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Metal Prices Remain Weak as Spanish Bond Yields Soar
Apr 17,2012 11:10CST
smm insight
Shanghai metal prices will remain weak in the near future.

SHANGHAI, Apr. 17 (SMM) -- Chinese and overseas economic data were mixed over recent several trading days. China’s economic growth slowed, and Spanish government bond yields soared, both fueling investor concerns and sending Shanghai metal prices lower.

In addition to lower GDP growth in 1Q, the National Energy Administration (NEA) said recently that China’s power consumption was 416 billion kwh in March, up 7% YoY and 8% MoM. The YoY growth rate was 6 percentage points lower than 2011 levels and was also lower than the GDP growth for the same period, further confirming that China’s economic growth continues to slow. 

US equities advanced driven by strong retail sales in March. Dow Jones Industrial Average closed up 71.82 points at 12,921.41 points; Standard & Poor's 500 Index ended 0.69 points lower at 1,369.57 points; and Nasdaq Composite Index closed down 22.93 points at 2,988.40 points. The US Commerce Department released that US retail sales rose 0.8% to USD 411.07 billion in March, above forecasts for a 0.3% increase, indicating consumers remain confident in the US economic recovery. The US market is considered as a key source of income for European enterprises when there was an economic downturn in Europe. Positive US retail sales were favorable for stock markets. The overall US economic conditions are better than those in euro zone, so investors were seeking risky assets. Spanish 10-year government bond yields rose above 6% on Monday, and the cost of insuring Spanish debt against default also hit a record high, spurring market concerns that Spain may be heading toward a Greece-like debt crisis. Spain is more likely to seek an international bailout, and Spanish yields will likely continue to rise without the intervention of the European Central Bank.

The global economic recovery is still faltering given the lack of strong demand and risks arising from weak financial system and uncertain policies. Shanghai metal prices move below the 30-day moving average currently, and key positive news is needed for metal prices to return to an upward track. Moreover, the long momentum has been exhausted after prices fall continuously. Therefore, Shanghai metal prices will remain weak in the near future.  


base metals
euro zone debt crisis

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