Commodity markets slide on mounting demand worries
Monday, 18 August 2008
LONDON, Aug 17 (AFP): Most commodity prices fell sharply this week, with gold under 800 dollars per ounce and crude oil slumping further, as weak economic growth heralded lower demand for raw materials, analysts said.
OIL: Crude oil prices tumbled owing to reduced demand for energy around the globe.
OPEC Friday lowered its forecast for world oil demand growth, citing the weak global economy. On Tuesday, the International Energy Agency had said that crude demand was slowing sharply in advanced economies.
OPEC, which produces about 40 per cent of the world's oil, revised its global oil demand growth forecast for 2008 down to 1.17 per cent from 1.20 per cent in July.
The cartel also kept its 2009 forecast for oil demand growth unchanged at 1.03 per cent, according OPEC's latest report.
OPEC predicted that world oil demand would rise to 86.90 million barrels per day in 2008 -- up from its July estimate of 86.81 million bpd-and to 87.80 million bpd in 2009.
Crude futures had fallen Thursday after official data showed that the 15- nation eurozone economy shrank 0.2 per cent in the second quarter, the first contraction since the creation of the single European currency in 1999.
Gasoline stocks are closely watched at this time of year as American motorists hit the highways for their summer vacations, typically pushing up demand for gasoline, which is refined from crude oil.
Dealers said that fears of supply disruption had receded after Russia and Georgia agreed to a French-brokered peace plan following several days of hostilities.
PRECIOUS METALS: Gold prices tumbled underneath 800 dollars per ounce Friday, hitting a 10-month low point as the precious metal was hampered by the strengthening US currency and weaker oil prices, analysts said.
The price of gold slid to 772.98 dollars, which was the lowest point since the end of October.
Gold, which is used in jewellery, dentistry and electronics, has shed one quarter of its value since striking a record high of 1,032.70 dollars in March.
In the foreign exchange market Friday, the European single currency sank to 1.4663 dollars-the lowest point since February 20.
A spike in US consumer price inflation (CPI) Thursday sparked talk of Federal Reserve interest rate hikes, which could make the dollar more attractive to investors and therefore boosted the greenback, dealers said.
Silver dived to 12.82 dollars per ounce from 15.76 dollars.
On the London Platinum and Palladium Market, platinum dropped to 1,400 dollars per ounce at the late fixing Friday from 1,552 dollars.
Palladium tumbled to 295 dollars per ounce from 345 dollars.
BASE METALS: Base metals prices also fell in unison.
"Prices (of base metals) remain weak, pressured by fragile sentiment, lingering worries on the health of the global economy, and a stronger dollar coupled with a slow period for metals demand," said Barclays Capital analysts.
By Friday, copper for delivery in three months fell to 7,310 dollars per tonne on the London Metal Exchange from 7,430 dollars a week earlier.
Three-month aluminium declined to 2,769 dollars per tonne from 2,867 dollars.
COFFEE: Coffee prices dipped in line with most commodity markets.
By Friday on LIFFE, Robusta for November delivery declined to 2,210 dollars per tonne from 2,346 dollars a week earlier. On the NYBOT, Arabica for December delivery stood at 134.45 US cents per pound from 137.60 cents.
COCOA: Cocoa prices retreated.
By Friday on LIFFE, London's futures exchange, the price of cocoa for November weakened to 1,458 pounds per tonne from 1,473 pounds a week earlier.
On the New York Board of Trade (NYBOT), the December cocoa contract dived to 2,651 dollars per tonne from 2,743 dollars.
SUGAR: Sugar prices also declined.
By Friday on LIFFE, the price per tonne of white sugar for October delivery dipped to 381.80 pounds from 393.20 pounds the previous week.
On NYBOT, the price of unrefined sugar for October delivery dropped to 13.13 US cents per pound from 13.89 cents.
GRAINS AND SOYA: Grains and soya prices gained ground on the back of strong export sales.
"Solid weekly export demand helped provide underlying support for corn and wheat," said Victor Lespinasse at grainanalyst.com.
By Friday on the Chicago Board of Trade, maize for September delivery rose to 5.35 dollars per bushel from 4.98 dollars the previous week.
RUBBER: Malaysian rubber prices declined this week on lower demand as China-based companies cut production during the Beijing Olympics, dealers said.
"The current price has been dropping for a month already although it has not really scratched the bottom yet," said a dealer with an international commodities firm who requested anonymity.
"The low demand in raw materials is due to the summer season in Europe and the US. It is also due to the Beijing Olympics.
Factories in China have slowed down production. This is putting a lot of downward pressure on the price," the dealer added.
