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SMM Base Metals Daily Review (2013-3-1)
Mar 4,2013 10:35CST
SMM Comments
With LME copper sliding overnight, the most active SHFE 1306 copper contract opened RMB 500/mt down at RMB 57,200/mt last Friday.

SHANGHAI, Mar. 4 (SMM) -

With LME copper sliding overnight, the most active SHFE 1306 copper contract opened RMB 500/mt down at RMB 57,200/mt last Friday. As China's two major PMI indexes came in soft, and since the Shanghai Composite Index dived by 1%, SHFE copper prices also marched down, searching support at lower prices after losing RMB 57,000/mt, with an intraday high at merely RMB 57,250/mt. In the afternoon, SHFE copper prices drifted down further, but stopped falling after testing RMB 56,610/mt. SHFE 1306 copper contract settled RMB 970/mt or 1.68% lower at RMB 56,730/mt, with trading volumes and positions up 91,184 lots and 24,614 lots, respectively. SHFE copper will look for support at lower prices over the short term, as selling pressures increased noticeably after prices lost the RMB 57,000/mt mark.

SHFE copper prices slid significantly and caused hedged copper to enter spot markets, leading spot copper supply to increase. Shanghai spot copper discounts were quoted between RMB 100-220/mt in the morning business. Traded prices for standard-quality copper were between RMB 56,300-56,620/mt, and RMB 56,400-56,750/mt for high-quality copper. Discounts were unable to narrow in the morning, but market activity improved as downstream producers bought at lows. Copper discounts, though, shrank near the midday when SHFE copper prices shed by nearly RMB 1,000/mt, but cargo-holders shifted to the sidelines. Market pessimism was growing again, and market activity became muted. Overall market transactions dropped after initially rising in the morning as market surplus remained. In the afternoon, with SHFE copper extending losses and the price gap among SHFE copper contracts narrowing, spot copper discounts shrank to RMB 80-180/mt. Traded prices in the afternoon were little changed from morning levels, and market activity remained lackluster. SHFE copper stocks added by 18,492 mt to 226,201 mt last Friday now that downstream consumption was not seen to pick up noticeably. Copper's weak fundamentals side will weigh on overseas and domestic copper prices.

SHFE 1305 aluminum contract opened at RMB 14,775/mt on March 1. The most active aluminum contract later tumbled more than 1% to RMB 14,625/mt along with other base metals as falling February manufacturing PMI triggered short selling. SHFE aluminum for May delivery rebounded limitedly in the afternoon and finally ended the day down RMB 140/mt or 0.94% at RMB 14,675/mt. Positions were down 1,046 lots to 88,812 lots. The light metal will remain vulnerable to declines due to a lack of market confidence. The most-traded SHFE aluminum contract should meet growing resistance at RMB 14,700/mt this week.

Spot aluminum was mainly traded at RMB 14,360-14,370/mt in Shanghai last Friday, with discounts at RMB 100-120/mt. Low-iron aluminum was traded around RMB 14,480/mt. SHFE 1305 aluminum contract prices lost nearly 1%, turning investors even more bearish. Cargo holders were anxious to sell, sending spot aluminum prices down below RMB 14,400/mt. Downstream producers and middlemen expressed no interest in buying, leaving trading muted.  

SHFE lead prices gapped lower at RMB 14,890/mt on March 1 due to slipping LME lead prices and moved around moving averages in the morning. In the afternoon, SHFE lead prices fell to RMB 14,840/mt as Shanghai Composite Index weakened and as LME lead prices fell. Prices finally closed at RMB 14,860/mt, down RMB 130/mt. Trading volumes increased 234 lots to 382 lots, while positions were down 132 lots to 1,992 lots.

Spot lead prices in China also showed noticeable decline. Quotations for Chihong Zn & Ge were RMB 14,790-14,800/mt, with spot discounts over the most active SHFE lead contract price at RMB 80/mt. Shuangyan and Hanjiang were quoted at RMB 14,670-14,680/mt, while offers for Shenqian were at RMB 14,660/mt. Market confidence was further hurt by the slumping prices, leaving trading poor.

As LME zinc prices overnight plunged, SHFE 1305 zinc contract prices opened lower at RMB 15,560/mt, and then generally moved between RMB 15,520-15,535/mt. Since China’s February PMI fell to 50.1, LME zinc prices dipped to USD 2,056.8/mt. Investor confidence was depressed, and short momentum thus strengthened. SHFE three-month zinc contract prices struggled around RMB 15,445/mt near the end of the morning trading, and closed at RMB 15,460/mt, down RMB 195/mt, or 1.25%. Trading volumes of SHFE 1305 zinc contract decreased by 5,266 lots, to 45,442 lots, and total position decreased by 7,162 lots to 104,214 lots.

SHFE three-month zinc contract prices opened lower and then fluctuated today, slumping near the end of the trading. Discounts of #0 zinc against SHFE 1305 zinc contract prices were RMB 250-280/mt, with traded prices between RMB 15,220-15,250/mt. #1 zinc prices were RMB 15,150-15,190/mt. Smelters continued to hold onto their goods, but arbitrage traders released goods as spot discounts narrowed by RMB 20-50/mt. Downstream buyers took a wait-and-see attitude, keeping transactions muted.

Spot trading in Shanghai tin market remained modest on March 1, with mainstream traded prices between RMB 155,500-156,500/mt, and goods quoted lower than RMB 155,500/mt were rarely seen. LME tin prices dropped below the 5-day moving average, hurting market confidence, and leaving trading light. Most goods circulating in the market were from Yunnan, while those from Jiangxi were rarely reported.

In the Shanghai nickel spot market, mainstream traded prices of nickel from Jinchuan Group rose to RMB 118,000-118,200/mt and mainstream traded prices of nickel from Russia were between RMB 117,000-117,200/mt. During the afternoon trading hours, Jinchuan Group nickel prices fell to RMB 117,700/mt and Russian nickel prices fell to around RMB 116,700/mt. Lower prices dampened market confidence, which resulted in reduced inquiries and quiet transactions.

latest SHFE copper prices
current aluminum prices

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