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SMM Base Metals Daily Review (2013-3-22)
Mar 25,2013 19:21CST
price review forecast
SHFE 1307 copper contract prices opened down by RMB 450/mt at RMB 55,580/mt as LME copper market overnight fell back from highs.

SHANGHAI, Mar. 25 (SMM) –  

SHFE 1307 copper contract prices opened down by RMB 450/mt at RMB 55,580/mt as LME copper market overnight fell back from highs. After a low open, the contract moved higher, testing the RMB 56,000/mt mark, and fell back after meeting resistance at RMB 55,940/mt, and later generally moved below the daily moving averages. In the afternoon session, the contract extended declines, down to RMB 55,460/mt, and returned the daily moving averages after finding support at the 5-day moving averages. Finally, the contract closed at RMB 55,630/mt, down RMB 400/mt or 0.71%. Trading volumes of SHFE three-month copper contracts were down 219,000 lots, and positions were up 1,572 lots. Total trading volumes were down 326,000 lots, and total positions were up 10,040 lots. The support at the 5-day moving averages was strong despite downward pressures facing SHFE forward-month copper contracts. 

In the spot market, cargo-holders showed higher interest in moving goods after SHFE copper market dropped slightly. As the SHFE/LME copper price ratio rose, supply of imported copper increased. Spot premiums were down all the way, with quotations between RMB 20-120/mt. Standard-quality copper traded between RMB 55,820-55,920/mt, and high-quality copper traded between RMB 55,880-56,020/mt. During the earlier trading hours, some speculators entered the market for purchases, and as copper prices dropped, trading sentiment was depressed. Middlemen were reluctant in buying, and downstream producers, however, increased purchases ahead of the weekend, helping improve transactions. In the afternoon business, spot premiums were up slightly to RMB 40-150/mt as SHFE copper market inched lower, and only a limited number of speculators entered the market, and downstream producers generally exited the market. SHFE copper inventories were up 7,401 mt to 239,273 mt in the week ending March 22, causing by large arrivals of imported goods with improvement in the ratio.

SHFE 1306 aluminum contract prices opened slightly lower at RMB 14,705/mt on March 22 and hovered near RMB 14,700/mt in the session due to struggle between longs and shorts. Finally, the most active SHFE aluminum contract closed at RMB 14,700/mt, down RMB 45/mt or 0.31%. Positions increased 550 lots to 93,158 lots. With mixed economic indicators clouding market direction, SHFE aluminum for June delivery should stagnate near RMB 14,700/mt this week.

Spot aluminum was mainly traded at RMB 14,520-14,540/mt in Shanghai last Friday, a discount of RMB 70-100/mt over SHFE 1304 aluminum contract prices. Low-iron aluminum was trade around RMB 14,620/mt. SHFE 1306 aluminum contract prices inched down, sending spot aluminum prices down as well. Some traders held back goods, but most were in a hurry to sell. Downstream producers rebuilt stocks modestly at low prices as liquidity crunch at the quarter’s end bit in, which did help overall trading improve from the previous day. In the afternoon, SHFE 1304 aluminum contract prices retreated from RMB 14,600/mt. Most traders held back goods, but some remained eager to sell at RMB 14,510-14,520/mt. Buying interest was low, leaving trading muted.

Prices of the most active SHFE lead contracts opened RMB 90/mt lower at RMB 14,590/mt on March 22, moving within RMB 14,520-14,530/mt in the morning session on thin trading activity. In the afternoon, more investors closed positions as Cyprus received an ultimatum to reach a bailout deal by Monday. Finally, the most-traded SHFE lead contract closed RMB 90/mt lower at RMB 14,500/mt. Trading volumes increased 18 lots to 106 lots, while positions decreased 48 lots to 2,098 lots.

Chihong Zn & Ge lead was traded around RMB 14,470/mt last Friday, a discount of RMB 60/mt over the most active SHFE lead contract prices. Traded prices were RMB 14,450/mt for Nanfang lead and RMB 14,430/mt for Yuguang lead, a discount of RMB 10/mt over SHFE 1304 lead contract prices. Trading remained thin as both sides watched from the sidelines.    

SHFE 1306 zinc contract prices opened at RMB 14,960/mt today, and generally fluctuated around RMB 14,950/mt in the morning trading. As the Shanghai Composite plunged, SHFE 1306 zinc contract prices hit RMB 14,920/mt, and dipped to an intraday low of RMB 14,890/mt. As the Shanghai Composite rebounded, SHFE zinc prices inched up and finally closed at RMB 14,950/mt, down RMB 60/mt. Total positions decreased by 318 lots to 132,392 lots.

SHFE 1306 zinc contract prices opened lower and then fluctuated today. Discounts of #0 zinc against SHFE 1306 zinc contract prices were RMB 170-190/mt, with traded prices around RMB 14,760-14,780/mt. #1 zinc prices were RMB 14,720-14,730/mt. Both suppliers and downstream buyers took a wait-and-see attitude, keeping overall transactions muted.

Mainstream traded prices in the Shanghai tin spot market fell to RMB 150,000-153,000/mt, with the lowest at RMB 149,500/mt also reported. Supply of low-priced goods dragged down mainstream traded prices. Transactions were still quiet, and prices trend pointed down.

In the Shanghai nickel spot market, mainstream offers of nickel from Jinchuan Group were between RMB 118,200-118,400/mt, and mainstream traded prices of nickel from Russia were between RMB 117,100-117,300/mt. As LME nickel prices advanced, many traders were bullish towards price outlook and began to replenish stocks at current low prices, resulting brisk transactions. However, as conditions still did not improve in stainless steel sector, downstream demand was still sluggish.

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