Metal Prices Fluctuate Weakly over Negative Rating Outlook on Europe

Data Analysis 12:03:55PM Feb 15, 2012 Source:SMM

SHANGHAI, Feb 15 (SMM) – Moody’s downgrade of six European countries and the lower-than-expected US January retail sales depressed the trading sentiments among investors. Thus, LME lead markets fell slightly on January 14.

Moody’s downgraded sovereign ratings of six European countries including Italy, Spain and Portugal and switched outlooks on the AAA ratings of the UK and France to negative January 14, discouraging investors’ confidence. The rating agency also said the uncertainty over the eurozone prospects for institutional reform of its fiscal and economic framework and the resources that will be made available to deal with the crisis should be among the main drivers of the downgrade. Besides, two leading credit rating agencies, Fitch Ratings and S&P, also downgraded some of Spain's largest banks.

In addition, EU officials said January 14 that the eurozone finance ministers’ meeting scheduled for Wednesday will be canceled as documents pertaining to Greece bailout plan were not ready yet. Instead, eurozone finance ministers will hold a telephone conference to discuss the issue. The change is sure to add market concerns over the Greek debt issue. On the other hand, the US January retail sales were reported worse than expected, suppressing risk appetite in the markets. According to the data released by the US Commerce Department January 14, its January retail sales rose by 0.4% MoM to USD 401.4 billion, lower than the expected 0.7% growth, and up 5.8% YoY, also worse than expected. This showed that US consumption has not fully recovered. Hence, LME base metal prices showed a downward trend on January 14. LME three-month copper price dropped by USD 63.5/mt or 0.1%, to close at USD 8,368/mt, LME three-month aluminum closed up USD 1.75/mt at USD 2,218/mt, LME lead price closed at USD 2,085/mt, down USD 39/mt, and LME zinc price closed at USD 2,040/mt, down USD 28.5/mt.

In China’s domestic markets, SHFE copper inventories continued to increase and hit a new high since 2002, revealing that downstream consumption of refined copper did not recover. Besides, total social power consumption presented negative growth in January, suggesting the fact of a slowdown of economic growth. Given the serial negative news from Europe and the unrecovered domestic consumption, SHFE base metals are expected to fluctuate weakly.

Key Words:  base metal prices   LME   SHFE    
Relative News

Metal Prices Fluctuate Weakly over Negative Rating Outlook on Europe

Data Analysis 12:03:55PM Feb 15, 2012 Source:SMM

SHANGHAI, Feb 15 (SMM) – Moody’s downgrade of six European countries and the lower-than-expected US January retail sales depressed the trading sentiments among investors. Thus, LME lead markets fell slightly on January 14.

Moody’s downgraded sovereign ratings of six European countries including Italy, Spain and Portugal and switched outlooks on the AAA ratings of the UK and France to negative January 14, discouraging investors’ confidence. The rating agency also said the uncertainty over the eurozone prospects for institutional reform of its fiscal and economic framework and the resources that will be made available to deal with the crisis should be among the main drivers of the downgrade. Besides, two leading credit rating agencies, Fitch Ratings and S&P, also downgraded some of Spain's largest banks.

In addition, EU officials said January 14 that the eurozone finance ministers’ meeting scheduled for Wednesday will be canceled as documents pertaining to Greece bailout plan were not ready yet. Instead, eurozone finance ministers will hold a telephone conference to discuss the issue. The change is sure to add market concerns over the Greek debt issue. On the other hand, the US January retail sales were reported worse than expected, suppressing risk appetite in the markets. According to the data released by the US Commerce Department January 14, its January retail sales rose by 0.4% MoM to USD 401.4 billion, lower than the expected 0.7% growth, and up 5.8% YoY, also worse than expected. This showed that US consumption has not fully recovered. Hence, LME base metal prices showed a downward trend on January 14. LME three-month copper price dropped by USD 63.5/mt or 0.1%, to close at USD 8,368/mt, LME three-month aluminum closed up USD 1.75/mt at USD 2,218/mt, LME lead price closed at USD 2,085/mt, down USD 39/mt, and LME zinc price closed at USD 2,040/mt, down USD 28.5/mt.

In China’s domestic markets, SHFE copper inventories continued to increase and hit a new high since 2002, revealing that downstream consumption of refined copper did not recover. Besides, total social power consumption presented negative growth in January, suggesting the fact of a slowdown of economic growth. Given the serial negative news from Europe and the unrecovered domestic consumption, SHFE base metals are expected to fluctuate weakly.

Key Words:  base metal prices   LME   SHFE