LONDON: Commodity markets enjoyed mixed fortunes this week as traders eyed growing speculation over a full bailout of debt-plagued Spain, and amid rising doubts over the US Federal Reserve’s stimulus plan.
“Commodity prices were broadly down over the week as European debt concerns intensified, leading to choppy price action,” noted Barclays Capital analyst Sudakshina Unnikrishnan.
Financial markets were rocked on Tuesday as violent protests in Madrid and a general strike in Greece spooked investors and stoked jitters over the eurozone crisis. Spain unveiled on Friday the full cost of rescuing its troubled banks, seen by investors as one of the final steps before a looming sovereign bailout.
The nation’s stricken banks need ¤59.3bn ($76bn) to fix balance sheets hammered by a 2008 property crash, an independent audit showed. It comes one day after the Spanish government unveiled a ¤39bn austerity budget to rein in the public deficit.
OIL: New York crude plunged close to a two-month low under $89 per barrel on eurozone woes, but prices finished the week on a mixed note. West Texas Intermediate dived to $88.95 on Wednesday, hitting the lowest level since August 3. The market has since recovered somewhat, helped by a weaker dollar, steps taken by Spain to help reduce its debt mountain, and on easing Middle East tensions, analysts said.
“Factors which contributed majorly to the price increase include brightening of sentiment on the financial markets and a weaker US dollar after Spain approved a comprehensive raft of austerity measures, which could pave the way for possible financial aid,” said Commerzbank analyst Carsten Fritsch.
The euro rose against the dollar on Friday. A weaker US currency makes dollar-denominated crude cheaper for buyers using rival currencies, pushing up demand. Oil prices also won some support from Middle East tensions according to traders. “Tensions between Iran and the West reinforced concerns about potential supply disruptions,” Phillip Futures said in a market commentary.
By Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery in November increased to $111.77 a barrel from $110.37 a week earlier. On the New York Mercantile Exchange, West Texas Intermediate (WTI) or light sweet crude for November retreated to $91.78 a barrel, from $93.09 a week earlier.
PRECIOUS METALS: Gold and silver lost ground as dealers took profits from recent multi-month peaks and tracked worries over Chinese and European demand. “Gold and silver prices have continued to be swayed by investor sentiment and the macro environment,” said Barclays Capital analysts in a research note.
Meanwhile, the world’s top platinum producer on Thursday launched disciplinary procedures against thousands of striking miners emboldened by a big pay hike won by workers at another South African mine. The move by Anglo American Platinum that could result in the miners being sacked was designed to put an end to weeks of production-crippling wildcat strikes.
The company, known by its acronym Amplats, said less than a fifth of workers at its Rustenburg mines clocked in on Thursday, despite repeated deadlines for employees to return to work. By late Friday on the London Bullion Market, gold dipped to $1,776 an ounce from $1,784.50 a week earlier. Silver eased to $34.65 an ounce from $34.69. On the London Platinum and Palladium Market, platinum increased to $1,668 an ounce from $1,642. Palladium slid to $642 an ounce from $672.
BASE METALS: Base or industrial metals diverged, having fallen earlier in the week on eurozone woes, but the outlook remains upbeat according to analysts. “On balance this week we have viewed the pull backs across the metals as consolidation and have expected prices to extend gains before too long,” said William Adams at Fast Markets.
He added: “The markets are looking more upbeat on the back of the brighter economic news and following Spain’s announcement of further austerity measures, which means it may be closer to asking for help.”
By late Friday on the London Metal Exchange, copper for delivery in three months slid to $8,250 a tonne from $8,283 a week earlier. Three-month aluminium firmed to $2,123 a tonne from $2,106. Three-month lead gained to $2,300 a tonne from $2,283. Three-month tin rose to $21,700 a tonne from $20,825. Three-month nickel grew to $18,576 a tonne from $18,086. Three-month zinc eased to $2,120 a tonne from $2,124.
COCOA: Prices rebounded from recent falls, as traders also eyed crop concerns in Ivory Coast, which is the top producer of the commodity that is mostly used to make chocolate.
“Values were due for an upward correction after recent declines,” said trade publication the Public Ledger. It added: “Adding to the support in cocoa were concerns over the quality of the crop at the Ivory Coast.”
By Friday on LIFFE, London’s futures exchange, cocoa for delivery in December rose to £1,635 a tonne from £1,613 a week earlier. On New York’s NYBOT-ICE exchange, cocoa for December grew to $2,543 a tonne from $2,509.
SUGAR: Sugar futures drifter higher, aided by the weaker US currency. By Friday on NYBOT-ICE, the price of unrefined sugar for March stood at 20.40 US cents a pound compared with 19.2 cents. On LIFFE, the price of a tonne of white sugar for delivery in December climbed to $574.90 from $567 a week earlier.
COFFEE: The market edged higher on speculative buying. By Friday on NYBOT-ICE, Arabica for delivery in December rose to 174.35 US cents a pound from 171 cents a week earlier. On LIFFE, Robusta for November increased to $2,175 a tonne from $2,060.
RUBBER: Prices were weighed down by pessimism over the global economy and the eurozone debt crisis. The Malaysian Rubber Board’s benchmark SMR20 ended the week down at 285.75 US cents a kilo from 286.35 cents the previous week.
AFP
