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SMM Daily Review (Sept. 11)

[Pb] SMM Morning Review - 2009/9/14 Lead Market

SHANGHAI, Sept. 14 (SMM) --
&nbsp;&nbsp;&nbsp; Copper:
&nbsp;&nbsp;&nbsp; SHFE copper prices opened low, but after the National Bureau of Statistics (NBS) announced in the morning that the economic data in August were better than July, especially the industrial added value has accelerated the growth rate on a yearly basis for four consecutive months, and CPI also experienced a slower decline on a yearly basis and a growth on a monthly basis, and A-share stock market climbed by more than 2%, SHFE copper prices moved upward, with three-month contracts soaring to RMB 50,100/mt and spot-month contracts surging to RMB 49,950/mt. In the afternoon, Shanghai Futures Exchange inventory weekly report showed that copper inventories increased by 10,288mt, generating demand concerns. In the mean time, the profit-takings and the onset of weekend also helped drag down SHFE copper prices to daily low point.
&nbsp;&nbsp;&nbsp; In spot market, spot discounts narrowed today. Discounts were RMB 50-100/mt for premium copper, and RMB 100-120/mt for parity copper, and price spread between parity copper and premium copper narrowed as well. The trading sentiment was moderate in the morning, with increasing deals being made in the RMB 49,700-49,900/mt range, but falling SHFE copper prices dampened copper traders' trading interest in the afternoon, and market players adopted a wait-and-see attitude when copper prices moved up to RMB 49,400/mt.
&nbsp;&nbsp;&nbsp; On Friday, the positive overseas economic market conditions (for example: the US dollar index dropped and Dow Jones index grew) failed to drive up LME copper prices. In addition, the preliminary data from China Customs today shows that China's imports of copper still experienced marked declines, while domestic copper inventories increased significantly, further generating market concerns over China's consumption, so copper prices will likely fluctuate. Next week, a new contract month will begin, and slight premiums will likely appear in high-quality copper prices.
&nbsp;&nbsp;&nbsp; Aluminum:
&nbsp;&nbsp;&nbsp; SHFE aluminum prices opened low and fluctuated narrowly, with high wait-and-see sentiment prevailing among market players. Today, the situation of weak SHFE aluminum prices and strong spot aluminum prices remained in the market. Imported aluminum prices were RMB 15,000/mt. Although Chalco reduced offers to RMB 15,100/mt today, market supply of famous brands aluminum decreased. The optimistic sentiment helped increase the purchasing interest during weekend, with traded prices climbing to RMB 15,050-15,060/mt from RMB 15,020-15,030/mt. Slight premiums will likely appear in spot market given the approach of the delivery date.
&nbsp;&nbsp;&nbsp; Lead:
&nbsp;&nbsp;&nbsp; The 12th China International Lead and Zinc Conference held in Lanzhou city came to an end yesterday, and supply surplus still existed in lead market, and the production suspension caused by lead poisoning incident was limited. In this context, LME lead prices lost one-week gains and dropped to USD 2,085/mt. Today, the latest report from National Bureau of Statistics showed that China's lead output was 364kt during August, up 5.6% MoM.
&nbsp;&nbsp;&nbsp; The plunged LME lead prices exerted great negative impact on domestic lead market, and struggles in lead prices appeared in the market. Smelters with imported lead concentrate as raw materials hoped LME lead prices to climb in order to reduce costs, but smelters with own mines hoped LME lead prices to remain stable in order to stabilize market sentiment; Traders with inventories in hand were in panic, and market offers were mixed. Lead prices were testing the support level of RMB 15,500/mt, and are expected to test RMB 15,000/mt next week.
&nbsp;&nbsp;&nbsp; Zinc:
&nbsp;&nbsp;&nbsp; SHFE zinc prices opened low and went lower, with a daily decline of 2-3%. SHFE spot-month contracts zinc prices remained at RMB 15,000/mt, while SHFE three-month contracts zinc prices closed at RMB 15,150/mt. In spot market, inquiries increased when zinc prices were below RMB 15,000/mt in the morning, and traded prices for #0 zinc were RMB 15,000-15,050/mt. In the afternoon, although SHFE zinc prices dropped, smelters still believe any downward room for zinc prices will be limited. Zinc prices will likely fall back to previous fluctuating range.
&nbsp;&nbsp;&nbsp; Tin:
&nbsp;&nbsp;&nbsp; In Shanghai tin market, offers for high-end tin edged down due to falling LME tin prices, while most producers were still firm with their offers at RMB 119,000/mt. Offers for inferior brands tin were RMB 117,000/mt, and the wait-and-see sentiment began dominating downstream consumers.
&nbsp;&nbsp;&nbsp; Nickel:
&nbsp;&nbsp;&nbsp; In Shanghai nickel market, Jinchuan Group reduced nickel ex-works prices by RMB 5,000/mt to RMB 136,000/mt today, and market offers were close to nickel ex-works prices, while imported nickel prices fell to RMB 133,000/mt as well, leaving narrowed import loss as a result.
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