Metal prices get boost from Chinese stimulus package

BNamericas quoted Mr Gayle Berry base metals analyst at Barclays Capital as saying that base metal prices rose on November 17th 2008, having received a boost by news that China would inject CNY 4 trillion into its economy to stimulate local markets.

The price of copper rose by 6.48% from the previous trading day to close at USD 1.817 per pound cash on the London Metal Exchange. Aluminum closed at USD 0.894 per pound cash as compared to USD 0.887 per pound cash the prior trading day, while nickel finished at USD 5.4 per pound cash versus USD 5.173 per pound cash. Zinc moved to USD 0.502 per pound cash from USD 0.490 per pound cash the previous trading day.

Mr Berry said that "The market sees it as positive for base metals consumption that the Chinese government is willing to act in order to try to stimulate domestic Chinese growth. Fiscal stimulus packages like this, as well as a looser monetary policy, will help to provide some much-needed support to domestic Chinese consumption because the export markets are looking weaker and weaker."

Mr Berry said that but despite the positive effect the package had on the copper price, red metal prices have not yet reached rock bottom, as is also the case with other metals.

Barclays anticipates copper to average USD 4,700 per tonne cash on the LME in 2009.

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