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SHFE copper may follow int'l loss

By Michael Bellart  (Global Times)

08:19, June 11, 2012

Base metal futures are set to open lower Monday following the drop in international copper prices after China's surprise interest rate cut Thursday night.

The global benchmark three-month copper contract on the London Metal Exchange (LME) plunged 2.4 percent Friday to close at $7,299 per ton, killing off any gains for the week. The contract fell 0.6 percent last week, its sixth straight week in the red.

The most active copper contract on the Shanghai Futures Exchange (SHFE) fell 2.4 percent last week to close at 53,030 yuan ($8,318.43) per ton. The contract hit a fresh low for the year, falling to 53,000 yuan per ton Friday - its lowest point since December 15.

Although an interest rate cut typically bolsters financial markets, Thursday's buoyancy was short-lived. US Federal Reserve chairman Ben Bernanke's testimony before the US Congress dashed growing hopes for additional monetary stimulus from the Fed, according to a note from the Australian bank ANZ.

Furthermore, the unexpected rate cut may have exacerbated concerns about China's slowing economy, contributing to copper's plunge. China consumes about 40 percent of the world's supply of the metal, which is seen as a gauge of global economic health.

Meanwhile, the European debt situation continued to weigh on market confidence. Fitch Ratings downgraded Spain's credit rating by three levels Friday to BBB as the country continued to look for a way to bail out its beleaguered banks.

In more positive news, the Chinese government released data over the weekend showing that the country's consumer price index (CPI) eased to 3 percent in May, showing room for Beijing to roll out more stimulus measures if needed.

Email|Print|Comments(Editor:厉振羽、张洪宇)

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