The unresolved debt issues in Europe reduced the appetite for market risk, helping the US dollar index soar and base metal markets tumble in response. A bearish sentiment dominated the market and will limit upward momentum for base metal prices in the short term.
Copper: Spot premiums surged to positive RMB 400/mt following supply tightness from severe spot copper price declines. Plunging copper prices depressed downstream producer confidence, opting instead to consume previously stock-piled inventories. Spot trading volumes fell, caused by a strong wait-and-see attitude in the market. (Page 4)
Aluminum: LME aluminum prices moved lower and SHFE aluminum market fundamentals reported no improvements. Price support from higher costs will be limited given the current panic market sentiment, while bearish financial markets also weigh down aluminum futures prices. In addition, market supply will likely increase over the near to mid-term, and point to lower aluminum prices for the foreseeable future. (Page 6)
Zinc: TC of domestic zinc concentrate moved lower, with the low-end TC reported below RMB 5,000/mt. (Page 8)
Lead: Over the past week, LME lead prices plunged more than 10%, while traded prices in domestic lead markets fell to RMB 14,500/mt. Buying interest failed to materialize, even at low price levels. (Page 10)
Nickel: China's domestic spot nickel ore and NPI prices were lower. (Page 13)