Commodity Blog

Posts Tagged ‘metal’

Metals, together with energy and agricultural commodities, extended its slump today as the debt crisis in Europe eats away confidence of traders.

Goldman Sachs reduced its growth estimates for the world economy and forecast recessions in Germany and France.

Moody’s Investor Serviced cut Italy’s credit rating to A2 with a negative outlook from Aa2, citing:

The main drivers that prompted the rating downgrade are:

(1) The material increase in long-term funding risks for euro area sovereigns with high levels of public debt, such as Italy, as a result of the sustained and non-cyclical erosion of confidence in the wholesale finance environment for euro sovereigns, due to the current sovereign debt crisis.

(2) The increased downside risks to economic growth due to macroeconomic structural weaknesses and a weakening global outlook.

(3) The implementation risks and time needed to achieve the government’s fiscal consolidation targets to reverse the adverse trend observed in the public debt, due to economic and political uncertainties.

The Standard & Poor’s GSCI index declined 1.6 percent.

Gold fell from $1650.40 to $1596.60 per ounce as of 22:51 GMT today on COMEX, following the jump to the daily high of $1675.50. Copper dropped from $3.0955 to $3.0775 per pound. Palladium declined from $586.70 to $569.50 per ounce.

Silver, along with the other traded metals resumed, its yesterday’s drop today, in spite of the improving macroeconomic conditions, falling dollar and the rise of gold.

The industrial and precious metals, except for gold, continued to fall today, even after a surprising and very positive unemployment report from the United States. The silver declined for a second day, reaching a 3-week low vs. the US dollar.

It looks like the investors favor gold as the most risk-free commodity, leaving silver, platinum and the industrial metals behind, not willing to re-open their long positions in those markets. The crude oil joined gold in its recovery but mainly due to the natural demand for fuel.

Meanwhile, many market analysts suggest closing out the long gold positions, as they do not expect the new highs any time soon. If the speculators will leave gold, and won’t enter the stock markets with those money, they might choose silver or some other less overbought but liquid commodity.

Silver fell from $38.89 to $37.97 per troy ounce or almost 2.4 percent as of 17:56 GMT on the spot market today; it reached its daily low at $37.53 — the minimum level since July 13.

Soybeans reached the highest level in seven weeks after the report that China may continue its purchases of supplies from the U.S. The demand for the supplies from the U.S. rose as China stopped the soybean-oil imports from Argentina. The country may import 5.5 million metric tons in the next month. July futures for soybean delivery rose $0.0375 (0.4 percent) to $9.7925 per bushel as of 11:01 on the Chicago Board of Trade.

Copper gained on the weakening dollar and the recovery of the U.S.economy. U.S. retail sales rose in March more than forecast, signaling about the widening economic rebound. The U.S. currency dropped versus the basket of the six major currencies, making commodities more appealing as an inflation hedge. May futures for copper delivery gained $0.0075 (0.2 percent) to $3.608 per pound by 12:10 on NYMEX.

Soybeans advanced on speculation that supplies available for domestic processors may shrink as exports sales increased last week. Exports reached rose as much as 28 percent from a week earlier to 273,439 metric tons in the week ended March 18th, the highest since February 4th. Processors are planning to cut their production because of  shrinking supplies. May futures for soybean delivery advanced $0.02 (0.2 percent) to $9.62 per bushel as of 10:44 on CBoT.

Copper prices went up after the euro rebounded versus the dollar, boosting appeal of the metal as a hedge against inflation. The euro gained as much as 0.5 percent. Inventories of the LME-monitored copper dropped 0.3 percent, supporting the metal’s price. Delivery for copper in three months went up $47 (0.6 percent) to $7,418 per metric ton by 17:44 on the London Metal Exchange.

Corn and soybeans prices dropped today as the stronger dollar curbed appeal of commodities as an alternative investment. May futures for corn delivery dropped $0.0275 (0.7 percent) to $3.7125 per bushel by 10:37 on the Chicago Board of Trade. May futures for soybean delivery slid $0.005 to $9.585 per bushel in Chicago.

Copper prices slipped after the dollar gained, diminishing the demand for most metals as an inflation hedge. Prices also fell on concern that demand from China, the largest consumer of the metal in the world, will wane on increasing interest rates. May futures for copper delivery slipped $0.0225 (0.7 percent) to $3.3955 per pound in New York.

Prices for cotton may rise as China, the largest cotton importer, may increase purchases of the fiber 30 percent in 2010. Analysts say that imports may total more than 2 million metric tons, compared 1.53 million tons in the previous year. May delivery for cotton rose 0.3 percent to $0.8137 per pound on ICE.

Wheat advanced after the dollar fell, spurring appeal of the grain to overseas buyers. The dollar slid 0.5 percent versus a basket of six major currencies. May futures for wheat delivery advanced $0.0525 (1.1 percent) to $4.845 per bushel by 9:54 on the Chicago Board of Trade.

