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SMM Base Metals Daily Review (2013-3-27)
Mar 28,2013 10:30CST
price review forecast
SHFE 1307 copper contract opened RMB 180/mt higher at RMB 55,900/mt on Wednesday, despite pullback in LME copper overnight.

SHANGHAI, Mar. 28 (SMM) –

SHFE 1307 copper contract opened RMB 180/mt higher at RMB 55,900/mt on Wednesday, despite pullback in LME copper overnight. After the opening, the most active SHFE copper contract climbed to RMB 55,920/mt before tumbling all the way down below the daily moving average. In the afternoon, LME copper slid and shorts flooded in, driving the most-traded SHFE copper contract to an intraday low of RMB 55,430/mt. Finally, SHFE copper for July delivery ended the day down RMB 160/mt or 0.29% at RMB 55,560/mt. Trading volumes increased 25,170 lots, while positions were also up 9,050 lots. SHFE copper is under selling pressure at RMB 56,000/mt in the near term.

Spot copper premiums were RMB 20-100/mt in Shanghai on Wednesday. Traded prices for standard-quality copper were between RMB 55,750-55,800/mt, and RMB 55,780-55,880/mt for high-quality copper. Prices for the most active SHFE copper contracts drifted lower after a high opening, stimulating cargo holders to sell at highs, pushing spot premiums up. Many varieties of high-quality copper was available in the market, whereas standard-quality copper and low-end wet-processed copper were in tight supply, narrowing price spread between these two categories. Downstream producers and middlemen stayed out of the market out of growing bearishness over future prices, keeping transactions muted. In the afternoon, SHFE copper continued to fall, and cargo holders became unwilling to move goods, leaving few quotations. Downstream purchases remained limited despite falling prices. Thus, premiums showed no significant increase, with Guixi quoted at premiums of RMB 90-100/mt and traded prices at RMB 55,650-55,750/mt.

SHFE 1306 aluminum contract opened slightly lower at RMB 14,665/mt on Wednesday. The contract failed to break RMB 14,700/mt as shorts increased, and finally ended the day down RMB 50/mt or 0.34% at RMB 14,655/mt. Positions increased 998 lots to 94,496 lots. SHFE aluminum for June delivery was dragged down by falling LME aluminum, but should still hold stable at RMB 14,600/mt at the bottom as shorts will be limited for the near term.

Spot aluminum was mainly traded at RMB 14,500-14,520/mt in Shanghai on Wednesday, a discount of RMB 60-80/mt over SHFE 1304 aluminum contract prices. Low-iron aluminum was trade around RMB 14,700/mt. Traders were anxious to sell due to falling SHFE aluminum and tight cash flows at the quarter’s end, dragging spot aluminum down to RMB 14,500/mt. Downstream producers and middlemen evinced little buying interest, depressing overall trading. In the afternoon, SHFE 1306 aluminum contract prices remained weak, bringing spot aluminum down to RMB 14,490/mt from RMB 14,500/mt. Traders were eager to sell against low buying interest downstream, leaving trading subdued.

SHFE 1305 lead contract price started lower at RMB 14,485/mt on March 27 as the mixed US economic and worries about the influence of the Cyrus bailout drove the LME lead prices to fall sharply overnight. Prices then moved narrowly between RMB 14,470-14,500/mt with investors unwilling to enter the market, and finally closed down RMB 120/mt to RMB 14,450/mt. Traded volumes were up 58 lots to 232 lots, and positions remained unchanged.

Spot lead prices remained stable, with spot discounts over the most active SHFE lead contract price narrowing to RMB 60/mt. Chihong Zn & Ge and Nanfang were quoted at RMB 14,420/mt and RMB 14,380/mt, and prices for Mengzi were offered at RMB 14,350/mt. Downstream buying interest remained low and smelters were also reluctant to sell goods, leaving transactions poor. In the afternoon, lead prices changed little and both suppliers and buyers were not interested in entering the market.

SHFE 1306 zinc contract prices opened slightly lower at RMB 14,870/mt today and then fluctuated around that level. As the Shanghai Composite weakened in the afternoon, and since LME zinc prices also plunged due to a strengthening US dollar index, SHFE 1306 zinc contract prices dropped to RMB 14,850/mt, and finally closed at RMB 14,835/mt, down RMB 135/mt or 0.9%. Trading volumes increased by 20,188 lots, to 54,426 lots, and total positions increased by 2,890 lots to 126,530 lots.

SHFE 1306 zinc contract prices opened low then fluctuated narrowly today. Discounts of #0 zinc against SHFE 1306 zinc contract prices were RMB 150-170/mt, with traded prices around RMB 14,700-14,730/mt. #1 zinc prices were RMB 14,690/mt. Smelters continued to hold goods, while arbitrage traders released some goods due to narrowing spot discounts. But narrowly fluctuating SHFE zinc prices depressed traders, and downstream buyers purchased modestly at lower prices. Overall transactions did not improve.

In Shanghai tin market, mainstream traded prices were between RMB 150,500-152,500/mt on March 27 with trading light. LME tin prices staged a slight rebound but met strong resistance, and failed to offer support to spot tin prices. That, combined with the oversupply and weak demand, left prices stabilized but hard to rise.

Jinchuan Group cut ex-works nickel prices by RMB 1,000/mt, to RMB 118,000/mt Wednesday.  In the Shanghai nickel spot market, mainstream offers of nickel from Jinchuan Group were between RMB 118,000-118,300/mt, and mainstream traded prices of nickel from Russia were between RMB 117,000-117,300/mt. Wait-and-see sentiment further grew as LME nickel prices fell overnight, and transactions were also quiet.

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