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This morning’s more cautious approach to trading follows significant weakness in Chinese stock markets on Monday after a top-level meeting by China’s Communist Party at the end of last week seemed to suggest that policymakers will trim the stimulus package aimed at bolstering economic growth.
In a statement on April 19, China’s politburo said it will maintain policy support for the economy, which still faces “downward pressure” and difficulties after better-than-expected first quarter growth.
But it added that authorities will try to strike a balance between stabilizing economic growth, promoting reforms and controlling risks.
“[The statement] contained much of the expected view of long-term growth but focusing on stability and effectively trying to stamp out wild moves due to speculative activity in general,” Kingdom Futures director and chief executive Malcolm Freeman said in a morning report.
“This had caused the Shanghai composite to drop some 1.7% [on Monday] and so far today the metals, with the exception of aluminium that tends to live in its own world, have all drifted lower on very modest volumes so far,” Freeman added.
The Shanghai Composite Index retreated 1.7%, or 55.76 points, to close at 3,215.04 on Monday. The CSI300 Index gave a similarly weak performance on Monday as it dropped by 2.3% to record its biggest loss in a month.
This weakness has filtered through to wider markets this morning, causing prices for the base metals traded on the SHFE to decline. The sole exception to this was aluminium, for which prices were modestly up.
The most-traded June aluminium contract on the SHFE rose to 14,220 yuan ($2,119) per tonne as at 10.32am Shanghai time, up by 30 yuan per tonne or 0.2% from its close of 14,190 yuan per tonne on Monday.
Outflows of aluminium stocks at SHFE warehouses continued last week with inventories declining by 5%, or 36,071 tonnes, to total 665,067 tonnes as of April 19. Stocks have fallen by 7.9% so far in April.
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