Metals Hit New Lows as Greece Reignites Euro Zone Debt Crisis-Shanghai Metals Market

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Metals Hit New Lows as Greece Reignites Euro Zone Debt Crisis

SMM Insight 10:55:54AM May 15, 2012 Source:SMM

SHANGHAI, May 15 (SMM) -- Major metals futures, including copper, aluminum and zinc, hit their new lows of this year as Chinese growth slowdown may exceed estimate and euro zone political disturbance exacerbates to trigger more sell-off.

The Chinese central bank announced a second cut this year in bank’s reserve requirement, by 0.5 percentage point, effective from May 18, bringing the proportion of money required to be put aside to 20% at large banks and 17.5% at medium- to small-sized banks. The cut provided little support for major markets, however, as weak demand is the real cause of economic slowdown. It in turn triggered more worries towards the Chinese economy, though. Investor confidence has yet to be boosted by a pick up in demand, which may be realized by government investment projects.

Europe delivered several pieces of negative news. Greece, in the second week after election, is still unable to build a coalition government as its left-wing party rejects austerity-oriented government proposal which has also drawn opposition from civilians. Investors worry Greece may exit euro zone. In the mean time, Spanish and Italian debt yields surged after data showed the euro zone economy again stepped into recession, as confirmed by an unexpected drop of 0.3% in March’s industrial output. Euro zone central banks for the first time in history began to discuss risks of Greece leaving the euro zone, which those central bankers say has become a serious problem facing euro zone countries.

Pressured by above development, major global financial markets plunged. The Dow Jones Industrial Average dropped 125.25 points. NYMEX June light crude slipped USD 1.35/bbl or 1.4% to USD 94.78/bbl, recording the lowest price of most actively traded contracts since mid December. LME metals futures also shed heavy losses as investors worry about global demand. SMM expects metals markets to see more losses in the near term due to the European debt crisis.

Key Words:  metals   crude   Greece   euro zone   demand 

Metals Hit New Lows as Greece Reignites Euro Zone Debt Crisis

SMM Insight 10:55:54AM May 15, 2012 Source:SMM

SHANGHAI, May 15 (SMM) -- Major metals futures, including copper, aluminum and zinc, hit their new lows of this year as Chinese growth slowdown may exceed estimate and euro zone political disturbance exacerbates to trigger more sell-off.

The Chinese central bank announced a second cut this year in bank’s reserve requirement, by 0.5 percentage point, effective from May 18, bringing the proportion of money required to be put aside to 20% at large banks and 17.5% at medium- to small-sized banks. The cut provided little support for major markets, however, as weak demand is the real cause of economic slowdown. It in turn triggered more worries towards the Chinese economy, though. Investor confidence has yet to be boosted by a pick up in demand, which may be realized by government investment projects.

Europe delivered several pieces of negative news. Greece, in the second week after election, is still unable to build a coalition government as its left-wing party rejects austerity-oriented government proposal which has also drawn opposition from civilians. Investors worry Greece may exit euro zone. In the mean time, Spanish and Italian debt yields surged after data showed the euro zone economy again stepped into recession, as confirmed by an unexpected drop of 0.3% in March’s industrial output. Euro zone central banks for the first time in history began to discuss risks of Greece leaving the euro zone, which those central bankers say has become a serious problem facing euro zone countries.

Pressured by above development, major global financial markets plunged. The Dow Jones Industrial Average dropped 125.25 points. NYMEX June light crude slipped USD 1.35/bbl or 1.4% to USD 94.78/bbl, recording the lowest price of most actively traded contracts since mid December. LME metals futures also shed heavy losses as investors worry about global demand. SMM expects metals markets to see more losses in the near term due to the European debt crisis.

Key Words:  metals   crude   Greece   euro zone   demand