SMM Daily Review (Oct. 12)

SHANGHAI, Oct. 13 (SMM) --

    Copper:

    SHFE copper prices underperformed LME copper prices. SHFE copper prices opened high and went lower. SHFE copper prices soared to RMB 49,500/mt in pre-market and SHFE copper for January 2010 delivery hit RMB 49,000/mt, but dipped to RMB 48,750/mt. In the afternoon, SHFE copper prices climbed, with positions up more than 29,000 lots, but then slipped again and closed at RMB 49,000/mt, with limited support from below RMB 49,000/mt.

    In spot market, traded prices were RMB 49,000-49,200/mt in the morning, with discounts of RMB 50-100/mt. LME copper price trend was mixed given the first trading day after the holiday, and SHFE copper prices also lacked further upward momentum. In the mean time, the purchasing interest was low, especially when copper prices were more than RMB 49,000/mt.

    Supply was sufficient in spot copper market, including imported and domestic copper. In this context, consumers had more choices and advantages upon supply surplus. However, this week will be the last several trading days for 910 contracts, and cargo-holders were reluctant to reduce copper prices significantly, so copper prices will remain around RMB 49,000/mt.

    Aluminum:

    SHFE aluminum prices opened low and went higher. SHFE aluminum prices have dipped at noon, but later soared in the afternoon along with bullish copper market and A-share stock market. However, SHFE aluminum prices closed down finally, but both spot-month contracts and three-month contracts received support at RMB 14,900/mt. Positions of three-month contracts experienced slight increases today, indicating the cautious entrance of risk-avoidance funds after the holiday.

    In spot market, traded prices were flat with futures prices, and limited end-users made deals with premiums of RMB 20/mt. Traded prices were RMB 14,880-14,910/mt at noon, and then climbed to the range of RMB 14,900-14,930/mt in the afternoon. CHALCO and other large aluminum producers were unwilling to move goods when aluminum prices were below RMB 15,000/mt. As limited traders built stocks at higher premiums before the holiday, and they hoped aluminum prices to move up to RMB 15,000/mt after the holiday. Meanwhile, no low-priced imported aluminum was available in the market, so both traders and other small aluminum producers stood on the sidelines and kept their offers firm. However, consumers have purchased before the holiday, so their purchases were limited and cautious after the holiday given the uncertain market direction.

    The purchasing interest will grow significantly when aluminum prices are below RMB 14,900/mt, while large aluminum producers will move cargos in large quantities when aluminum prices move in the RMB 15,000-15,100/mt range. Hence, aluminum prices will remain around RMB 14,900/mt in the short term.

    Lead:

    In Shanghai lead market, SMM lead prices remained in the RMB 15,600-15,800/mt range today. Large smelters were firm at RMB 15,600/mt, but consumers stood on the sidelines, resulting in weak market sentiment. The strong LME lead prices will help support domestic lead prices.

    Zinc:

    SHFE zinc prices opened low, but SHFE three-month contract zinc prices received strong support at RMB 15,840/mt and remained on upward trend. Today, total positions increased by more than 20,000 lots, and both RSI and KDJ indicators were also in upward track, resulting in optimistic lead market outlook.

    In spot market, #0 zinc was traded at RMB 15,400-15,450/mt in the morning, with brisk inquiries but weak transactions. Spot zinc prices moved up to RMB 15,500/mt in the afternoon, but consumers remained cautious without a clear market direction.

    Tin:

    In Shanghai tin market, although large smelters kept their offers firm at RMB 118,000-118,500/mt, but only made deals with small number of end-consumers, while tin from small smelters was traded in the RMB 116,500-117,000/mt range in the market, with no marked fluctuations in traded prices, and transactions were also weak.  

    Nickel:

    In Shanghai nickel market, offers for Jinchuan nickel were above RMB 135,000/mt, and offers for imported nickel were RMB 134,000/mt, leaving a RMB 1,000/mt price spread. Traders were cautious in the morning, but inquiries and purchases increased in the afternoon along with rising LME nickel prices. Sources report that spot inventories in Shanghai reached more than 10kt. Hence, ample supply in nickel market and production cuts at steel mills will dampen nickel prices further.

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