Non-ferrous
Non-ferrous
Base Metals
Rare Earth
Scrap Metals
Minor Metals
Precious Metals
New Energy
DashboardDatabaseProReportsEventsConsulting
Download our mobile app to
your devices
SMM Base Metals Weekly Price Review and Forecast (Aug. 26-30, 2013)
Aug 27, 2013 09:11Source:SMM
Base metals prices rallied after dipping low last week.
SHANGHAI, Aug. 26 (SMM) – Base metals prices rallied after dipping low last week. Caution prevailed in the market early last week ahead of the release of minutes from the Fed’s July policy meeting and HSBC China manufacturing PMI, prompting investors to book profits. The resulting increase in the US dollar and decline in US equities put pressure on base metals. However, the positive manufacturing data for China, US and euro zone helped base metals regain the earlier losses. But trading in spot markets was dampened with downstream buyers waiting on the sidelines. SMMI edged up 0.02% last week, led by lead prices which staged a strong trend despite a slight pullback at mid-week. The tight raw material supply, tough environmental protection campaign, and unusually high temperature hindered production at lead smelters, keeping lead prices hovering at high levels. SMMI.Pb gained 1.55% last week, and SMM prices for zinc, aluminum, and tin all remained stable. Nickel prices dropped noticeably, with LME nickel presenting a largest intraday loss of 4%. Jinchuan Group thus lowered nickel prices four times by a total of RMB 1,200/mt. SMMI.Ni fell 1.12% during the whole week.
Copper
The Shanghai Composite Index consolidated early last week, but SHFE copper prices fell from RMB 53,200/mt, to RMB 52,000/mt, but later rose to RMB 52,800/mt by the week's end. Total positions surged by over 30,000 lots and copper prices were boosted following the release of HSBC's PMI for China and after a large number of long investors entered the market.
The People's Bank of China (PBOC) continued to execute reverse repurchase in an effort to ease the ongoing liquidity crunch. PBOC implemented 14-day reverse repurchases on August 22 totaling RMB 46 billion, up RMB 18 billion from the last round of repurchasing and the highest level since late July. In response, Shibor fell across the board last Thursday as capital tightness mitigated, but tight liquidity conditions have not been resolved. A slowing of international capital inflows precipitated net outflows of forex receipts, and if forex receipts continued to fall, China's central bank may be forced to lower the deposit reserve ratio in order to free up additional liquidity from banks. However, if forex receipt changes are mixed, the central bank will continue to use reverse repurchases to improve liquidity. Domestic stocks markets should also level out due to cyclical month-end cash flow problems. In this context, SHFE copper prices will move between RMB 52,000-53,200/mt, tracking LME copper prices.
Aluminum
SHFE 1312 aluminum contracts became the new most active contract last Wednesday. Prices for the most active SHFE aluminum contracts broke through RMB 14,500/mt last Monday before falling back to RMB 14,380-14,480/mt later in the week as investors pulled out of the market. In spot markets, cargo holders became more eager to sell as liquidity tightens at the month’s end, but consumption was still sluggish, sending mainstream traded prices in Shanghai down from RMB 14,450/mt to RMB 14,380/mt, a contango of RMB 20/mt over SHFE 1309 aluminum contract prices.
In the coming week, LME aluminum prices will struggle at USD 1,900/mt, while prices for the most active SHFE aluminum contracts will test support at RMB 14,400/mt. In spot markets, cargo holders will remain anxious to sell due to tight cash flows at the end of the month, but consumption will falter further, so spot aluminum prices will remain RMB 10-30/mt below SHFE 1309 aluminum contract prices.
Lead
SHFE lead prices began last week at RMB 14,960/mt, but fell back to RMB 14,700/mt as investors liquidated positions. Prices rebounded, however, after gaining support from falling SHFE lead inventories. Since the trading unit for SHFE lead contract will be changed from 25mt/lot to 5mt/lot on September 2nd, SHFE lead prices may show sharper movements this week due to greater speculative activity. SHFE lead prices are expected between RMB 14,600-14,900/mt.
In China’s spot lead markets, prices were RMB 14,850-14,900/mt early last week and attempted to break through RMB 15,000/mt, propelled by low selling interest from cargo holders. Nevertheless, falling SHFE lead prices dragged down spot prices to RMB 14,650-14,750/mt. Downstream buyers stayed on the sidelines, leaving purchases down from a week ago. At the same time, smelters slightly increased supply. Lead smelters will increase supplies during the last week of August, easing shortages of lead ingot. Traders may stay out of the market and lead consumption by downstream enterprises will fall further given recent price cuts for lead-acid batteries. In this context, spot lead prices are expected between RMB 14,600-14,850/mt.
