SHANGHAI, Mar. 18 (SMM)--
As LME copper prices drifted higher overnight, the most active SHFE 1306 copper contract opened RMB 320/mt up at RMB 56,900/mt Friday. The contract hovered around the daily moving average following the opening, with a fluctuating band of merely RMB 100/mt. However, as Chinese A-share market surged near the midday, SHFE copper prices broke resistance at RMB 57,000/mt and rose to an intraday high of RMB 57,280/mt, but then edged down to around the RMB 57,000/mt point. SHFE 1306 copper contract finally closed at RMB 57,120/mt, still up RMB 540/mt or 0.95%, with trading volumes and positions down 17,408 lots and 7,216 lots, respectively. The shift of the most active copper contract was still not finished. With low-end price increasing but pressure around the 20-day moving average growing, SHFE copper prices are likely to further fluctuate between the 10 and 20-day moving average over the short term.
Shanghai spot copper premiums were quoted between RMB 20-110/mt in the morning business. Traded prices for standard-quality copper were between RMB 56,750-56,900/mt, and RMB 56,800-57,050/mt for high-quality copper. SHFE copper prices marched higher after starting up, with the price gap between SHFE 1303 and 1304 copper contract expanding above RMB 100/mt. However, spot copper supply decreased sharply, forcing cargo-holders to hold prices firm during the last trading day for SHFE 1303 copper contract. Traders exhibited low buying interest due to high premiums, while downstream producers increased purchase volumes at lows but shifted to the sidelines following copper price surges.
SHFE 1306 aluminum contract prices opened slightly higher at RMB 14,900/mt on March 15. The contract slipped to RMB 14,800/mt in early morning session due to short selling. The SRB bought 300,000 mt of aluminum ingot last Friday, but lower-than-expected bid price disappointed investors, limiting the upside space of the most active SHFE aluminum contract. Finally, SHFE aluminum for June delivery shed RMB 5/mt or 0.03% to close at RMB 14,840/mt. Positions increased 2,288 lots to 100,226 lots. Aluminum prices will remain under downward pressure since the SRB's aluminum ingot purchase could do little to ease existing oversupply pressure. The most-traded SHFE aluminum contract should test support at RMB 14,800/mt in the short term.
Spot aluminum was mainly traded at RMB 14,530-14,550/mt in Shanghai last Friday, a discount of RMB 50-70/mt over SHFE current-month aluminum contract prices. Low-iron aluminum was trade around RMB 14,700/mt. The SRB's bid price for aluminum ingot was slightly lower than expected at RMB 15,137/mt, dampening market sentiment. As a result, SHFE 1306 aluminum contract prices staged volatile movement, curtailing gains of spot aluminum. Traders were eager to sell, but downstream producers exhibited little buying interest, with only middlemen purchasing limited amounts at low prices, depressing overall trading. In the afternoon, SHFE current-month aluminum contract prices hovered around RMB 14,600/mt. Traders remained anxious to move goods, with offers reported at RMB 14,540-14,550/mt. Downstream producers and middlemen, on the other hand, took a wait-and-see stance.
SHFE 1305 lead contract price opened RMB 100/mt higher at RMB 14,820/mt on Friday as LME lead prices were buoyed by the falling US dollar overnight. However, SHFE lead prices fell later despite an increase in domestic stock markets since most investors stayed out of the market ahead of the weekend. Prices moved between RMB 14,720-14,760/mt and closed at RMB 14,735/mt, down RMB 5/mt. Trading volumes increased 86 lots to 222 lots, and positions were down 70 lots to 2,244 lots. SHFE lead inventories continued to increase 3,412 lots to 139,672 lots last week.
In China's spot lead market, Chihong Zn & Ge was mainly quoted at RMB 14,600/mt, with spot discounts over the most active SHFE lead contract price at RMB 170/mt. Shuikoushan was quoted at RMB 14,580/mt, while quotations for Dongling were around RMB 14,530/mt. Downstream buyers only purchased as needed, and cargo holders were unwilling to move goods with bearish outlook.
