Commodity Trends:Copper demand to beat supply

By
A A A

Commodity Online
Copper demand may outstrip supply in 2011 for the first time in four years as China, the world's biggest consumer, sustains purchases and as ore grades decline.

The demand-supply gap will be the extent of  200,000 metric tons. Copper, used in pipes, tubes and wires, faces a "deepening supply crunch" and record prices are highly likely in the next two years, Barclays Capital said in a report on July 27. Prices for immediate delivery will average $7,763 a ton next year as a market shortage widens, the bank said. The spot price in London has averaged $7,088 this year.

Commodity assets under management
Commodity assets under management surpassed $300 billion for the first time in July, Barclays Capital said in a report. Inflows were $5 billion compared with June's $2.3 billion, Barclays said

India ETF gold collections up 82%
India's gold collections in exchange traded funds ( ETF ) rose more than 82 percent on year in July as investors plucked bargains in anticipation of higher prices going ahead. Gold collections by the seven fund houses rose to 11.294 tonnes in July, when the yellow metal struck a low of 17,660 rupees per 10 grams on July 29.Prices have rebounded by 5 percent since then till Thursday, but are still below the all-time high of 19,198 struck on June.

SMC gets approval for trading
Financial Technologies ( FT ) Group's Singapore Mercantile Exchange has received final approval from Singapore authorities to operate as an international commodity and currency derivatives exchange there.

SMX is the first pan-Asian multi-product commodity and currency derivatives exchange. The Monetary Authority of Singapore ( MAS ) granted 'Approved Exchange' status to SMX to operate out of Singapore as a regulated and licensed exchange, a company release said here.

Coffee prices jump on news of Colombia rainfall
Coffee prices jumped the most in two weeks on speculation that excess rainfall may hurt output in Colombia, the world's second-largest arabica-bean producer, tightening global supplies. Cocoa also gained.

Persistent wet weather in Colombia may hamper a recovery from last year's 33-year production low by depriving plants of sunlight, Jorge Lozano, the head of the National Association of Coffee Exporters, said on Aug. 4. Inventories of arabica coffee in warehouses monitored by ICE Futures U.S. have dropped to the lowest level since May 2000

India food inflation sees upsurge
Food inflation, based on the Wholesale Price Index ( WPI ), witnessed an upsurge during end-July, after having dipped for two straight weeks. The annual food inflation increased 11.40 per cent during the week ended July 31 from the previous week's year-on-year rise of 9.53 per cent, mainly on account of a surge in items such as milk and pulses, official data released on Thursday showed.

The increase in the fuel prices index, however, slowed to 12.66 per cent on an annual basis during the latest week as against 14.26 per cent recorded in the previous week.

The primary articles index gained 15.66 per cent compared with the previous week's 14.36 per cent.

Comexes turnover up 63%
Driven by increased trade in bullion and metals, the turnover of commodity exchanges in the country surged by 63 per cent to Rs 5, 01,046 crore during the fortnight ended July 31, 2010, according to the Forward Markets Commission ( FMC ) data.

The total turnover of the bourses was Rs 3,07,829 crore in the same period last year, commodity market regulator FMC said in a statement. The cumulative value of trade in the first four months of this fiscal grew by 59 per cent at Rs 33,72,249 crore compared to Rs 21,23,637 crore in the corresponding period last fiscal

Gold
Gold prices continued to trade range bound after Federal reassessment of the US economy but rallied 1.5% on Thursday thanks to weakness in US equity markets. Weak US jobs data and signs of economic slowdown bolstered the safe-haven appeal of the yellow metal. US retail sales have rebounded in July but still shows signs of weakness. Gold prices are still not too near to the all time highs recorded in June but looks bullish. Gold held firmly against dollar even as the latter was headed for strong performance in about 2 years against a basket of currencies. Gold still has chance of sustaining above $1200 in the near future and may rise to $1280. Spot gold prices rose to $1213 after rising to with SPDR gold holdings gaining last week. Silver prices rose to $18.10 while platinum prices were ruling at $1,519 levels.

MCX October Gold rises to Rs 18565 on an upward trend, support levels 18430, 18285

Base Metals
After a recent rally that saw LME copper gaining 12% in July on climbning China imports, the red metal is indeed showing signs of cooling. For the past two weeks, copper prices have remained subdued with market feeling the slump was overdone. Fall in inventory levels at Shanghai and London have provided firm support for the base metals pack.

Copper premiums in China, the world's largest user, dropped to a four-month low this week as higher prices weighed on demand and supplies remained ample. Premiums paid by Chinese importers dropped to as low as $70 a metric ton over the London Metal Exchange cash price on a cost, insurance and freight basis to Shanghai this week, That's the lowest level since April and down from this year's high of $160 last month, according to news reports.

The drop in premiums is being interpreted as unwillingness to buy overseas metal as it is now unprofitable.

