SMM Base Metals Market Daily Review (2013-3-19)

SHANGHAI, Mar. 19 (SMM) –

Copper
With LME copper prices stopped falling at the tail of trading yesterday, SHFE 1307 copper contract prices opened RMB 110/mt higher at RMB 55,430/mt on March 19. After the opening, SHFE copper for July delivery fell back to near Monday’s settlement price. In the afternoon, shorts entered the market, sending the most active SHFE copper contract to a low of RMB 54,710/mt. The most-traded SHFE copper contract did recover some losses at the tail of trading thanks to a rebound in the Shanghai Composite Index, and finally finished at RMB 54,910/mt, down RMB 370/mt or 0.67%. Trading volumes of SHFE 1307 copper contracts decreased 125,000 lots, but positions increased 36,674 lots. Short selling eased some, but shorts continued to dominate the market, putting downward pressure on copper prices.

Spot copper premiums were RMB 50-180/mt in Shanghai on Tuesday. Traded prices for standard-quality copper were between RMB 55,480-55,520/mt, and RMB 55,550-55,600/mt for high-quality copper. SHFE copper prices stopped falling, allowing cargo holders to hold back goods at low prices. Spot copper supplies fell sharply as a result, especially high-quality copper. Downstream producers went bargain-hunting, while middlemen were hunting for high-quality copper. Both traded prices and volumes of high-quality copper went up. Trading was brisk at low prices. In the afternoon, SHFE copper prices fell quickly. High-quality copper was rarely seen in spot market with a few quotations made at spot premiums of RMB 180-220/mt against the most active SHFE copper contract price. Sellers holding high-quality copper were more reluctant to move goods at low prices, while standard-quality copper was not favored by buyers, and was quoted at premiums of RMB 60-100/mt over the most active SHFE copper contract price. Trading was quiet and traded prices slipped to RMB 55,200-55,400/mt.

Aluminum
SHFE 1306 aluminum contract prices opened unchanged from yesterday at RMB 14,695/mt on March 19. The most active SHFE aluminum contract hovered around RMB 14,700/mt in the morning session, but dropped in the afternoon as shorts entered the market. Finally, SHFE aluminum for June delivery lost RMB 40/mt or 0.27% to close at RMB 14,655/mt. Positions decreased 1,326 lots to 98,016 lots. Investors are cautious as the European debt crisis resurfaced, keeping the light metal in check. Aluminum prices remain under downward track at the moment, with no signs of stopping falling.

Spot aluminum was mainly traded at RMB 14,470-14,500/mt in Shanghai on Tuesday, a discount of RMB 60-90/mt over SHFE current-month aluminum contract prices. Low-iron aluminum was trade around RMB 14,650/mt. SHFE 1306 aluminum contract prices stopped falling, easing market panic. Cargo holders held back goods, helping spot discounts narrow. Resistance remained strong at RMB 14,500/mt due to limited buying interest from downstream producers and middlemen. Overall trading was light. In the afternoon, SHFE 1306 aluminum contract prices dropped, but SHFE current-month aluminum contract prices proved resilient. Wait-and-see sentiment dominated the spot market. Sparse offers were reported at RMB 14,470-14,480/mt, but inquiries were rarely heard, leaving trading muted. 

Lead
SHFE lead prices stopped falling but remained low Tuesday following the slump on the previous trading day. The most active SHFE lead contract price opened at RMB 14,410/mt and moved up due to the rising Shanghai Composite Index and short entering the market actively, to finally close at RMB 14,515/mt, up RMB 25/mt. Trading volumes fell 108 lots to 194 lots, while holdings were down 10 lots to 2,174 lots.

Spot lead market in China was quiet. Chihong Zn & Ge was quoted at RMB 14,500/mt, level with the most active SHFE lead contract price, and prices for Yuguang were offered at RMB 14,430/mt, with spot premiums of RMB 10/mt over the SHFE 1304 lead contract price. Shuangyan was quoted at RMB 14,400/mt. Downstream buyers purchased cautiously given unclear outlook, while cargo holders were not willing to sell due to low prices.

Zinc
The SHFE 1306 zinc contract price opened at RMB 14,900/mt on Tuesday and moved between RMB 14,905-14,925/mt. In the afternoon, SHFE zinc prices hit a low of RMB 14,815/mt as LME zinc prices slumped and shorts flooding into the market to finally end at RMB 14,850/mt, down RMB 45/mt or 0.3%. Trading volumes fell to 75,294 lots and positions were down 2,144 lots to 139,474 lots.

In China’s spot zinc market, mainstream traded prices for #0 zinc prices were between RMB 14,720-14,730/mt on Tuesday, with spot discounts of RMB 170-190/mt over the most active SHFE zinc contract price, while #1 zinc prices were mainly around RMB 14,700/mt. Buyers were cautious after purchasing goods when prices plunged on Monday, leaving transactions fewer than the previous trading day. In the afternoon, #0 zinc prices slipped to RMB 14,650-14,670/mt along with falling SHFE zinc prices, and investors rarely entered the market, awaiting for clear signals.

Tin
In Shanghai tin market, cargo holders were still unwilling to sell goods, but quotations fell from RMB 152,500-155,000/mt to RMB 151,500-153,500/mt due to falling LME tin prices and some well-known enterprises cutting ex-works prices. A few goods for non-leading brands were offered at RMB 151,000/mt. The declines in tin prices fueled wait-and-see sentiment in the market, leaving trading muted.

Nickel
In the Shanghai nickel spot market, mainstream traded prices of nickel from Jinchuan Group were in the RMB 116,900-117,100/mt range, and mainstream traded prices of nickel from Russia were in the RMB 115,800-116,000/mt range. Market sentiment turned cautious following LME nickel price stumble overnight and spot transactions turned quiet.