Last week, base metals prices tumbled to price levels last seen in mid-November 2009. Market performance was depressed by fears of credit tightening in China, and base metals prices are now more influenced by traditional market fundamentals. With the approach of the Chinese New Year holiday, trading sentiment is expected to wane. In this context, CBI predicts price declines of base metals will be moderate in the coming week, but will continue to fluctuations.
Copper: Tightening liquidity in China, as well as proposed banking regulations in the US are weighing on commodity markets. LME copper prices fell by USD 340/mt, to USD 7,030/mt, passing below the previous support level of USD 7,166/mt. (Page 4)
Aluminum: Base metals and LME aluminum prices were lower last week due to weakening commodity markets, sluggish market fundamentals, as well as from fears of tightening credit. (Page 6)
Zinc: Last week, LME zinc prices fell by 8.3%, and SHFE zinc prices were down by 7.4%, which were the largest price declines among all base metals. (Page 9)
Lead: Last week, LME lead prices fell to USD 2,000/mt due to credit tightening in China, and from a plan for limits on risk by US banks. Domestic lead prices fell below RMB 16,000/mt. Downstream producers were pessimistic and waiting for further price declines, while lead producers showed little interest in selling goods and were maintaining prices above RMB 16,000/mt. (Page 11)
Nickel: CBI reviews nickel imports during 2009. (Page 17)