After the earthquake in northeast Japan, market players began to believe post-earthquake construction would boost base metal demand despite any short-term negative impact on Japan's economy. However, deteriorating conditions at the Japanese nuclear power plant have triggered market fears of a greater threat, sending the global stocks and commodity markets down sharply, and will continue to put downward pressure on base metal prices in the short term.
Copper: China's output of refined copper was 386 kt in February, down 23 kt from January's 409 kt, but up 3.8% YoY. SMM believes that China's output of refined copper will exceed 400 kt in March due to the start of the seasonal strong demand period and due to completion of unit maintenance. (Page 3)
Aluminum: China's demand for scrap aluminum fell significantly during the Chinese New Year holiday, and overseas scrap aluminum prices have remained high since early 2011. Meanwhile, domestic consumption of scrap aluminum has improved, but slowly. All these factors caused China's imports of scrap aluminum to fall during the first two months of 2011. SMM predicts scrap aluminum imports will increase in March as demand improves. (Page 7)
Zinc: The earthquake in Japan will have a limited impact on demand for Chinese zinc. (Page 9)
Lead: Last week, LME lead prices made the strongest gains of all base metals, with prices reaching as high as USD 2,659.8/mt. Domestic lead prices were between RMB 17,050-17,150/mt. (Page 13)
Nickel: LME nickel prices tumbled, transactions for NPI stagnated, and prices for nickel ore were down. (Page 16)