SMM Base Metals Daily Review (2013-3-8)

SHANGHAI, Mar. 11 (SMM) --

Copper

With LME copper prices reversing declines overnight, the most active SHFE 1306 copper contract opened RMB 330/mt up at RMB 56,740/mt last Friday. The contract hovered narrowly around the daily moving average following the opening, with a fluctuating band of merely RMB 200/mt. SHFE copper prices suffered resistance at a high of RMB 56,870/mt, but were well supported at RMB 56,620/mt. SHFE 1306 copper contract finally gained RMB 330/mt or 0.59% to close at RMB 56,740/mt, with trading volumes and positions down 31,446 lots and 6,540 lots, respectively. SHFE copper prices recouped the 5-day moving average and won increasing support at a trough of RMB 56,500/mt.
 
SHFE copper prices rebounded, heightening market optimism over future markets. That, combined with the fact that some hedged copper was locked, helped spot copper cargo-holders quote firm prices. Copper premium quotes rose all the way in the face of limited copper supply, and copper offers all turned to premiums near the midday. Shanghai spot copper offers were largely quoted between discounts RMB 30/mt and premiums 70/mt in the morning business. Traded prices for standard-quality copper were between RMB 56,500-56,600/mt, and RMB 56,560-56,680/mt for high-quality copper. Some large traders chose to buy in large quantities and led copper supply to decrease sharply, and downstream producers also stepped up purchases owing to optimism towards copper prices in the coming week. Nevertheless, cargo-holders expressed reluctance in moving goods. In the afternoon, SHFE copper prices stabilized, but spot copper supply decreased further, helping mainstream copper premium quotes to rise to RMB 20-90/mt. Traded prices surged to RMB 56,600 -56,700/mt in the afternoon as cargo-holders became more eager to hold prices. SHFE copper stocks declined by 785 mt to 225,416 mt last Friday now that downstream producers increased purchases at lows.

Aluminum

SHFE 1306 aluminum contract prices opened higher at RMB 15,030/mt on March 8. Longs took profits at RMB 15,000/mt, but the most active aluminum contract did find support at RMB 14,900/mt. In the afternoon, SHFE aluminum for June delivery recovered some losses, and finally closed at RMB 14,990/mt, up RMB 70/mt or 0.47%. Positions increased 652 lots to 91,612 lots. SHFE aluminum prices rose less sharply after extending gains for a third straight trading day as longs and shorts chose to take profits at highs. The most-traded SHFE aluminum will not break through resistance at RMB 15,000/mt this week until more longs enter the market.

Spot aluminum was mainly traded at RMB 14,540-14,560/mt in Shanghai last Friday, with discounts at RMB 120-140/mt. Low-iron aluminum was traded around RMB 14,710/mt. SHFE 1306 aluminum contract prices marched down after a high opening. News that the State Reserve Bureau will buy aluminum ingot allowed traders to hold offers firm at RMB 14,550/mt. Middlemen were actively buying due to high spot discounts, while buying interest downstream was limited. Discounts of some deliverable brand aluminum ingot over SHFE current-month aluminum contracts were a mere RMB 50/mt. Overall trading was moderate. In the afternoon, SHFE current-month aluminum contract prices edged up. Sparse offers were seen at RMB 14,550-14,560/mt in spot markets, and strong wait-and-see sentiment among downstream producers and middlemen depressed overall trading. 

Lead

As LME lead prices increased 1% overnight, SHFE 1305 lead contract price opened higher at RMB 14,820/mt on Friday. In the afternoon, prices gained buying support at RMB 14,800/mt and moved up to RMB 14,800-14,825/mt, but the decline in domestic stock markets limited increase in SHFE lead prices, with prices ending at RMB 14,830/mt, up RMB 55/mt. Trading volumes fell 206 lots to 144 lots, while positions were up 26 lots to 2,263 lots.

Spot lead prices in China edged up along with SHFE lead prices March 8. Quotations for Chihong Zn & Ge were firm due to tight supplies, and a few goods were traded at RMB 14,610/mt, with spot discounts over the most active SHFE lead contract price remaining at RMB 200/mt. Nanfang was quoted at RMB 14,570-14,580/mt, while Hanjiang was quoted at RMB 14,530/mt. Downstream buyers purchased at low prices, while smelters were reluctant to move goods due to low prices. Some traders replenished stocks modestly, believing lead prices were already low.

Zinc

SHFE 1306 zinc contract prices opened slightly higher at RMB 15,330/mt, and then touched RMB 15,370/mt, meeting resistance at the 5-day moving average. SHFE three-month zinc contract prices generally moved between RMB 15,320-15,340/mt during the day, and finally closed at RMB 15,325/mt, up RMB 85/mt, or 0.56%. Trading volumes decreased by 66,716 lots, to 67,468 lots, and total position increased by 368 lots to 116,180 lots.

SHFE three-month zinc contract prices opened slightly higher and then fluctuated today. Discounts of #0 zinc against SHFE 1305 zinc contract prices were RMB 220-230/mt, with traded prices between RMB 15,000-15,020/mt. #1 zinc prices were RMB 14,970-14,980/mt. Smelters sold goods modestly, and zinc prices rose compared to the previous day. But downstream buyers were cautious, keeping transactions muted.

Tin

Spot prices in Shanghai tin market were mainly between RMB 154,500-156,000/mt on Friday, flat with the previous trading day, as LME tin prices fell after opening higher. Well-known smelters lower ex-works prices, depressing market sentiment and leaving trading thin. Transactions were even fewer in the afternoon, with some deals for brands in Jiangxi made at RMB 154,000/mt.

Nickel

In the Shanghai nickel spot market, mainstream traded prices of nickel from Jinchuan Group were between RMB 117,800-118,000/mt, and mainstream traded prices of nickel from Russia were between RMB 116,800-117,000/mt. Most buyers adopted a wait-and-see attitude amid high prices offered, and mainstream were thus muted. During the afternoon trading hours, traders lowered Jinchuan Group nickel price to RMB 117,700/mt and Russian nickel prices to RMB 116,700/mt as their willingness to move goods grew out of concern that nonfarm employment data may fall. The lower prices in spot market offered arbitrage opportunity, increasing transactions between traders.