SHANGHAI, Oct. 25 (SMM) -- Shanghai base metal prices rebounded robustly after hitting a yearly low on October 20th, boosted by better-than-expected manufacture data from China and positive expectation over the EU summit. SHFE copper prices rallied and even hit the daily upper trading limit on Monday.
HSBC announced on October 24th that the initial Purchasing Managers Index (PMI) for China’s manufacturing sector stood at 51.1 in October, the highest level in five months. Meanwhile, the growth of production index and purchase volume index accelerated. European policymakers failed to reach an agreement on a rescue package over the weekend, but euro zone officials were close to consensus on how to use the European Financial Stability Facility to stave off contagion in the bond market, and agreed to give EUR 8 billion relief fund to Greece. Investors are optimistic toward the final decisions on a second EU summit scheduled for Wednesday. Positive expectations of China’s economy and hopes for European debt crisis solution help boost investor confidence and bring upward momentum to metal markets.
However, it is hard to say that base metal prices have established a long-term upward trend only following several days’ rally, and it remains unknown whether or not this round of correction has come to an end. Nevertheless, Monday's base metal price rally will help lift low-end base metal prices. SMM believes that the recent base metal price rally is a technical rebound following previous excessive decline, and it still needs observation to tell whether or not an upwards trend comes for base metal prices.