SMM Daily Review (Dec. 2)

SHANGHAI, Dec. 3 (SMM) --

    Copper:

    SHFE copper prices opened high and went higher and trading sentiment was brisk, with positions down at closing. Long technical indicators showed strong upward momentum despite of profit-takings by long players. SHFE three-month contract copper prices hit RMB 55,850/mt, and closed at RMB 55,630/mt, while SHFE spot-month contract copper prices stood firm at RMB 55,000/mt.

    In spot market, market supply of spot goods tightened further, with limited cargo movements. Spot discounts ranged from negative RMB 50/mt to positive RMB 50/mt in the morning, and spot discounts for high-quality copper were RMB 0/mt in the morning, but cargo-holder reluctance to move goods helped drive up traded prices to RMB 55,150/mt from RMB 54,900/mt, with most deals made above RMB 55,000/mt. However, copper prices above RMB 55,000/mt depressed buying interest, with trades mainly made by traders.

    Spot premiums will appear gradually since December began, but premiums higher than RMB 100-150/mt will help curb trading sentiment. LME copper prices will report limited upward room above USD 7,000/mt during the remainder of 2009, but the optimistic market environment will remain unchanged.

    Aluminum:

    SHFE aluminum prices moved smoothly in the morning, but picked up in the afternoon, with positions down more than 5,500 lots, as short players withdrew from the market. SHFE three-month contract aluminum prices stood above 10-day moving average line, and intended to break through recent fluctuating level of RMB 15,650/mt after stabilizing at RMB 15,500/mt. SHFE spot-month contract aluminum prices stood firm at RMB 15,350/mt, with low-side prices climbing to RMB 15,400/mt.

    In spot market, spot discounts widened to RMB 220-240/mt due to rising SHFE aluminum prices and weak consumption, with limited market supply. Optimistic market players hoped that aluminum prices would move higher and spot discounts would narrow. In this context, supply of high-end aluminum with well-known brands was unavailable in the market, and higher prices also limited consumption. Traded prices climbed to RMB 15,200/mt from the range of RMB 15,160-15,180/mt. In addition, CHALCO moved goods at RMB 15,200/mt.

    Lead:

    In Shanghai lead market, SMM lead prices increased by RMB 200/mt to RMB 16,300-16,500/mt. Most refined lead was traded above RMB 16,000/mt, at RMB 16,100/mt, and only limited amount of unknown brands at RMB 15,950/mt were in the market. Offers for well-known brands grew gradually, but downstream consumers still showed resistance to higher lead prices. Although it will take some time for consumers to accept the fact that lead prices advance constantly, the expectations of inflation help push up raw materials prices, then consumer goods prices.

    Zinc:

    SHFE zinc prices opened high and went higher, with both positions and trading volumes up. SHFE three-month contract zinc prices closed up 1.85%, and stood firm at RMB 18,500/mt and advanced to RMB 18,800/mt, while SHFE spot-month contract zinc prices stood above RMB 18,000/mt, and soared to RMB 18,200/mt, and closed at RMB 18,100/mt.

    In spot market, SMM offers for #0 zinc were RMB 17,750-17,850/mt, but market offers were firm at RMB 17,900-17,950/mt in the morning, and have been lifted to RMB 18,000/mt in the afternoon. However, higher zinc prices approaching RMB 18,000/mt curbed downward buying interest, but traders remained optimistic with regard to future prices, and zinc prices will rise further. Spot zinc prices will move around RMB 18,000/mt.

    Tin:

    In Shanghai tin market, Yunnan Tin Company was unwilling to lower prices, and Yunnan Chengfeng Non-ferrous Metal Company had no inventory pressure, with limited cargo movements reported, while Yunnan Gejiu Zili Metallurgy Company and Gejiu Nonferrous Metal Processing Company only moved goods under capital pressure, so traded prices for well-known brands moved between RMB 116,000-116,500/mt. Unknown brands flowed into market again, with deals mainly made around RMB 115,000/mt. Downstream consumers showed more interest in unknown brands due to lower prices, as prices for end products like soldering tin remained low.

    Nickel:

    In Shanghai nickel market, traded prices were RMB 126,500/mt for goods from Jinchuan Group, and RMB 126,000/mt for imported nickel from Russia. Market sentiment remained sluggish, as low-priced goods were unavailable, while higher prices could not be accepted by consumers.

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