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)
