo holders holding prices firm and reluctant to sell goods at lows. Only a few downstream enterprises entered market, leaving trading modest.

In the Shanghai nickel spot market, mainstream traded prices of nickel from Jinchuan Group were in the RMB 119,500-119,800/mt range, and mainstream traded prices of nickel from Russia were in the RMB 118,100-118,500/mt range. Transactions of limited Russian nickel made at RMB 118,000/mt were also heard. Traders' interest to replenish stocks increased as LME nickel prices rebounded during the Asian trading hours, increasing trading volumes.


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