Commodity Blog

Posts Tagged ‘LME’

Crude oil rose today as a rally of global stock markets improved confidence in sustainability of the global economic recovery, increasing demand for fuel. The S&P 500 rose 1.4 percent and the Dow Jones Industrial Average gained 1.2 percent. Oil also gained after the dollar dropped, increasing attractiveness of commodities as an alternative investment. September delivery for crude oil gained $1.16 (1.5 percent) to $76.40 per barrel by 11:23 on NYMEX.

Nickel prices fell on outlook that demand for stainless steel, the main source of consumption for the metal, would weaken. Demand from China, the largest consumer, will stay at 377,000 tons this year. Global nickel consumption will slow to 8.4 percent in this quarter, down by almost half from the previous quarter. Nickel spot price closed yesterday at $21,479 on LME. Prices may reach $17,030, the lowest level since February, before rebounding.

Copper prices jumped today on speculation that the metal was oversold, considering declining inventories. Prices declined earlier as traders were concerned about slower economic growth in two most significant copper consumers: the US and China. The Federal Reserve said that the US economic growth would be “more modest”. China’s industrial production grew with the slowest pace in 11 months in July.

Worries are still present, but perhaps fears were overdone. LME-monitored inventories were decreasing for five consecutive months, the longest decrease since July 2007. As Matthew Zeman, a trader at LaSalle Futures Group, put it:

On a short-term basis, this market has been oversold. The lower inventory levels will help to keep a lid on things. The market will still be vulnerable if we continue to get more indications that growth is slowing.

September futures for copper delivery went up $0.037 (1.1 percent) to $3.3125 per pound by 11:25 COMEX. The price previously slipped 0.6 percent to $3.255, the lowest level since July 30.

Copper dropped today from its record prices on speculation that demand for the metal would wane as house prices in China will tumble. Chinese government was concerned after house prices jumped 68 percent in the first quarter that soaring prices would create bubble that sooner or later burst, crippling the nation’s economy. The government was already attempting to cool the overheated economy and bring prices down. Now Chinese banking regulators are going to perform stress tests on banks to discover how they would fare in case of a 60% slump of Chinese house prices. Housing market has great influence on copper prices as construction makes up a quarter of copper demand.

Frank McGhee, the head dealer at Integrated Brokerage Services LLC, thinks that “if China wants to signal a slowdown, then the copper rally may have run its course”. Another analyst said that that it’ll be good if annual growth of Chinese demand would be limited by 8 percent.

September futures for copper delivery slid $0.0480 (1.4 percent) to $3.3565 per pound by 11:21 on COMEX. Yesterday, price reached $3.4105, the highest level since April 29th. Delivery for copper in three months dropped $94.50 (1.3 percent) to $7,410.50 per metric ton on LME.

The copper is ending the week with all 5 days being bullish and with the biggest total weekly gain in about 5 months as the stockpiles of the metal continue to fall.

According to the reports on LME, the stockpiles have dropped for 22 consecutive weeks and for the 26th straight day today. As the build-up of the reserves caused a decline copper several months ago, the drop of the inventories spurs the demand from the traders. The analysts see a growth of the demand with staggering supply of the commodity in the future.

The weekly gain of the metal was also spurred by the growth of the real estate sector expectations in United States and the rallying stock market, which increased the eagerness of the market participants to invest in commodities. Pessimistic analysts expect copper to continue in the bullish trend till the end of summer but await some correction afterward.

Spot copper rose from $6,973.00 to $7,031.00 as of 19:55 GMT today. The weekly growth stretches from $6,479.00 or 8.52 percent.

The copper grew at the fastest speed since June 25 today as the markets reacted to the increased building permits that were reported in United States today. Today’s growth was also spurred with a continued decline of the commodity’s stockpiles.

Copper is a major beneficiary of the growing real estate market. For the first time since March, the U.S. building permits showed a growth — from 574,000 to 586,000 (seasonally adjusted annual rate). It surpassed rather pessimistic growth expectations by the market analysts. According to them, any more or less good news from the housing market are going to be helpful for copper.

Copper stockpiles monitored by the London Metal Exchange decreased by 0.8 percent or 3,250 metric tons today. That’s 23rd straight session of decline of the copper stockpiles. Some analysts believe that the copper has left the bearish trend zone and is going to be bullish until the end of the year and for some part of 2011.

Spot copper is currently trading near $6,645.00 per metric ton as of 16:50 GMT after opening at $6,517.00 today. It has gained 1.93 percent during the day — the biggest upward movement since June 25 (3.03 percent).

