Seventeen of the 19 commodity futures contracts traded on the
mainland's three exchanges fell sharply yesterday in tandem with
the worldwide market slump in the wake of growing concern about a
US-led economic downturn.
The copper and zinc futures for delivery in 12 different months
on Shanghai Futures Exchange (SHFE) dropped to the daily allowable
limits shortly after the opening.
The most actively traded copper contracts for delivery in April
plummeted to 58,560 yuan per ton, down 4.02 percent before touching
the bottom.
Gold futures contracts on SHFE also continued the downward
spiral for the third consecutive day, with the most actively traded
contract for June delivery sliding 4.08 percent to 206.42 yuan per
gram.
Analysts attributed the worldwide fall in commodity prices to
investor worries about a possible glut in supply as demand tapers
off in a recession-hit US. Their concern has been heightened by the
latest batch of US economic figures pointing to an even worse
outlook for 2008.
The data released by the US government in the past weeks showed
rising unemployment, falling growth rate in the manufacturing
sector and declining monthly retail sales, all of which point to a
slowdown of the US economy that has been reeling from the subprime
mortgage crisis since August.
"The price drop in the domestic market was triggered much more
by dwindling investor confidence than market fundamentals," said
Zhao Xijun, a professor of finance at Renmin University in
Beijing.
Zhou Zhiqiang, an analyst at Great Wall Futures Co in Shanghai,
said the deteriorating outlook for the US economy would raise
traders' concern about a declining US demand for commodities in
2008 and hence trigger a selling spree in the international
markets.
On Dalian Commodity Exchange (DCE) and Zhengzhou Commodity
Exchange (ZCE), the nation's two futures exchanges specializing in
agricultural produce, most contracts saw sharp price drops.
The most actively traded soybean contract for September delivery
on DCE sank 3.29 percent to close at 4,550 yuan per ton, the
biggest one-day drop over the past six months. The sugar contract
for July delivery on ZCE also fell 1.96 percent to close at 3,707
yuan per ton.
Li Jingyuan, an analyst at Haitong Futures Co in Shanghai, said:
"The all-round price drop of so wide a range of commodities in the
domestic market is rare, which reflects a deepening investor
concern about the global economy. As China's economy won't be an
exception to the global trend, Chinese investors can't afford to
shrug off growing fears of a global recession."
(China Daily January 23, 2008)
