China's rising CPI in July triggered market expectations of future tighter monetary policies, and also offered an opportunity for longs to withdraw from the market. SMM believes base metal prices will undergo corrections over the short term, but still holds an optimistic outlook towards the long-term outlook.
Copper: According to China Customs, China's imports of unwrought copper and copper semis were 342.9 kt in July, up slightly by 14.7 kt, or 4.47%, from the 328.2 kt in June. SMM believes tight supplies of imported goods and weak domestic consumption are behind the lack of significant improvement in July imports. (Page 6)
Aluminum: Alumina price increases slowed gradually last week after rising rapidly for the previous two weeks. Downstream aluminum producers were not interested in purchasing due to rapid increases in alumina prices, resulting in lower trading volumes. SMM believes upward momentum will cease without strong support from aluminum prices. (Page 8)
Zinc: Operating rates at zinc smelters in July were 68.4%, a record low since March 2009. (Page 9)
Lead: Last week, the LME lead market prices experienced corrections, falling below USD 2,100/mt after briefly hovering at USD 2,200/mt earlier in the week. Domestic lead prices fell to RMB 15,900/mt, down from RMB 16,500/mt. (Page 13)
Nickel: China's domestic NPI prices at various grades all advanced. (Page 15)