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SMM Base Metals Daily Review (2013-3-6)
Mar 7,2013 09:26CST
price review forecast
As LME copper prices holding flat overnight, the most active SHFE 1306 copper contract opened slightly RMB 120/mt up at RMB 56,940/mt Wednesday.

SHANGHAI, Mar. 7 (SMM) –

As LME copper prices holding flat overnight, the most active SHFE 1306 copper contract opened slightly RMB 120/mt up at RMB 56,940/mt Wednesday. The contract broke through RMB 57,000/mt to challenge a high at RMB 57,150/mt, but then marched down all the way as short investors exerted more selling pressures, with prices touching a trough at RMB 56,640/mt. However, a strong Chinese A-share market during the day gave some support to the low-end copper price. SHFE 1306 copper contract finally settled at RMB 56,700/mt, still down RMB 120/mt or 0.21%. Trading volumes for the most active copper contract added by 10,458 lots, but positions fell 9,726 lots. SHFE copper prices suffered resistance at the 10-day moving average after breaking pressure at the 5-day moving average, but the KDJ indicator pointed upside. As such, SMM believes that SHFE copper prices will continue to consolidate at lows for the immediate future.

SHFE copper prices marched down after opening higher, but spot copper cargo-holders were still optimistic over future markets and expressed unwillingness in moving goods. Spot copper supply thus decreased noticeably and helped copper discounts narrow all the way, mainly between RMB 30-120/mt in the morning business. Traded prices for standard-quality copper were between RMB 56,580-56,680/mt, and RMB 56,620-56,740/mt for high-quality copper. Speculative interest weakened in the face of shrinking discounts, but downstream producers still bought as needed. Supply surplus eased marginally as a result. In the afternoon, with SHFE copper stop falling, spot copper cargo-holders opted to hold prices firm, causing copper supply to decrease further. Copper discounts thus continued to narrow, largely between RMB 0-70/mt. Traded prices were RMB 56,550-56,650/mt in the afternoon, but market trading was limited.

SHFE 1306 aluminum contracts, the most active one, opened slightly higher at RMB 14,775/mt on March 6, and broke through RMB 14,800/mt shortly after the opening. Finally, SHFE aluminum for June delivery closed at an intraday high of RMB 14,880/mt, up RMB 160/mt or 1.09%. Positions increased 6,352 lots to 84,842 lots. SHFE aluminum led gains among base metals, thanks to the rebound in the Shanghai Composite Index and expectations for favorable policies to help smelters reverse losses from falling spot aluminum prices and to ease oversupply pressure. In this context, the most-traded SHFE aluminum should hold stable at RMB 14,800/mt in the short term.

Spot aluminum was mainly traded at RMB 14,400-14,420/mt in Shanghai on Wednesday, with discounts at RMB 120-140/mt. Low-iron aluminum was traded around RMB 14,580/mt. Prices of the most active SHFE aluminum contracts rose more than RMB 100/mt, but later pared some gains. Oversupply in spot markets limited upward momentum of spot aluminum prices and caused spot discounts to expand to over RMB 100/mt, leaving mainstream traded prices stagnant at RMB 14,400/mt. Offers of some deliverable brand aluminum ingot were firm. Low buying interest from downstream producers and middlemen depressed overall trading. In the afternoon, SHFE 1306 aluminum contract prices continued to rise. Cargo holders seldom moved goods, with sparse offers reported at RMB 14,430/mt. Downstream producers and middlemen were cautious about buying, leaving trading muted.

The SHFE 1305 lead contract price started at RMB 14,900/mt and moved narrowly between RMB 14,850-14,880/mt on March 6, and finally closed at RMB 14,880/mt, down RMB 20/mt from the previous trading day. Trading volumes fell 100 lots to 96 lots, while positions were down 10 lots to 2,068 lots. Most market players opted to wait on the sidelines, combined with unimproved demand in spot lead market, investors feared SHFE lead prices lacked impetus to rebound.

Spot lead prices in China remained stable. Quotations for Chihong Zn & Ge were at RMB 14,670/mt, with spot discounts over the most active SHFE lead contract price at RMB 200/mt. Prices for Nanfang were offered at RMB 14,650/mt. Tongguan and Hanjiang were quoted at RMB 14,580-14,600/m. Goods holders actively moved goods due to inventory pressure, while downstream consumption showed a sign of stabilizing. In the afternoon, spot lead prices remained little changed as SHFE lead prices were still weak.

SHFE 1306 zinc contract prices opened at RMB 15,465/mt, and then inched down to RMB 15,420/mt as short momentum mounted. LME zinc prices dropped after opening, down to USD 2,000/mt. As a result, SHFE three-month zinc contract prices pulled down and moved between RMB 15,375-15,400/mt in the afternoon, with the low end of the price range dipping to RMB 15,335/mt, the lowest since December 2012, and finally closed at RMB 15,370/mt, down RMB 90/mt, or 0.58%. Trading volumes increased by 14,442 lots, to 86,466 lots, and total position increased by 9,680 lots to 106,618 lots.

SHFE three-month zinc contract prices opened flat and then inched down slightly today. Discounts of #0 zinc against SHFE 1305 zinc contract prices were RMB 230-240/mt, with traded prices between RMB 15,090-15,100/mt. #1 zinc prices were RMB 15,050-15,060/mt. Smelters moved goods modestly, while downstream buyers and traders bought at lower prices, keeping transactions muted.

In Shanghai tin market, spot prices were mainly between RMB 155,500-156,500/mt on March 6, with some goods traded at RMB 155,000/mt. Goods from Yunxi were rarely seen with traded prices at RMB 156,000-156,500/mt. Trading was still thin. Downstream enterprises were not willing to purchase due to poor orders, keeping spot tin prices low. Spot prices are expected to remain weak if LME tin prices fail to rally.

In the Shanghai nickel spot market, mainstream traded prices of nickel from Jinchuan Group were in the RMB 117,900-118,100/mt range, and mainstream traded prices of nickel from Russia were in the RMB 116,900-117,100/mt range. As LME nickel prices slightly advanced on Tuesday night, offers of nickel in the Shanghai nickel spot market slightly grew on Wednesday. As nickel prices gradually rose from this week, downstream purchases increased, with brisk transactions reported.

latest SHFE copper prices
SHFE aluminum prices

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