SHFE Market Movement on July 15th, 2010 (Thursday)

SHANGHAI, July 15 (SMM) &ndash;
China&rsquo;s GDP Keeps Double-Digit Growth in 1H 2010 
According to data released by China&rsquo;s National Bureau of Statistics (NBS) on July 15th, China&rsquo;s GDP was up 11.1% during the first half of 2010. The growth was 3.7% higher compared with the same period last year. The double-digit growth rate indicates that China&rsquo;s economy has maintained a strong growth during 1H 2010 despite of Chinese Central Government&rsquo;s measures in cooling the property market and economic structural adjustments and transformations, easing market fears of possible double-dip recession to an extent. The CPI, a main gauge of inflation, increased by 2.6% on a yearly basis during 1H 2010, and the consumer inflation eased to 2.9% in June from May&rsquo;s 3.1%. The PPI grew 6.4% year on year in June, and the figure for the first six months was 6.0% higher from a year ago. China&rsquo;s trade surplus was USD 55.3 billion during 1H 2010. SMM believes that the CPI may have reached the peak based on the figure in June, and the CPI will fall slightly during the remainder of the year. Although domestic industrial output value increases at a slower pace, it remains on a rapid track of growth. SMM believes China&rsquo;s Central Government will step up efforts in construction of low-income housing and infrastructure facilities, so as to maintain its stable growth. As the economic data shows that the overheating economic growth has cooled down, China&rsquo;s Central Government will unlikely announce a tighter monetary policy in the coming several months. However, SMM expects that China will continue to keep its differential and quantitative macro-controlling policy.
US Economic Recovery Still Under Huge Pressure from High Trade and Budget Deficits 
The US Commerce Department released on July 13th that US international trade deficit in May rose by 4.8% to USD 42.27 billion, setting a new high since November 2008. The US trade deficit shows no signs of improvement, and the sustainable recovery in the US economic remains under huge pressure. The US Treasury Department revealed that US government's budget deficit in June was USD 68.42 billion, slightly lower than previous market expectations of USD 69.5 billion, but the US government has reported a budget deficit for twenty-first consecutive months. The US economy is still under huge pressure from high trade and budget deficits, which will have a negative effect on long-term base metals prices trends. However, Greece government sold EUR 1.625 billion of treasury bills recently, indicating market players' views on government bonds in the euro zone have generally turned positive. Meanwhile, it seems that market concerns over the European debt crisis have begun to ease recently.
Base Metal Prices Receive Support in the Short Term 
Related financial markets recently have good performance. The U.S. stock market has rallied for the seventh consecutive trading day, and the Dow Jones Industrial Average index has climbed for more than 6.2% in July, standing stably above 10,000 points and ending at 10,366 points. As the most representative manufacturing enterprise, Alcoa second-quarter results reported profit from previous losses, indicating that the entire manufacture industry is recovering. The currently boosted risk appetite from investors, the newly released economic data from China, along with the fact that shares of Agriculture Bank of China ended higher than public offering price on July 15th helped lend certain support for base metal to stay around current prices. However, a positive medium-term price trend shall still lie in further improvement in market demand.
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