The Shanghai Nonferrous Metals Trade Association (SNTA) yesterday said it would issue its first daily price index for nonferrous metals today to provide a reliable indicator to users and investors.

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The Shanghai Nonferrous Metals Index (SMMI) is to be based on the spot prices of the six nonferrous metals - copper, aluminum, nickel, lead, zinc and tin - published on the Shanghai Nonferrous Metals Website. The combined output of these six metals accounts for 90 percent of the country's entire non-ferrous metal output.

"It is high time to establish a nonferrous metals index in China. As a big nonferrous metals producer and consumer, we are in urgent need of a price index to produce our own voice in the international market and better serve China's enterprises," said Zhang Minxiang, chairman of Shanghai Nonferrous Metals Trade Association.

The reference level of 1,000 was based on the spot prices of the six metals quoted on April 1, 2003. At current prices, the index is estimated to have risen beyond 3,000, a reflection of the magnitude of the jump in commodity prices in the past several years.

This first composite spot price index for nonferrous metals, to be published at noon every weekday, is expected to be closely watched by metals buyers, particularly makers of electronics, electrical appliances and cars. In addition, the index should serve as an important barometer of manufacturing prices that are crucial to economic planning.

"The SMMI is a composite index that reveals not only the price trend of one metal, but incorporates major nonferrous metals and considers the interactions among different markets. The index should accurately reflect the situation of the whole industry," said Tong Leshen, general manager of Shanghai Nonferrous Metals Trade Association Information Service Center.

The weighting of each nonferrous metal in the SMMI has been set in accordance with its market share according to figures provided by the State Statistics Bureau and China Customs. According to the SNTA, the weighting of the SMMI is going to be adjusted every two years to keep pace with new developments in the industry.

A total of 105 enterprises ranging from producers of nonferrous metals to the companies trading in them have been selected to provide the pricing reference. These companies include 12 listed companies in the nonferrous metals industry.

The establishment of the composite index should provide the government with a simplified approach to watching the industry and enable it to draft appropriate regulatory policies, said Cheng Daxuan, secretary-general of Shanghai Price Association.

The index is expected to reflect the fundamentals of the domestic nonferrous metals market, he said.

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