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Metals Embrace Improving Economic Environment as CPI Falls
Oct 14,2011 10:47CST
smm insight
Source:SMM
China’s Consumer Price Index dropped slightly to 6.1% in September, according China’s National Bureau of Statistics.

SHANGHAI, Oct. 14 (SMM) – China’s Consumer Price Index dropped slightly to 6.1% in September, according China’s National Bureau of Statistics. The Producer Price Index is up 6.5%. SMM also expects October Consumer Price Index to stay unchanged or drop from September.

The drop in CPI, combined with stock buying by Huijin Central Investment Ltd., a unit of China’s sovereign wealth fund, and new measures from China’s State Council to help medium-to-small businesses, may signal a easing in monetary policies in the near-term, which will increase capital flow in domestic markets. Buying for metals will also increase as a result.

Slovakia approved the EFSF expansion during the country’s second round of voting overnight. By now, the EFSF expansion plan has been approved by all members of the euro zone, paving the way for EFSF releasing its help. The EFSF expansion is quite important for stopping the Greek debt crisis from spreading to other euro zone countries. The 440 billion euro fund can not only provide capital for debt ridden countries, but also help European banks which are currently facing difficulties. It can also serve as backup credit for government. The news is expected to help stabilizing global markets.

Shanghai metals are continuing their rebounds during previous trading days and copper has taken up the lead. Zinc and lead has slightly climbed today, while aluminum is little changed. SMM expects Shanghai metals to continue their rebounds in the short term as global economic environment improves.

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