Posts Tagged ‘nickel’
Rio Tinto Chief Economist Expects Rough Year for Commodity Prices
Global miner Rio Tinto expects 2009 to be a rough year in terms of both prices and volumes for key commodities, the firm’s chief economist said on Wednesday.
Vivek Tulpule, speaking to Reuters on the sidelines of a conference, said a
Rio Tinto’s major commodities are iron ore, aluminium and copper.
“2009 will be a very rough year for both prices and volumes and probably also for construction. A lot of people I talk to in the mining industry are suffering a crisis of confidence, they are putting a lot of projects on hold,” Mr Tulpule said.
“Our view is that it will be a slow year or two.”
Copper, zinc, nickel and other industrial staples have lost 50 per cent or more in value since last year’s collapse in commodities markets.
For iron ore, analysts predict benchmark prices could contract by as much as 60 per cent this year due to sharp drops in orders from steel mills.
Mr Tulpule said benefits flowing from China’s giant economic stimulus package, largely directed at infrastructure, were likely to show up midway through the year.
“It will take to time to offset the negative impact of a downturn in exports and construction, those areas have slowed very fast,” Mr Tulpule said.
He said the collapse in commodities flowed from two “crunches”: the global credit crunch and a crunch in China that had been induced by its attempts to slow the economy last year because of concerns it was overheating.
“The effect that had was way beyond their own expectations and certainly beyond the expectations of anyone else,” Mr Tupule said.
“That deceleration had a profound effect on our markets as when growth decelerates inventories build up, and when you’ve got lots of inventory you suddenly decide not to build things and then you don’t need to buy half as much copper and aluminium and iron ore.”
After Painful Slide, Commodities Languish
Aggressive
When the Reuters/Jefferies CRB Commodity Price Index rebounded 2.3 per cent yesterday, it was a welcome respite in a relentless rout that had knocked the commodity market to its lowest levels in nearly seven years. The bounce ended seven consecutive days of declines for the CRB index, during which time the benchmark had lost 11 per cent, relinquishing whatever modest gains it had mustered from its previous lows of early December.
Analysts say that while they don’t see much more room for most commodities to fall, the latest selloff is a signal that a second wave of worries has overtaken the commodity market. While the credit market crisis and hedge fund redemptions triggered the rapid exodus from commodities over the fall, now the deepening slowdown in physical demand for these products is entrenching the low- price environment.
“[Hedge fund liquidation] is becoming less and less of a factor. But the macro [economic] situation is just killing us,” said Edward Meir, commodity analyst at MF Global in Darien, Conn.
With most economists now seeing the economic slowdown lasting considerably longer than had been anticipated a few months ago, experts generally expect prices for many key commodities to drift sideways for much of this year. They said that while the low prices for some products will discourage production, that will be outweighed by the severe and lingering dearth in demand.
“In the near term, I don’t see a big break in the recent trend,” said Derek Burleton, senior economist at
“A more meaningful recovery in commodities may have to wait until 2011.”
Within that dim general view, there are varying degrees of pessimism and hope for the key commodities in the Canadian market:
OIL
The weak demand and high inventories for crude should keep prices in their recent range of roughly $35 (U.S.) to $50 a barrel for much of 2009. However, analysts say oil should get support from the fact that at current price levels, new supplies will slow to a trickle.
“When you’re down at these kinds of [price] levels, the only part of the world where you can bring on new projects is the Middle East,” said Patricia Mohr, commodity market specialist at Bank of Nova Scotia, who predicts that global oil production will actually fall this year.
As a result of this supply slowdown, she said, “once we see some glimmer of hope on the global economy, you’ll see prices come back quite quickly.”
Analysts are looking for prices to average $75 to $80 a barrel in 2010.
GOLD
Gold has bucked the downward trend in commodities, as investors have flocked to it as a safe haven from plunging financial markets and economic and political uncertainties.
While the continued
“But the main point is that gold seems to be able to maintain its value,” Ms. Mohr said, which should continue to attract investors to
COPPER
Copper is stuck in
The price is depressed as a result of sluggish demand, but it’s still high enough to keep most producers profitable, meaning little pressure to slow production.
“The big declines are probably behind us,” Mr. Meir said. However, he said, prices in 2009 “are going to be in a sideways pattern.”
However, Ms. Mohr said copper should benefit from government stimulus efforts aimed at expanding electricity infrastructure, particularly in China.
ALUMINUM
Unlike copper, analysts said aluminum prices have fallen considerably below most producers’ cash costs, which is triggering production cuts and killing new mining projects in their tracks.
“In aluminum, everyone is in the red. Everyone is struggling,” Mr. Meir said.
That suggests that even a modest recovery in demand could put upward pressure on what could become a very tight market on the supply side. Analysts said the situation isn’t that different in other base metals, such as zinc and nickel.
“I think all of them are oversold,” said Bart Melek, global commodity strategist at BMO Nesbitt Burns.
