All six Shanghai futures products rose sharply yesterday, with
zinc surging to the daily allowable limit on expectations of strong
demand and short supply after recent blizzards halted
production.
All 12 zinc futures contracts for delivery in different months
on the Shanghai Futures Exchange (SHFE) soared to their daily
allowable limits. The most actively traded zinc futures contract
for delivery in May jumped 4.2 percent to close at 20,525 yuan per
ton.
Meanwhile, the most actively traded copper futures contract for
delivery in May on the SHFE rose for the fourth consecutive day to
2 percent, closing at 67,550 yuan per ton. Copper contract prices
for May delivery climbed an aggregate 15.7 percent from a month
ago.
Power disruptions in provinces hit hard by recent snowstorms
forced many zinc and other metal manufacturers to suspend part or
all of their production.
Repair of infrastructure damaged in the blizzards is expected to
create strong demand for a wide range of raw materials, analysts
said.
"Serious production disruptions in Yunnan and Guizhou provinces
have further upset the supply and demand balance," said Zhou Jie at
China International Futures (Shanghai) Co.
Analysts said the flood of speculative capital into the
international and domestic commodities markets has exacerbated the
price surge.
"Intensified concern about rising global inflation has triggered
a buying spree in commodities," said Zhou. The rapidly depreciating
US dollar against most major world currencies has made buying
commodities a safe bet for investors because trading in those
commodities is settled in the US currency.
"Expectations of further US dollar depreciation also pushed up
prices of commodities in the global markets," said Liu Chao, an
analyst at Xiangcai Qinian Futures Co in Shanghai.
"Investors are rushing into commodities to seek refuge in
anticipation of an upswing in energy and metals prices."
Zhu Mingyuan, an analyst at Xinguolian Futures Co in Shanghai,
said: "The upward momentum of commodity futures in London and New
York also helped drive up prices in the Chinese commodity
markets."
On the London Metals Exchange, the three-month copper futures
contract rose 1.39 percent in yesterday's electronic trading to
reach $8,268 per ton.
(China Daily February 22, 2008)
