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SMM Base Metals Market Daily Review (2013-2-27)
Feb 28,2013 09:41CST
price review forecast
As LME copper rose from lows overnight, the most active SHFE 1306 copper contract opened RMB 220/mt up at RMB 57,510/mt Wednesday.

SHANGHAI, Feb. 28 (SMM) –

As LME copper rose from lows overnight, the most active SHFE 1306 copper contract opened RMB 220/mt up at RMB 57,510/mt Wednesday. The contract continued increasing following the opening, but hovered narrowly around the daily moving average after suffering resistance at RMB 57,740/mt, with a low at RMB 57,420/mt. Narrowing daily gains, SHFE 1306 copper contract closed at RMB 57,490/mt, an increase of RMB 180/mt or 0.31%. Trading volumes for the most active copper contract decreased 27,722 lots, but positions increased 10,380 lots. With severe struggle between long and short investors, SHFE copper prices were restricted at the 5-day moving average, and are expected to fluctuate at current levels for the near future.

SHFE copper prices lacked rebounding momentum, but spot copper cargo-holders insisted on moving goods, keeping market supply sufficient. Large copper discounts continued as a result, largely between RMB 140-260/mt in the morning business. Traded prices for standard-quality copper were between RMB 57,020-57,100/mt, and RMB 57,100-57,200/mt for high-quality copper. Most speculators took a wait-and-see posture, awaiting clear price direction, while some downstream producers chose to enter markets at lows. Hence, market transactions increased marginally, but overall market supply still exceeded demand. In the afternoon, with SHFE copper holding flat, both spot copper offers and traded prices remained basically unchanged from morning levels.

SHFE 1305 aluminum contract opened slightly higher at RMB 14,850/mt on February 27. The most active contract briefly climbed to RMB 14,880/mt, but later pared some gains. Finally, SHFE aluminum for May delivery advanced RMB 30/mt or 0.20% to close at RMB 14,855/mt. Positions were down 878 lots to 88,734 lots. Trading volumes shrank due to a lack of confidence, with prices of the most active SHFE aluminum contracts meeting resistance at the 5-day moving average. The most-traded SHFE aluminum contract will be unable to break through RMB 15,900/mt in the short term until more upward momentum is available.  

Spot aluminum was mainly traded at RMB 14,500-14,520/mt in Shanghai on Wednesday, with discounts at RMB 140-160/mt. Low-iron aluminum was traded around RMB 14,620/mt. SHFE 1305 aluminum contract prices fell back after hitting high, eroding gains of spot aluminum prices. Cargo holders stood on the sidelines, holding offers firm at RMB 14,500/mt. Downstream producers were little interested in buying out of growing pessimism over future prices and due to tightening liquidity as the month ends. Only middlemen bought modest amounts at low prices. Overall trading was light. In the afternoon, SHFE current-month aluminum contracts were mired. Spot markets were quiet, with sparse offers seen at RMB 14,510-14,520/mt.   

SHFE lead prices opened at RMB 14,970/mt on February 27 and rose above RMB 15,095/mt due to favorable US economic data and Bernanke’s remark about maintaining easing policies. However, prices lacked momentum to rise further due to unimproved demand and fell to RMB 15,040/mt. In the afternoon, SHFE lead prices fell slightly to close at RMB 15,030/mt due to weak domestic stock markets, up RMB 60/mt from the previous trading day. Trading volumes were fell 8 lots to 196 lots, while positions were down 36 lots to 2,132 lots.

Spot lead demand remained weak with downstream enterprises still buying as needed. Most downstream buyers only consumed existing inventories due to poor orders, but cargo holders still held prices firm. Prices for Chihong Zn & Ge were offered around RMB 14,850/mt, with spot discounts over the most active SHFE lead price at RMB 200/mt. Dongling and Shenqian were quoted at RMB 14,710-14,720/mt.

The most active SHFE zinc 1305 contract prices opened high at RMB 15,685/mt, and later advanced to hit RMB 15,715/mt due to brief rally of China’s stock market. Due However, SHFE zinc contract quickly fell to RMB 15,660-15,680/mt after finding support at 60-day moving average due to absence of downstream demand. Finally, SHFE zinc contract closed at RMB 15,665/mt, up RMB 90/mt or 0.58% from a day earlier. Trading volumes reduced by 14,590 lots to 59,080 lots. Positions reduced by 4,296 lots to 119,198 lots.

On February 27, SHFE zinc prices advanced Traded prices for #0 zinc in spot market were largely between RMB 15,330-15,340/mt, with spot discounts over the 1305 SHFE zinc contract expanding to RMB 310-320/mt. Traded prices for #1 zinc were in the RMB 15,330-15,340/mt. Smelters were still reluctant to move goods, expanding discounts. Limited traders purchased hedged zinc, but downstream producers still adopted a wait-and-see attitude. Overall transactions reduced from a day earlier. 
Mainstream traded prices in Shanghai spot tin market remained stable at RMB 155,500-157,000/mt, with some goods traded at RMB 155,000/mt. Although LME tin prices increased, spot tin prices were not greatly boosted as soft consumption prevented cargo holders from offering prices high.

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. LME nickel prices fluctuated in narrow range, leaving limited opportunities for arbitrage transactions. As a result, transactions were relatively quiet in spot market. According to some traders, downstream inquiries increased, but transactions were still limited. Nevertheless, it is believed that downstream stock replenishment will gradually increase in the near term.




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