CANOLA
Ms. Mohr believes canola is poised to be a strong performer this year.
It’s an attractive product for Canadian farmers because of its traditionally strong profit margins, and could benefit from the threat of drought in some of China’s key
TD’s Mr. Burleton thinks agricultural commodities in general look promising. He added that drought worries in several parts of the world could also bode well for grain prices.
Commodity Prices – August 27, 2008
Gold N.Y. Spot $ 827.60
Silver N.Y. Spot $ 13.54
Lead LME Cash $ 0.8689
Copper LME Cash $ 3.4587
Zinc LME Cash $ 0.8065
Nickel LME Spot $ 9.26
Aluminum LME Spot $ 1.2356
Platinum N.Y. Spot $ 1440.00
Palladium N.Y Spot $ 294.50
Oil WTI Cushing $ 118.20
Natural Gas (Henry Hub)($/MMBtu) $08.01
Commodity Prices – August 20, 2008
Gold N.Y. Spot $ 805.20
Silver N.Y. Spot $ 12.90
Lead LME Cash $ 0.8246
Copper LME Cash $ 3.4786
Zinc LME Cash $ 0.7679
Nickel LME Spot $ 8.87
Aluminum LME Spot $ 1.2333
Platinum N.Y. Spot $ 1357.00
Palladium N.Y Spot $ 284.50
Oil WTI Cushing $ 116.70
Natural Gas (Henry Hub)($/MMBtu) $07.72
Commodity Prices – August 1, 2008
Gold N.Y. Spot $ 912.40
Silver N.Y. Spot $ 17.61
Lead LME Cash $ 0.9775
Copper LME Cash $ 3.6719
Zinc LME Cash $ 0.8394
Nickel LME Spot $ 8.23
Aluminum LME Spot $ 1.3027
Platinum N.Y. Spot $ 1666.50
Palladium N.Y Spot $ 364.50
Oil WTI Cushing $ 127.90
Natural Gas (Henry Hub)($/MMBtu) $09.26
Commodity Prices – July 31, 2008
Gold N.Y. Spot $ 914.80
Silver N.Y. Spot $ 17.62
Lead LME Cash $ 1.0111
Copper LME Cash $ 3.7467
Zinc LME Cash $ 0.8646
Nickel LME Spot $ 8.45
Aluminum LME Spot $ 1.3281
Platinum N.Y. Spot $ 1755.00
Palladium N.Y Spot $ 381.50
Oil WTI Cushing $ 124.40
Natural Gas (Henry Hub)($/MMBtu) $09.00
Commodity Prices – July 30, 2008
Gold N.Y. Spot $ 897.90
Silver N.Y. Spot $ 17.10
Lead LME Cash $ 1.0161
Copper LME Cash $ 3.6515
Zinc LME Cash $ 0.8448
Nickel LME Spot $ 8.26
Aluminum LME Spot $ 1.3177
Platinum N.Y. Spot $ 1724.00
Palladium N.Y Spot $ 371.50
Oil WTI Cushing $ 123.20
Natural Gas (Henry Hub)($/MMBtu) $09.17
Commodity Prices – July 25, 2008
Gold N.Y. Spot $ 920.30
Silver N.Y. Spot $ 17.19
Lead LME Cash $ 0.9707
Copper LME Cash $ 3.7009
Zinc LME Cash $ 0.8278
Nickel LME Spot $ 8.26
Aluminum LME Spot $ 1.3186
Platinum N.Y. Spot $ 1726.00
Palladium N.Y Spot $ 383.00
Oil WTI Cushing $ 123.60
Natural Gas (Henry Hub)($/MMBtu) $09.69
Commodity Prices – July 24, 2008
Gold N.Y. Spot $ 918.65
Silver N.Y. Spot $ 17.16
Lead LME Cash $ 0.9888
Copper LME Cash $ 3.7460
Zinc LME Cash $ 0.8578
Nickel LME Spot $ 8.62
Aluminum LME Spot $ 1.3318
Platinum N.Y. Spot $ 1734.00
Palladium N.Y Spot $ 386.50
Oil WTI Cushing $ 124.60
Natural Gas (Henry Hub)($/MMBtu) $09.85
USD-AUD $ 1.0421
AUD-USD $ 0.9596
CAD-USD $ 0.9913
USD-CAD $ 1.0088
EUR-USD $ 1.5672
Commodity Prices – July 23, 2008
Gold N.Y. Spot $ 927.70
Silver N.Y. Spot $ 17.70
Lead LME Cash $ 0.9675
Copper LME Cash $ 3.7689
Zinc LME Cash $ 0.8550
Nickel LME Spot $ 9.18
Aluminum LME Spot $ 1.3454
Platinum N.Y. Spot $ 1753.00
Palladium N.Y Spot $ 388.50
Oil WTI Cushing $ 126.40
Natural Gas (Henry Hub)($/MMBtu) $10.16
