The Monetary Policy Commission of the People's Bank of China recently held its 1Q regular meeting and reiterated one important goal of stabilizing commodity prices in 2011. China's Central Bank will likely raise interest rates during 2Q as current inflationary pressure remains high. In addition, officials of other major central banks in Europe and the US also suggested a shift to tighter monetary policies if needed. Commodity prices will be negatively affected if such credit tightening measures are implemented in China, Europe, and the US.
Copper: Recently, the State Administration of Foreign Exchange announced further control measures for foreign exchange, to be effective April 1st, and would likely have a negative impact on import copper trading, especially finance-driven trading. (Page 3)
Aluminum: As overseas scrap aluminum prices remain high, domestic scrap aluminum traders are cautious toward imports, resulting in limited supply of imported scrap aluminum. However, operating rates at secondary aluminum producers increased after the Chinese New Year, and since they needed to replenish raw material inventories, domestic scrap aluminum supply has tightened since early March. SMM predicts secondary aluminum producers will increase purchases of domestic scrap aluminum in order to offset shortages of imported scrap aluminum. (Page 6)
Zinc: Mines and smelters were negotiating over increases of TC for zinc concentrate. (Page 7)
Lead: Last week, LME lead prices fluctuated between USD 2,600-2,700/mt. The SHFE lead futures market was quiet following the launch almost a week ago. Domestic lead spot prices fell below RMB 17,500/mt. (Page 10)
Nickel: NPI prices slipped slightly, but nickel ore prices extended previous week's weak momentum. (Page 14)