On Friday, the Malaysian Rubber Board's benchmark SMR20 fell to 299.30 US cents per kilogramme (2.2 pounds) from 309.60 US cents a week ago.
OIL: Crude oil prices tumbled owing to reduced demand for energy around the globe.
OPEC Friday lowered its forecast for world oil demand growth, citing the weak global economy. On Tuesday, the International Energy Agency had said that crude demand was slowing sharply in advanced economies.
OPEC, which produces about 40 per cent of the world's oil, revised its global oil demand growth forecast for 2008 down to 1.17 per cent from 1.20 per cent in July.
The cartel also kept its 2009 forecast for oil demand growth unchanged at 1.03 per cent, according OPEC's latest report.
OPEC predicted that world oil demand would rise to 86.90 million barrels per day in 2008 -- up from its July estimate of 86.81 million bpd-and to 87.80 million bpd in 2009.
Crude futures had fallen Thursday after official data showed that the 15- nation eurozone economy shrank 0.2 per cent in the second quarter, the first contraction since the creation of the single European currency in 1999.
Gasoline stocks are closely watched at this time of year as American motorists hit the highways for their summer vacations, typically pushing up demand for gasoline, which is refined from crude oil.
Dealers said that fears of supply disruption had receded after Russia and Georgia agreed to a French-brokered peace plan following several days of hostilities.
PRECIOUS METALS: Gold prices tumbled underneath 800 dollars per ounce Friday, hitting a 10-month low point as the precious metal was hampered by the strengthening US currency and weaker oil prices, analysts said.
The price of gold slid to 772.98 dollars, which was the lowest point since the end of October.
Gold, which is used in jewellery, dentistry and electronics, has shed one quarter of its value since striking a record high of 1,032.70 dollars in March.
In the foreign exchange market Friday, the European single currency sank to 1.4663 dollars-the lowest point since February 20.
A spike in US consumer price inflation (CPI) Thursday sparked talk of Federal Reserve interest rate hikes, which could make the dollar more attractive to investors and therefore boosted the greenback, dealers said.
Silver dived to 12.82 dollars per ounce from 15.76 dollars.
On the London Platinum and Palladium Market, platinum dropped to 1,400 dollars per ounce at the late fixing Friday from 1,552 dollars.
Palladium tumbled to 295 dollars per ounce from 345 dollars.
BASE METALS: Base metals prices also fell in unison.
"Prices (of base metals) remain weak, pressured by fragile sentiment, lingering worries on the health of the global economy, and a stronger dollar coupled with a slow period for metals demand," said Barclays Capital analysts.
By Friday, copper for delivery in three months fell to 7,310 dollars per tonne on the London Metal Exchange from 7,430 dollars a week earlier.
Three-month aluminium declined to 2,769 dollars per tonne from 2,867 dollars.
COFFEE: Coffee prices dipped in line with most commodity markets.
By Friday on LIFFE, Robusta for November delivery declined to 2,210 dollars per tonne from 2,346 dollars a week earlier. On the NYBOT, Arabica for December delivery stood at 134.45 US cents per pound from 137.60 cents.
COCOA: Cocoa prices retreated.
By Friday on LIFFE, London's futures exchange, the price of cocoa for November weakened to 1,458 pounds per tonne from 1,473 pounds a week earlier.
On the New York Board of Trade (NYBOT), the December cocoa contract dived to 2,651 dollars per tonne from 2,743 dollars.
SUGAR: Sugar prices also declined.
By Friday on LIFFE, the price per tonne of white sugar for October delivery dipped to 381.80 pounds from 393.20 pounds the previous week.
On NYBOT, the price of unrefined sugar for October delivery dropped to 13.13 US cents per pound from 13.89 cents.
GRAINS AND SOYA: Grains and soya prices gained ground on the back of strong export sales.
"Solid weekly export demand helped provide underlying support for corn and wheat," said Victor Lespinasse at grainanalyst.com.
By Friday on the Chicago Board of Trade, maize for September delivery rose to 5.35 dollars per bushel from 4.98 dollars the previous week.
RUBBER: Malaysian rubber prices declined this week on lower demand as China-based companies cut production during the Beijing Olympics, dealers said.
"The current price has been dropping for a month already although it has not really scratched the bottom yet," said a dealer with an international commodities firm who requested anonymity.
"The low demand in raw materials is due to the summer season in Europe and the US. It is also due to the Beijing Olympics.
Factories in China have slowed down production. This is putting a lot of downward pressure on the price," the dealer added.
On Friday, the Malaysian Rubber Board's benchmark SMR20 fell to 299.30 US cents per kilogramme (2.2 pounds) from 309.60 US cents a week ago.