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Shanghai Metals Hit New Low on Grim Economic Outlook
Oct 21,2011 10:47CST
smm insight
Source:SMM
In general, Shanghai metal prices were weak and lacked upward momentum given market pessimism, and SMM predicts Shanghai metal prices will remain weak in the near term.

SHANGHAI, Oct. 21 (SMM) -- Both SHFE and LME base metal prices declined significantly on Thursday, and base metal futures and spot prices hit new lows, with pessimism dominating the market. As effects from China’s directional easing of monetary policy waned, domestic markets lost upward momentum.

China’s monetary policy remains the major factor affecting the market. Although there is little chance China will continue to tighten monetary policy given current weak European and US economic conditions and the fact that emerging economies like Brazil began to cut interest rates, whether or not China’s directional easing of monetary policy amid eased inflation can exert positive effect on the market remains to be seen. The EU summit that is seen as the key to solve the European debt crisis will be held on October 23rd, but Germany and France have still not reached an agreement on the EFSF expansion and the extent of Greek debt reduction, dampening market expectations on this summit. Risk appetite weakened in financial markets, and metal investors also intended to be bearish toward the market. Based on current market situation, if the rescue plan is passed on the EU summit, metal market sentiment will likely ease, but if the plan is blocked, the panic selling will continue.

In general, Shanghai metal prices were weak and lacked upward momentum given market pessimism, and SMM predicts Shanghai metal prices will remain weak in the near term.

 

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