Metals News
Commodity Prices May Fall Further on Japanese Nuclear Crisis
smm insight
Mar 16,2011

SHANGHAI, Mar. 16 (SMM) -- Japan's nuclear crisis worsened after a 9 magnitude earthquake hit Japan, which had great effects on global market confidence. As a result, Nikkei tumbled by over 15% on March 15th after plummeting by over 6% a day earlier, and opened high but moved lower in the morning session on March 16th. The Japanese nuclear threat became the top issue determining financial and commodity market trends, and SMM predicts commodity prices will likely fall further in the near term given escalating nuclear crisis in Japan.

European and US Equities Constantly Dip
Some optimists believe reconstruction efforts of Japan will boost economy, despite short-term negative impacts to Japanese economy after the huge earthquake. However, consecutive explosions at the No.1 nuclear plant of Fukujima in Japan caused nuclear leakage which possibly spread to neighboring counties, sparking investors concerns the Japan quake and radioactive materials may slow global economy. In response, the US equities tumbled significantly on March 15th, meanwhile, the Nikkei showed signs of meltdown in the wake of Japan nuclear leakage after some aftershocks. The Dow Jones Industrial Average was down 137.74 to 11,855.42 points; the S&P 500 Index fell by 14.52 to 1,281.87 points; Nasdaq fell by 33 to 2667 points. Stocks in Europe ended March 15th with significant losses; equities were down 1.38% in England, down 2.5% in France; and down 3.19% in Germany.

Risk-Aversion Funds Exit Commodity Market
Since the earthquake in Japan cut the short-term demand for oil and triggered fears of future economies, NYMEX crude oil futures for April delivery fell by USD 1.98/bbl to USD 99.18/bbl on March 15th. Brent crude oil futures contract for April delivery on ICE fell by USD 1.31/bbl to USD 112.53/bbl. LME copper contract prices for 3-month delivery fell to USD 8,944.50/mt at midnight, the lowest level since December 16th 2010, then pared some losses to close at USD 9,118/mt, down USD 77/mt. LME copper prices were down USD 1,000/mt from USD 10,190/mt during February. Commodity prices such as crude and nonferrous metals will likely fall further in the near term due to nuclear crisis in Japan, despite of stabilizing LME copper prices.


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