SMM Base Metals Daily Review (2013-3-14)

SHANGHAI, Mar. 15 (SMM) –

Copper

As LME copper prices dropped overnight, the most active SHFE 1306 copper contract opened RMB 190/mt down at RMB 56,730/mt Thursday. The contract fell all the way following the opening as selling pressures for forward SHFE copper contracts grew, but eased declines after testing a low at RMB 56,370/mt. SHFE copper prices then rallied to the daily moving average of RMB 56,600/mt, and hovered around this price level. In the afternoon, with the Shanghai Composite Index slipping from earlier highs, SHFE copper prices experienced more volatility, but pared some of losses at the tail of trading. SHFE 1306 copper contract closed RMB 150/mt or 0.26% lower at RMB 56,770/mt, with trading volumes and positions down 29,662 lots and 5,064 lots, respectively. The most active copper contract was expected to shift to SHFE 1307 copper contract on March 15. With solid technical support at the lows but selling pressures for forward contracts, SHFE copper prices will fluctuate near current levels for the foreseeable future. 

SHFE copper prices trended down after opening lower, but spot copper cargo-holders insisted on firm prices ahead of delivery for SHFE 1303 copper contract. Shanghai spot copper premiums were quoted between RMB 0-100/mt in the morning business. Traded prices for standard-quality copper were between RMB 56,500-56,550/mt, and RMB 56,550-56,620/mt for high-quality copper. A small number of speculators chose to enter markets at lower price levels, but traders preferred to stand on the sidelines after copper prices rallied. Downstream producers continued purchasing to need, so overall market transactions remained limited in the morning. In the afternoon, as SHFE copper prices marched slightly down, copper premiums rose to RMB 20-120/mt, while traded prices were RMB 56,450-56,580/mt. Market activity was still muted in the afternoon.

Aluminum

SHFE 1306 aluminum contract prices retreated from the 10-day moving average to a low of RMB 14,800/mt after opening at RMB 14,895/mt on March 14. However, the most active SHFE aluminum contract did recover most of its losses incurred today at the tail of trading, helped by dip-buying. Finally, SHFE three-month aluminum contract closed RMB 15/mt or 0.10% lower at RMB 14,885/mt. Positions increased 356 lots to 97,938 lots. Markets are awaiting the State Reserve Bureau (SRB) to invite tenders to buy aluminum ingot due today, helping the light metal resist declines. SHFE aluminum for June delivery should challenge resistance at RMB 14,900/mt.

Spot aluminum was mainly traded at RMB 14,530-14,550/mt in Shanghai on Thursday, with discounts at RMB 50-70/mt. Low-iron aluminum was traded around RMB 14,700/mt. SHFE 1306 aluminum contract prices inched down, but spot aluminum prices were resilient, with spot discounts narrowing to RMB 50/mt as delivery date of SHFE current-month aluminum contracts is approaching. Traders held offers less firm, sending the low-end price down slightly. Downstream producers and middlemen evinced little buying interest, depressing overall trading. In the afternoon, spot markets were quiet as both suppliers and buyers are waiting for the SRB to buy aluminum ingot due today, with sparse offers reported at RMB 14,520-14,540/mt.

Lead

SHFE 1305 lead contract price opened lower at RMB 14,630/mt along with other base metals on Thursday, despite the increase in LME lead prices overnight. Prices then found buying support and climbed to close at RMB 14,730/mt, down RMB 20/mt. Trading volumes increased 26 lots to 136 lots, and positions were down 20 lots to 2,314 lots.
Chihong Zn & Ge was mainly quoted at RMB 14,600/mt, with spot discounts over the most active SHFE lead contract price at RMB 100/mt. Prices for Nanfang were offered at RMB 14,560/mt, while Shuangyan was quoted at RMB 14,480/mt. The continuous declines in lead prices and weak demand intensified market concerns. As such, downstream buyers still purchased on an as-needed basis, and smelters were unwilling to move goods at low prices, leaving a stalemate between suppliers and buyers.

Zinc

SHFE 1306 zinc contract prices opened at RMB 15,260/mt, and dropped to RMB 15,215/mt after opening as large numbers of shorts entered the market. Due to rising LME zinc prices, SHFE zinc prices rallied to RMB 15,295/mt near the end of the trading, and finally closed at RMB 15,280/mt, down RMB 5/mt, or 0.03%. Trading volumes decreased by 3,284 lots, to 72,178 lots. Total position increased by 4,902 lots to 127,768 lots.

SHFE three-month zinc contract prices fluctuated around RMB 15,215/mt today. Discounts of #0 zinc against SHFE 1305 zinc contract prices were RMB 170-180/mt, with traded prices between RMB 14,950-14,960/mt. #1 zinc prices were RMB 14,920-14,930/mt. Traders lacked buying interest, while downstream buyers were also cautious, keeping overall transactions quiet.

Tin

Mainstream traded prices in Shanghai tin market were between RMB 153,500-155,500/mt Thursday, with a few goods traded at RMB 153,000/mt. Although LME tin prices approached USD 24,000/mt, spot tin prices went against LME tin price trends, with mainstream prices dragged down by the large amount of low-priced resource in the market. However, domestic tin prices are expected to improve should LME tin continues to trend up.

Nickel

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 117,700-118,000/mt range. LME nickel prices slightly fell, but traders still kept offers firm, with mainstream offers unchanged from previous level. However, rebound in LME nickel prices still dampened market confidence, reducing transactions greatly.