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SMM Base Metals Daily Review (2013-3-12)
Mar 13,2013 10:12CST
SMM Comments
With LME copper rallying overnight, the most active SHFE 1306 copper contract opened slightly RMB 120/mt up at RMB 56,800/mt Tuesday.

SHANGHAI, Mar. 13 (SMM) --


With LME copper rallying overnight, the most active SHFE 1306 copper contract opened slightly RMB 120/mt up at RMB 56,800/mt Tuesday. The contract suffered resistance at the 10-day moving average following the opening and reached a high at RMB 56,830/mt, with prices between the 5 and 10-day moving average in the morning. However, as the Shanghai Composite Index dived by nearly 2% in the afternoon, SHFE copper prices were dragged down to RMB 56,320/mt. SHFE 1306 copper contract finally settled RMB 340/mt or 0.6% lower at RMB 56,340/mt, with trading volumes up 21,492 lots but positions down 8,054 lots. The most active copper contract continued to shift. With technical indicators pointing downward and weak support at the 5-day moving average, SHFE copper prices are likely to test RMB 56,300/mt for the immediate future.

SHFE copper prices lacked momentum to rebound, but some hedged copper was still locked. Copper prices also stopped falling temporarily and heightened some cargo-holders’ expectation over future copper prices. In this context, they quoted firm prices, causing spot copper supply to decrease. High-quality copper supply was limited. Shanghai spot copper premiums were quoted mainly between RMB 0-100/mt in the morning business. Traded prices for standard-quality copper were between RMB 56,600-56,650/mt, and RMB 56,650-56,750/mt for high-quality copper. With premiums restricting trader buying interest, Shanghai spot copper market transactions were limited. In the afternoon, as SHFE copper prices declined further, copper premiums marched slightly higher, up to largely RMB 20-120/mt, while traded prices were RMB 56,450-56,650/mt. Some traders still entered markets in the afternoon, but spot copper supply decreased further.


SHFE 1306 aluminum contract prices opened at RMB 14,920/mt on March 12. Shorts dominated the market, forcing longs to exit the market after taking profits. As such, the most active aluminum contract fell most sharply among base metals, and finally closed at an intraday low of RMB 14,815/mt, down RMB 110/mt or 0.74%. Positions increased 182 lots to 93,594 lots. SHFE aluminum for June delivery closed down for three straight days, with little upward impetus. The most-traded SHFE aluminum should struggle at RMB 14,800/mt in the short term.

Spot aluminum was mainly traded at RMB 14,520-14,540/mt in Shanghai on Tuesday, with discounts at RMB 70-90/mt. Low-iron aluminum was traded around RMB 14,680/mt. SHFE 1306 aluminum contract prices edged down, sending spot aluminum prices down as well. Traders were eager to move goods at RMB 80/mt lower than SHFE current-month aluminum contracts due to approaching delivery date of SHFE 1303 aluminum contracts. Downstream producers and middlemen showed low buying interest. Although aluminum prices have stabilized above RMB 14,500/mt for now, trading volumes turned thin again as news that the State Reserve Bureau will buy aluminum ingot has been digested. In the afternoon, SHFE current-month aluminum contract prices did not expand losses like the most active contract did, but some traders remained active in moving goods, with the lowest offers reported at RMB 14,510/mt. However, low price failed to stock much buying interest from downstream producers and middlemen, leaving overall trading muted.


SHFE lead prices opened at RMB 14,765/mt and followed a weak trend in the morning trading session with investors unwilling to enter the market. In the afternoon, as the Shanghai Composite Index fell over 1% and as LME lead prices dropped below USD 2,200/mt, SHFE lead prices slipped to RMB 14,730-14,745/mt to close at RMB 14,720/mt, down 45/mt. Trading volumes were down 72 lots to 140 lots, while positions were up 16 lots to 2,372 lots.

In China’s spot lead market, prices remained firm on Tuesday. Smelters were not willing to move goods at the current low prices, while downstream buyers purchased cautiously, with transactions unimproved. Quotes for Chihong Zn & Ge were around RMB 14,620/mt, with spot discounts over the most active SHFE lead contract price at RMB 140/mt. Nanfang was quoted at RMB 14,580/mt. Dongling, Hanjiang, and Shenqian were quoted at RMB 14,560/mt.


SHFE 1306 zinc contract prices opened at RMB 15,250/mt, moving within RMB 15,245-15,255/mt in the morning session. In the afternoon, the Shanghai Composite Index closed 1.04% lower at 2,286.6 points, sending SHFE zinc for June delivery to a low of RMB 15,155/mt. Finally, SHFE three-month zinc contract prices ended the day down RMB 75/mt or 0.49% at RMB 15,160/mt. Trading volumes increased by 2,312 lots to 86,778 lots, while positions decreased by 888 lots to 126,004 lots.

SHFE three-month zinc contract prices rose after opening unchanged from yesterday. Mainstream traded prices for #0 zinc were RMB 14,970-14,980/mt, with discounts over SHFE 1305 zinc contract prices at RMB 180-200/mt. #1 zinc was in tight supply, with traded price around RMB 14,950/mt. Smelters held back from selling. Traders, on the other hand, moved goods for arbitrage, resulting in ample supply. Offers for selected goods were firm due to tight supplies. Downstream producers mostly purchased as needed, leaving overall trading light.


Spot tin prices in Shanghai fell further to RMB 154,000-155,500/mt on Tuesday. Although goods held by traders were limited and LME tin prices did not weaken further, trading was quiet in spot tin market, with the depressed demand dragging down prices.


During the morning trading hours in the Shanghai nickel spot market, mainstream traded prices of nickel from Jinchuan Group were between RMB 118,000-118,300/mt, and mainstream traded prices of nickel from Russia were between RMB 117,000-117,200/mt. Arbitrage transactions were relatively brisk. During the afternoon trading hours, as LME nickel prices drifted lower, mainstream traded prices of Jinchuan nickel were around RMB 118,100/mt and Russian nickel price at RMB 117,100/mt. As price spread narrowed, arbitrage transactions turned light.


LME base metal price
SHFE base metal price
Shanghai base metal spot price

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