All six Shanghai futures products yesterday fell sharply, with
most contracts on copper, zinc and natural rubber and some
contracts on gold and fuel oil falling to the daily allowable
limits.
Commodity traders and analysts attributed the across-the-board
decline to growing concern about a US-led global recession, which
has depressed metal and oil prices in world markets.
On the Shanghai Futures Exchange, 11 out of 12 copper futures
contracts for delivery in different months dropped to the daily
allowable limits, with the most actively traded contract for March
delivery falling 4 percent before hitting the bottom at 59,520 yuan
per ton.
Zinc futures contracts for delivery in 11 different months also
dropped to the daily allowable limits, with the most actively
traded contract for March delivery closing at 18,980 yuan per
ton.
"The deteriorating outlook for the US economy will inevitably
drag down the prices of commodities in the global market," said Li
Jingyuan, a non-ferrous metals analyst at Haitong Futures Co in
Shanghai. "In this environment, domestic commodity traders can't
afford to shrug off the growing fear of recession."
The three-month copper futures contracts on London Metal
Exchange (LME) dropped 2.85 percent to $7,165 per ton in Tuesday's
pit trading. The copper contracts continued to fall a further 2.3
percent in yesterday's electronic trading.
The three-month zinc futures contracts on LME in Tuesday's pit
trading also plummeted 4.58 percent to close at $2,290 per ton, the
biggest one-day slump over the past two months.
On New York Commodity Exchange, the most actively traded copper
contract for delivery in March dropped 2.95 percent to $323.85 per
ton on Tuesday.
Economists and analysts said the latest figures showing a drop
in US retail sales has deepened concern about the slackening US
economy.
According to the statistics released by the US Department of
Commerce on Tuesday, December retail sales fell 0.4 percent, the
first such decline in six months and a performance that was worse
than analysts' earlier projection of a 0.1 percent dip.
Separately, US Labor Department said producer prices declined
0.1 percent last month, while core producer prices, which exclude
food and energy, climbed 0.2 percent.
Economists said the US retail sales figure is an important
indicator of where Americans are spending their money.
"December is usually a traditional peak season for consumption
in the US," said Zhou Zhiqiang, an analyst at Great Wall Futures Co
in Shanghai. "The 0.4 percent drop in retail sales in December
indicates a declining consumption enthusiasm, which is drastic
enough to seriously undermine investor confidence in the US
economy."
(China Daily January 17, 2008)
