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SMM Base Metals Market Daily Review (2013-12-24)
Dec 25,2013 11:50CST
price review forecast
SHFE 1403 copper contract opened RMB 60/mt higher at RMB 51,380/mt at Monday’s night trading.

SHANGHAI, Dec. 25 (SMM) – 

SHFE 1403 copper contract opened RMB 60/mt higher at RMB 51,380/mt at Monday’s night trading. The most active contract fluctuated between RMB 51,200-51,380/mt Monday night, with trading volumes down sharply. The red metal swung into a wider band during Tuesday’s day session, jumping to RMB 51,450/mt from RMB 51,240/mt. Finally, SHFE copper for March delivery added RMB 110/mt or 0.21% to close at RMB 51,420/mt. Trading volumes tumbled 105,000 lots, but positions increased 2,910 lots, with 1,144 lots added during day trading. With LME market closed on Wednesday and Thursday for the Christmas holiday, risks in SHFE copper market will grow.     
Spot copper in Shanghai was quoted at a discount of RMB 0-50/mt and a premium of RMB 0-20/mt over SHFE 1401 copper contract on Tuesday. Traded prices were RMB 51,330-51,380/mt for standard-quality copper, and RMB 51,360-51,440/mt for high-quality copper. SHFE copper fell back after hitting high. Supply and demand waned in tandem, leaving market quiet. In the afternoon, spot copper was offered at discounts of RMB 0-50/mt over the SHFE current-month copper contract prices, with traded prices down to RMB 51,320-51,390/mt. 
SHFE 1403 aluminum contract opened lower at Monday’s night session and hit its lowest in nearly four years at RMB 13,905/mt. The light metal climbed to RMB 13,960/mt during Tuesday’s day session, but still ended RMB 70/mt or 0.5% lower at RMB 13,930/mt. During the day session, trading volumes surged 5,352 lots to 11,684 lots, and positions also increased 2,538 lots to 52,378 lots. During the night session, positions added 1,128 lots to 50,968 lots. The most active contract should continue to stay low. 
Aluminum prices in east China dropped on Tuesday, dragged down by falling SHFE aluminum, growing arrivals and slack demand. Mainstream traded prices were RMB 14,010-14,020/mt in Shanghai, RMB 13,980-13,990/mt in Wuxi, and RMB 14,080-14,090/mt in Hangzhou. In the afternoon, traded prices remained stable and few deals were completed.   
In night trading hours, the most active SHFE 1402 lead contract prices started at RMB 14,360/mt and later trended lower. On Tuesday, SHFE lead prices dipped as low as RMB 14,225/mt and then fluctuated narrowly between RMB14,280-14,300/mt. In afternoon trading, the most active SHFE lead prices bounced back to RMB 14,330/mt, supported by LME lead prices and the 60-day moving average. SHFE lead prices finally closed the day up RMB 15/mt at RMB 14,345/mt. Affected by the upcoming Christmas Day holiday, trading in Shanghai lead futures market was fairly light on Tuesday. Transactions shrank 2,996 lots to 3,020 lots, while positions fell 466 lots to 7,886 lots.
In Shanghai spot lead market, goods of Chihong Zn & Ge traded at RMB 14,140/mt, a discount of RMB 140/mt over the most active SHFE lead prices on Tuesday. Shuikoushan resources were offered at RMB 14,130/mt, while Humon brand was sold at RMB 14,020/mt. Following declines in lead prices, lead smelters were even less willing to move goods, while downstream lead-acid battery producers purchased only on an as-needed basis due to tight cash flows by the year-end.    
SHFE 1403 zinc prices Monday evening opened RMB 60/mt higher at RMB 15,225/mt, then hovered at high levels, stabilizing around RMB 15,200/mt. Trading volumes decreased from the first trading day. SHFE 1403 zinc prices opened flat at RMB 14,225/mt on Tuesday morning, and then dipped to RMB 15,160/mt. Boosted by rising LME zinc prices, SHFE zinc prices then touched an intraday high of RMB 15,280/mt in the afternoon. But as a large number of short entered the market, SHFE zinc prices met resistance and finally closed at RMB 15,260/mt, up RMB 35/mt or 0.23%. Trading volumes decreased by 27,946 lots, to 103,022 lots, and total positions increased by 11,346 lots, to 113,740 lots. LME zinc inventories continued to slide below 900,000 mt, which will support SHFE zinc prices to test RMB 15,300/mt.
#0 zinc prices were between RMB 15,120-15,170/mt, with spot discounts of RMB 40-90/mt against SHFE 1403 zinc contract prices. #1 zinc supply was thin, with prices around RMB 15,080/mt, and SMC branded #0 zinc prices were around RMB 15,120/mt. SHFE 1403 zinc contract prices opened at RMB 15,225/mt, but then climbed to hover around RMB 15,210/mt. investors both in China and overseas stood on the sidelines due to the Christmas holiday, and downstream buyers purchased on an as-needed basis. Despite smelters were holding prices firm to move goods, overall transactions muted.
Spot tin was largely traded at RMB 140,000-142,000/mt on Tuesday. A few deals were done at RMB 139,500/mt. Consumption was decent. Yunnan Tin Group announced Tuesday that it planned to suspend production for a 35-day facility maintenance starting on December 30. The company added the production suspension would have little impact on its annual production target. Downstream producers will begin to build up stocks next month for the upcoming Chinese New Year. Production suspension by Yunnan Tin Group should lend some support to tin prices.  

In Shanghai, Jinchuan lowered ex-works prices by RMB 600/mt, to RMB 96,900/mt. SMM #1 nickel prices were between RMB 95,700-96,800/mt. With weak downstream buying interest, transactions were mainly made among traders.
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