Cattle futures gained on signs of increasing demand for U.S. beef. Wholesale beef, shipped by meatpackers in the week that ended yesterday, climbed as much as 44 percent to 43 million pounds, compared to 29 million pounds in the week earlier. October futures for cattle delivery rose $0.00875 (1 percent) to $0.92275 per pound on CME.

Cotton futures rebounded as the weaker dollar boosted demand for some commodities as an inflation hedge. The U.S. currency dropped to the lowest level in two months versus the basket of six currencies. December delivery for cotton gained $0.0086 (1.2 percent) to $0.7465 per pound on ICE Futures U.S.

Copper and aluminum prices rose after aluminum producer Alcoa Inc. reported that its earnings were higher than expected. Alcoa Inc. forecast that global aluminum demand would grow 12 percent in 2010. September futures for copper delivery added $0.0085 (0.3 percent) to $3.0175 per pound on COMEX. Aluminum rose 1.2 percent to $1,995 per metric ton on LME.

Cocoa rose in New York today for the first time in three sessions as rainfalls slowed production in Ivory Coast, the biggest producer in the world. Prices may rise further in New York after the dollar weakened today. September delivery for cocoa gained $13 (0.4 percent) to $2,980 per metric ton at 9:38 on ICE.

Copper prices rose in New York today for the third consecutive session as rising equities and decreasing stockpiles promised steady demand. The LME-monitored inventories fell for the 14th session to the lowest level since November 30th. The MSCI World Index of shares rose for the second day, signaling about the improving global economic outlook. September futures for copper delivery gained $0.047 (1.6 percent) to $3.018 per pound as of 10:52 on COMEX.

Cattle and hogs declined on concerns that global demand for U.S. beef and pork will wane after the dollar rose and equities fell. The global economic recovery is slowed by the EU crisis, making prospect for beef and pork demand less certain. August futures for cattle delivery subtracted $0.01175 (1.3 percent) to $0.89025 per pound by 9:40 on the Chicago Mercantile Exchange.

Wheat also felt the impact of the European troubles, tumbling to the lowest price in seven months. Shadow of the European debt crisis looms over markets, curbing demand for commodities. July futures for wheat delivery slid $0.0625 (1.3 percent) to $4.6125 per bushel as of 10:02 on CBoT.

Another victim of the sovereign-debt crisis in the European Union was copper, which fell today. Economists think that the industrial metal shouldn’t fall further and will be supported by demand from China. Three-month futures for copper fell 1.7 percent to $6,794 a ton at 12:07 on the LME.

Copper rose today after Giorgos Papakonstantinou, the Minister for Finance of Greece, said that Greece will be provided with an aid package from the European Union and the International Monetary Fund rather soon, easing concerns for EU economy. This announcement has brought some relief to markets, though it hasn’t completely removed doubts about future of the Euro zone.

An expanding global economic recovery coupled with a rising demand from China sparked optimism for a worldwide increase of a copper usage. A gross domestic product in China expected to grow about 8 percent, while an inflation rate predicted to be 3 percent in 2010. Sales of new houses in the U.S. have jumped 27 percent in March, adding to a copper demand in the world’s second biggest consumer of the metal. LME-tracked copper inventories dropped 0.2 percent to 506,125 tons.

Delivery for copper in three months advanced $45 (0.6 percent) to $7,795 per metric ton today on the London Metal Exchange. July futures for copper delivery added $0.0175 (0.5 percent) to $3.548 per pound on NYMEX.

Gold gained today as the concern that the rescue package, offered to Greece, won’t be enough to deal with the nation’s debt increased the appeal of the precious metal as a safe haven. Worries about a budget deficit are spreading to other European countries and also to U.K., driving investors to look for alternative assets and a safe haven. June futures for gold delivery gained $3 (0.3 percent) to $1,142.20 per ounce by 11:20 on NYMEX.

Sugar dropped to the weekly low in London on speculation that India may cut imports of the sweetener after its own sugar production increased. The India’s production may rise to 23 million tons in the year starting October 1st as there should be enough rains for the expected harvest. August futures for refined sugar delivery dropped $3.30 (0.7 percent) to $486.40 per metric ton at 15:18 on Liffe exchange.

Copper declined on speculation that demand for the metal may fall after China toughened rules for lending and property markets. Measures taken by China’s government should cool the nation’s economy, possibly resulting in falling demand and sinking price for commodities. Delivery for copper in three months declined $15 (0.2 percent) to $7,775 per metric ton as of 17:09 on the London Metal Exchange.