At Nymex, Copper for September delivery rose from earlier slump to $3.3055 per pound while LME Copper rose to $7255 in the weekend. MCX Aug Copper has also shown weakness offlate with prices tracking weak overseas trends and strength in Indian rupee. Doubts concerning economic recovery and China demand have created uneasiness in the base metals market. Aluminium, zince tin, lead prices gained while nickel prices fell.

Crude Oil
Crude oil prices have turned weak on rising US gasoline inventories and higher supplies by OPEC countries. Nymex crude oil futures have already fallen 6.6% this week with US retail sales figures showing less growth than forecasted suggested gloomier economic growth. The fundamentals for the energy complex continue to remain weak with high inventories and weak demand. Oil supplies were above the 5-year average last week, according to US Energy Department. Oil rigs operating in US jumped the most in nine months. Rigs exploring for oil produdction rose form 25 to 636.

Nymex Crude Oil for September delivery fell to $75.39 while ICE Brent Crude for September falls to $75.11. OPEC has raised the global oil demand forecast this year and next year to by 140,000 barrels per day thanks to consumption growth seen in Asia, Middle East and Latin American countries.

Chana
Chana prices have turned weak due to higher sowing of kharif pulses while improved spot demand ahead of festive season has provided firm support. Kharif pulses acreage as on August 12, 2010 is 10.32 mn ha while as against 8.6 mn ha a year ago. August Futures at NCDEX has ended teady at Rs 2254 before moving up to a high of 2274 while September contract gained marginally from Rs 2293 to Rs 2302. With rains abundant in major pulses growing regions of India, Chana may continue to trade weak.

Rubber
Rubber prices globally have shown signs of weakness due to falling crude oil prices and strength of yen against dollar. However, the trend was reversed towards the end of the week with January-delivery rubber gaining as much as 2.1% at 281.9 yen a kg.

India's rubber prices continued to trade rangebound at above Rs 180 levels but turned weak as trading was inactive at higher levels. NMCE Aug futures contract fell from Rs 189.66 levels to Rs 183.50 while September contract fell from Rs 174.77 to Rs 173.89 levels.Supply concerns in Thailand, Indonesia as well as Malysia continue to provide firm support for natural rubber prices. TOCOM rubber was hit by lower oil prices, declining equity markets and concerns over glbal economic growth. However, automobile consumption in emerging economies continue to be strong which provides firm support to rubber prices. NMCE Aug Contract has support at 184 levels while September contract has support at Rs 170 levels.

Pepper
India's pepper prices have gained last week thanks to festive season demand and squeeze in supplies, however, with Indian parity prices higher by 10-12 percent to overseas competition, export enquiries appear weak. Vietnam pepper production has fallen by 5% in 2010 and India's exports have fallen 5% to 4650 tonnes in April-June 2010. Vietnam's total export target for 2010 has been scaled down by 27% to 100,000 tonnes. India's peper prices have risen by 40% since January this year thus outpricing global markets.

Pepper prices have support from squeezed supplies while lot depends on growth in overseas demand.

NCDEX Aug Pepper has risen from Rs 18749 to Rs 18902 while September contract has risen from Rs 18973 to Rs 19131. NCDEX August Pepper suppor at Rs 18500 while September support is at Rs 18900 levels.

Soybean
Soybean prices have rallied in global markets thanks to imports by China to meet short fall for edible oil and oilseeds. Upcoming festivals and firm trends in global markets have led to rally in oil and oilseeds futures in India. India's July oilmeal exports have risen by a third from a year earlier reversing 8-months of weakness. As on August 12, the area under oilseeds stood at 15.82 mn ha compared to 15.28 mn ha a year ago. Oil meals exports from India have surged to 166,632 tonnes in July recovering from a recent slump. NCDEX Rapeseed contract hit a high of Rs 580.7 while NCDEX September soybean weakened slightly to Rs 2171.5 from Rs 2180 levels while September soyoil falling from Rs 517 levels to Rs 513.55 levels. Oilseeds market is expected to witness an uptrend although higher acreage, and sowing progress due to monsoon rains could limit gains in the short term.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Commodities

Referenced Stocks: ETF , FMC , FT , MAS , WPI

International Business Times

International Business Times
  • See all for International Business Times
  • View Print Version

More from International Business Times:

Related Videos

Stocks

Referenced

Most Active by Volume

75,750,465
  • $16.77 ▲ 0.36%
59,791,764
  • $101.58 ▲ 0.71%
38,720,622
  • $42.59 ▼ 0.28%
37,416,417
  • $46.52 ▼ 0.51%
35,101,793
  • $16.28 ▲ 0.74%
34,987,975
  • $99.53 ▲ 0.15%
33,760,830
  • $3.63 ▲ 0.69%
32,148,671
  • $17.61 ▲ 0.57%
As of 9/17/2014, 04:15 PM

Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com