Copper climbed to the two-week high as the weaker dollar boosted demand for commodities as an inflation hedge. Price also jumped as inventories of LME-monitored copper dropped to 528,050 metric tons, the lowest level since January 20th. Delivery for copper in three months climbed $108 (1.5 percent) to $7,413 a metric ton as of 17:59 on the LME.

Cocoa price slipped to the seven-month low on speculation that growing supplies will decrease demand. Hedge-funds and other speculators cut their bets on increasing prices by 21 percent in the week ended March 9th. May futures for cocoa delivery slipped $18 (0.6 percent) to $2,848 per metric ton on ICE.

Copper is an industrial metal important for housing construction. It’s also used in construction of refrigerators, automobiles, cell phones and other goods. Copper was steadily rising in the past year, but it experienced sharp decline through January to the beginning of February. Then, in the second half of February to March, the metal rebounded. What do analysts say about copper’s perspective? In fact, opinions vary on this matter.

There are voices supporting optimistic outlook for copper price. They are speculating about global economic recovery, supporting demand for the industrial metal. Data from the U.S., one of major copper consumer, about expanding economy especially supports optimism for copper performance, as healthy economy and decreasing jobless rate lead to more housing construction and, as a result, more copper demand. Reports about dwindling stockpiles of LME-monitored copper also can result in price increase. LME-monitored inventories of copper dropped to almost 540,000 metric tones, lowest amount since early February.

But many analysts are inclined to pessimistic view on copper ability to rise or even maintain current price level, some even were going as far as calling current price level “a bubble”. They point out that key reason for the metal’s outstanding performance was huge amount of copper imported by China, one of the world’s greatest consumer, causing copper price to double in 2009. In 2010 it turned out that China imported more copper than it really requires. And it seems that suggestion about demand for the metal rebounding after New Year holidays in China did not prove true. There is also concern that economic recovery may be slow and supply may exceed demand. Earthquake in Chile caused price surge at first but, while being harmful for copper output, didn’t affected copper production as strong as was expected.

So, how can we predict copper moves amid such uncertainty? First answer lies in the very nature of copper as industrial metal. Copper is tied very strongly with overall economical picture, so the world economy can suggest possible copper moves. If economy will continue to rebound, then copper will continue to go up. Another factor worthy consideration is a dollar. Commodities, including copper, are very dependent on the U.S. currency these days, so look for the greenback performance for suggestion where commodities may be heading. It’s also looks like copper performance is strongly correlated with the stock market, so you can plan your trade if you can predict where the stock market is heading.

Aluminum producers lowered the fee for Japanese buyers after China resumed halted capacity and supply in Asia rose as smelters began production. Premiums for the three months ending June 30 fell to $122 per metric ton down from $125 to $130 this quarter (the highest level in 14 years). The premium for Good Western-grade aluminum ingot more than doubled in 2009 as record purchases by China and decreased supplies from Russia caused shortage of the metal in Asia.

China, the largest buyer of copper in the world, decreased import after record purchases in 2009 as local smelters restarted production. Aluminum smelters in China, the largest producer of the industrial metal, resumed 5 million tons per annum of idled capacity in past year as profit margins improved with increasing prices. China’s purchases of refined aluminum dropped to 40,059 metric tons in January from 42,106 tons in December as the nation have ample inventories after it have bought more metal than necessary on outlook for a demand recovery.

Delivery for aluminum in three months rose 0.3 percent to $2,225 per ton by 15:57 on the London Metal Exchange. The price has reached previously a 15-month high.

Gold may slid after the dollar rebounded against the euro, cutting appeal of the metal as an alternative asset. The greenback rose on concern about Greece’s debts last month. Gold have tendency to move inversely to the U.S. currency.

Yet there are some factors that can support the metal’s price. Commodities’ prices may go up as U.S. economy advanced at a 5.9 percent annual rate in the fourth quarter, the greatest pace in six years. Chile earthquake boosted the base metals prices, possibly pushing other commodities up. Africa’s biggest gold mines may halt due strikes, decreasing supply of the precious metal.

April futures for gold delivery fell $1.20 (0.1 percent) to $1,117.70 per ounce by 11:28 on the Comex division of the New York Mercantile Exchange. Immediate delivery for gold was at $1,117.30 in London.

Copper rose in London on outlook for increasing demand in Japan, the fourth biggest buyer of the metal in the world. Japan’s gross domestic product grew 4.6 percent in the fourth quarter. Imports of the metal in China declined as much as 546,000 metric tons. Yet analysts say that this decline can be more than offset by rising global demand. Three-month delivery for copper rose $70 (1 percent) to $6,880 per ton by 16:52 on the London Metal Exchange.

Wheat futures fell in Paris on speculation that rising global stockpiles will decrease prices. The U.S. Department of Agriculture reported that global wheat stockpiles will increase from 164 million metric tons a year earlier to 195.9 million tons by the end of May as supply exceeds demand for a second year. Prices may yet go up with farmers’ reluctance to sell at current prices and good European Union exports. March delivery for milling wheat fell 0.4 percent to 125.25 euros ($170.35) per metric ton today on NYSE Liffe.