SHFE 1306 zinc contract prices opened at RMB 15,280/mt, and then struggled around RMB 15,280/mt. Due to a rising Shanghai Composite, SHFE zinc prices rallied to RMB 15,330-15,340/mt near the end of the trading, and finally closed at RMB 15,345/mt, up RMB 125/mt, or 0.82%. Trading volumes increased by 1,294 lots, to 73,472 lots. Total position increased by 1,520 lots to 129,288 lots.
SHFE 1306 zinc contract prices opened slightly higher and fluctuated narrowly today. Discounts of #0 zinc against SHFE 1305 zinc contract prices were RMB 190/mt, with traded prices around RMB 15,000/mt. #1 zinc prices were RMB 14,950-14,960/mt. The market was cautious as the SRB would invite bid this afternoon, while traders also stood on the sidelines due to fluctuating SHFE zinc prices, keeping overall transactions quiet.
LME tin for delivery in three months opened at USD 23,950/mt and closed at USD 23,898/mt overnight, down by USD 87/mt from a day earlier, with the highest price at USD 24,150/mt and the lowest price at USD 23,800/mt. Daily trading volumes were 319 lots, up by 182 lots. Positions were 21,228 lots, down by 120 lots from a day earlier. LME tin inventories were 13,775 mt, up 15 mt from a day earlier.
LME tin prices initially surged to hit a high at USD 24,150/mt, but later fell on lower-than-expected consumer confidence index from the US. Finally, LME tin prices closed at USD 23,898/mt, down USD 87/mt from a day earlier.
The University of Michigan Consumer Confidence Index for March hit the lowest since December 2011, far below 71.8 expected, which weighed down the US equity market, with Dow Jones Industrial Average snapping a 10-session winning streak. The US consumers may be negatively affected by the automatic cutting impact, and were more pessimistic towards outlook for economic growth and employment market. In addition, the New York Fed manufacturing index for March fell from 10.04 to 9.24. However, monthly rate of the industrial output for February rose by 0.7%, far higher than 0.4% expected, despite that the US long-term net capital inflow fell from USD 64.2 billion to 25.7 billion in January.
Market concern over the European debt crisis further grew. Cyprus received EUR 10 billion bailout fund, below the EUR 17 billion needed, and the remaining will get from the depositors. Tax for deposit higher than EUR 0.1 million will be 9.9% and will be 6.75% for deposit lower than EUR 0.1 billion. Corporate tax will be hiked from 10% and 12.5%, and EUR 1.4 billion state-owned assets will go privatization. Cyprus will vote for the proposal on Tuesday. If the proposal fails to be adopted, Cyprus will face severe capital outflow. Besides, the political impasse in Italy remained.
China's CPC and NPPCC finally held their closing ceremony, and Zhou Xiaochuan is reappointed as president of China's central bank, which guarantees consistence of China's monetary policy.
The US dollar index fell by 0.39 to 82.136. The European and US stock markets fell cross the board, and LME base metal market also inched down.
Close attention should be paid to the US Fed interest rate result for March. SMM expects that LME tin prices will try to break through USD 24,000/mt and the Shanghai tin spot prices will move between RMB 153,500-156,500/mt on Monday.
LME nickel for delivery in three months opened at USD 17,185/mt and closed at USD 16,940/mt, down USD 251/mt from a day earlier, with the intraday high at USD 17,340/mt and the low at USD 16,891/mt, down USD 251/mt from a day earlier. Daily trading volumes were 3,826 lots, up 734 lots. Positions were 115,018 lots, down 786 lots. LME nickel inventories were 161,544 mt, down 102 mt.
LME nickel prices fluctuated to hit a high at USD 17,290/mt, but later fell to pare certain gains due to absence of solid economic news during the Asian trading hours. During the European and US trading hours, the US consumer confidence index for March was announced to hit the lowest since December 20122, and the New York Fed manufacturing index for March also fell to 9.24. The downbeat economic data dragged the US equity market to hit daily decline limit and pushed down LME nickel prices to close at USD 16,940/mt, down USD 251/mt from a day earlier.
Technical speaking, LME nickel prices lack momentum to advance, but any room for LME nickel prices to fall sharply will be limited. SMM expects that LME nickel prices will move between USD 16,800-17,100/mt and Shanghai nickel spot prices will move between RMB 117,500-119,500/mt on Monday.