SMM Base Metals Daily Review (2013-3-26)

SHANGHAI, Mar. 27 (SMM) –

Copper
SHFE 1307 copper contract started RMB 380/mt lower at RMB 55,700/mt Tuesday as LME copper fell back overnight. The most active SHFE copper contract then rose, but failed to break RMB 55,950/mt. Later, LME copper slipped to USD 7,600/mt and the Shanghai Composite Index declined by over 1.5% to below 2,300 points, sending the most-traded SHFE copper contract below the daily moving average, with weak support at RMB 55,510/mt. Finally, SHFE copper for July delivery ended the day down RMB 320/mt or 0.57% at RMB 55,760/mt. Trading volumes decreased 41,140 lots, while positions increased 2,488 lots. SHFE copper should remain weak in the near term.

Spot copper premiums were RMB 30-150/mt in Shanghai on Tuesday. Traded prices for standard-quality copper were between RMB 55,730-55,800/mt, and RMB 55,780-56,000/mt for high-quality copper. Prices for the most active SHFE copper contracts trended down after a low opening. Cargo holders were eager to sell for cash against tight cash flows at the quarter’s end. Supplies of spot copper were ample and premiums were limited. Middlemen refrained from buying out of growing bearishness over future prices, while downstream producers took a wait-and-see stance, leaving transactions muted. In the afternoon, SHFE copper prices remained stable, while quotes and traded prices in spot copper markets also showed little change.

Aluminum
SHFE 1306 aluminum contract opened slightly lower at RMB 14,690/mt on Tuesday. The contract struggled at RMB 14,700/mt in the morning session on depressing trading activity, but stabilized at this mark in the afternoon. Most longs and shorts were watching from the sidelines. Finally, the most active SHFE aluminum contract ended the day down RMB 30/mt or 0.20% at RMB 14,705/mt. Positions decreased 414 lots to 93,498 lots. SHFE aluminum for June delivery should hover near RMB 14,700/mt in the near term.

Spot aluminum was mainly traded at RMB 14,520-14,550/mt in Shanghai on Tuesday, a discount of RMB 50-90/mt over SHFE 1304 aluminum contract prices. Low-iron aluminum was trade around RMB 14,710/mt. SHFE 1306 aluminum contract prices moved at low levels, causing spot aluminum to surrender gains. Most traders were in a hurry to sell against tight liquidity at the quarter’s end, but demand from downstream producers and middlemen was tepid, leaving mainstream traded prices stagnant near RMB 14,530/mt. In the afternoon, SHFE 1304 aluminum contract prices recovered some losses, but spot aluminum was still quoted around RMB 14,520/mt. Some traders were eager to sell, but inquiries were rarely heard, leaving transactions muted.

Lead
SHFE lead prices started lower at RMB 14,545/mt on Tuesday given market concerns over the European economy, and moved down due to falling holdings. However, prices found some support from the LME lead prices which were resistant to declines on one hand and refused to rise on the other and a stalemate between buyers and suppliers in China’s spot lead market, and mainly moved between RMB 14,530-14,560/mt before closing at RMB 14,570/mt, RMB 15/mt lower than the previous trading day. Traded volumes were up 88 lots to 174 lots, and positions were down 88 lots to 2,018 lots.

Spot lead prices in China remained little changed from the previous trading day. Chihong Zn & Ge was quoted at RMB 14,460/mt, with spot discounts of RMB 80/mt over the most active SHFE lead contract price at RMB 80/mt. Tongguan was quoted at RMB 14,420/mt, while Jinli was quoted at RMB 14,430/mt. Downstream buyers still purchased as needed due to poor orders, and cargo holders sold goods moderately given uncertain outlook, with transactions limited.

Zinc
SHFE 1306 zinc contract prices opened at RMB 15,055/mt today due to easing Cyprus debt crisis and since LME zinc prices closed up last Friday, and then touched RMB 15,075/mt, but met strong resistance at the 10-day moving average. SHFE 1306 zinc contract prices generally moved between RMB 15,020-15,050/mt during the day, and finally closed at RMB 15,030/mt, up RMB 85/mt or 0.57%. Trading volumes decreased by 2,990 lots, to 43,036 lots, and total positions decreased by 6,162 lots to 126,230 lots.

SHFE 1306 zinc contract prices opened higher then fluctuated narrowly today. Discounts of #0 zinc against SHFE 1306 zinc contract prices were RMB 200-210/mt, with traded prices around RMB 14,830-14,840/mt. #1 zinc prices were RMB 14,800-14,810/mt. Smelters continued to hold goods, while traders stayed out of the market. Downstream buying interest was still low, keeping overall transactions muted.

Tin
In Shanghai tin market, mainstream traded prices were between RMB 150,500-152,500/mt on Tuesday. Supply of low-priced goods was down, but tin prices failed to advance, with trading quieter than Monday afternoon. A slight rebound in LME tin prices and reduced goods at low prices gave some support to spot tin prices, but soft consumption and oversupply left prices hard to rise.

Nickel
In the Shanghai nickel spot market, mainstream offers for nickel from Jinchuan Group were between RMB 118,000-118,300/mt, and RMB 117,000-117,300/mt for nickel from Russia. As LME nickel prices fell during the day, prices for nickel from Jinchuan Group were at the lower end of the price range at RMB 118,000/mt and Russian nickel prices were near RMB 117,100/mt. Markets were bullish towards future prices as LME nickel prices have rebound recently. Some traders replenished stocks at low prices, improving overall trading.