Zinc
SHFE 1312 zinc contract prices became the most actively traded contracts last week, but with prices becoming more volatile. A rebounding Shanghai Composite Index and the entry of a large number of longs pushed up SHFE zinc prices to a four-month high of RMB 15,300. However, stocks in other Asian markets fell across the board later in the week, with the Nikkei Index and Hang Seng Index falling by over 2% as investors removed large amounts of capital out of Asian markets, which in turn caused SHFE zinc prices to fall briefly to RMB 14,900/mt. Nevertheless, HSBC's August PMI for China was unexpectedly positive, allowing SHFE zinc prices to rebound to RMB 15,000/mt, even briefly touching RMB 15,175/mt. LME zinc prices also advanced.
In China's domestic spot markets, spot prices moved in a narrower range than SHFE zinc prices, remaining RMB 40/mt below or RMB 60/mt above SHFE zinc prices, compared to premiums of between RMB 80-120/mt a week ago. The average SMM #0 zinc price was RMB 15,130/mt, up from a week earlier and close to early March's level, which kept smelters active selling goods. Downstream purchasing, however, remained modest. Spot goods were also sold at higher prices, but downstream buying interest was low. The spot price spread between Guangdong and Shanghai continued to narrow to RMB 70/mt. Prices in Tianjin were level with Shanghai, with supply and demand in that market in balance.
The market will continue to absorb positive news from China, but speculation continues regarding the timing by the US Federal Reserve's exit from the current QE3 program, weighing down zinc prices. In this context, LME zinc prices are expected to move between USD 1,950-2,000/mt. SHFE 1312 zinc contract prices stood at RMB 15,000/mt last Friday, but will now test support at RMB 14,900/mt and encounter resistance at RMB 15,300-15,500/mt. Cargo holders will liquidate spot goods to generate cash at the month's end, but downstream demand will remain sluggish, with spot discounts of RMB 50/mt against SHFE 1312 zinc contract prices.
Tin
Spot tin prices in China held steady at RMB 142,300-144,000/mt for most of last week, but went up to RMB 143,000-145,000/mt on Friday on the strength of higher LME tin and limited low-priced resources. But trading remained modest. A lack of guidance from LME tin resulted in divergent opinions on spot tin price trends. Smelters continued to refrain from selling, lending some support to prices, but downstream demand remained weak.
Nickel
In China’s domestic spot markets, the average price of #1 nickel from 16-22 August was RMB 102,480/mt. Jinchuan Group cut ex-works prices last week by RMB 1,200/mt to RMB 102,300/mt. Traded prices for Jinchuan nickel were between RMB 102,200-103,800/mt, and between RMB 101,000-102,600/mt for Russian nickel, a difference of RMB 1,200-1,300/mt. As LME nickel slid in early week trading, domestic traders chose to move goods at low prices due to market pessimism. Investors turned to electronic trading in Wuxi after hedging opportunities emerged on Wednesday. Traders raised prices after LME nickel moved higher, but a RMB 700/mt price cut by Jinchuan Group forced traders to reduce prices, although downstream producers purchased cautiously. The price adjustments by Jinchuan Group were finally accepted by traders since they believed the price change was reflective of market conditions.
In the coming week, LME nickel will move between USD 14,200-14,650/mt, while domestic spot nickel prices will hover in the RMB 100,000-102,100/mt range.
base metals price
SHFE copper price
SHFE metals prices
For queries, please contact Michael Jiang at michaeljiang@smm.cn
For more information on how to access our research reports, please email service.en@smm.cn
Related news
SMM Events & Webinars
All- Oct09
NET ZERO EUROPE - Solar & Energy Storage Summit
Oct 09 - 10,2024THE EGG BRUSSELS, BELGIUM
- Oct08
2nd Li-ion Battery Europe 2024
Oct 08 - 10,2024THE EGG BRUSSELS, BELGIUM
- Jun24
2024 Global Renewable Metal Industry Chain Summit
Jun 24 - 25,2024To foster international cooperation and dialogue among industry colleaguesKuala Lumpur , Malaysia
Shanghai Metals Market
Notice: By accessing this site you agree that you will not copy or reproduce any part of its contents (including, but not limited to, single prices, graphs or news content) in any form or for any purpose whatsoever without the prior written consent of the publisher.
Drop us a line
service.en@smm.cn
How can we help you?
+86 021 5155-0306
Live chat via WhatsApp
Copyright © 2024 SMM Information & Technology Co., Ltd. All rights reserved.
