January 21, 2012
LONDON (AFP) - Most commodities rallied this week on an improving outlook for the world economy, with sentiment boosted by upbeat data from Asian giant China, though many markets saw profit-taking before the weekend.
"Better-than-expected macro data -- in the form of China's Q4 GDP reading that has supported expectations of a soft landing of the Chinese economy, a strong ZEW survey and positive US manufacturing data -- have supported commodity prices," said Barclays Capital analyst Sudakshina Unnikrishnan.
"Indeed, base metals have gotten off to a strong start in 2012, with sentiment buoyed by improved perceptions of the macroeconomic environment and encouraging fundamental data, as copper prices have risen to their highest level since September 2011," she added.
Investors welcomed positive government bond sales by France and Spain on Thursday, despite last week's rating downgrades for the major eurozone economies.
Further support came from the weaker greenback, which makes dollar-priced goods cheaper for holders of stronger currencies. However, markets remain on edge as Greek attempts to clinch a new debt deal with its creditors.
BASE METALS: Copper, lead and nickel forged four-month peaks this week on the back of the bright economic numbers which sparked hopes of strengthening demand.
Official data Tuesday showed China's economy growing 8.9 percent in the last quarter of 2011, higher than analyst expectations of 8.6 percent although it was lower than in the previous three months.
In the US, sentiment was also boosted by the Federal Reserve's Empire State index of manufacturing activity in New York, which showed a pick-up in January that exceeded expectations.
Added to the picture, German investor confidence jumped in January, a new survey showed. The ZEW think-tank's economic expectations index rose by a whopping 32.2 points in January to stand at minus 21.6 points.
By late Friday on the London Metal Exchange, copper for delivery in three months jumped to $8,225 a tonne from $7,955 the previous week.
Three-month aluminium rose to $2,207 a tonne from $2,132.
Three-month lead increased to $2,177 a tonne from $2,012.
Three-month tin rallied to $21,800 a tonne from $20,905.
Three-month zinc gained to $2,014 a tonne from $1,954.
Three-month nickel advanced to $20,450 a tonne from $19,369.
PRECIOUS METALS: Prices also climbed higher in line with most other commodities.
"Positive sentiment on the markets is also currently overshadowing the negative news," said Commerzbank analysts.
"There remains a high risk of an outright insolvency of Greece in the coming months."
By late Friday on the London Bullion Market, gold rose to $1,653 an ounce from $1,635.50 the previous week.
Silver gained to $30.36 an ounce from $29.64.
On the London Platinum and Palladium Market, platinum increased to $1,517 an ounce from $1,479.
Palladium climbed to $669 an ounce from $627.
OIL: Prices rose on geopolitical concerns over Iran, fresh eurozone debt crisis concerns in Greece, and a stream of positive economic data. However, this was offset by profit-taking and signs of weak US energy demand.
"The (supply) threats coming from Iran and Nigeria ... drove up the price at the start of the week," said Inenco analyst Rebecca Seabury.
"The markets were also bouyed by the upbeat GDP figures coming out of China but falls on Friday were down to profit-taking and cautious sentiment dominating the market."
Iran has starkly warned Gulf states not to make up for any shortfall if its oil exports are cut as a result of new US and EU sanctions.
The United States and allied nations accuse Iran of developing an atomic bomb but Tehran insists its nuclear programme is exclusively for peaceful, civilian use.
In Africa's biggest oil producer Nigeria on Monday, soldiers seized protest sites and dispersed demonstrators after its president watered down a hike in petrol prices to help end an eight-day nationwide strike.
"This week, it was all about geopolitical issues about Iran and persistent concerns about Greece's economic stability in the eurozone," added Sucden analyst Myrto Sokou.
"It seems that ongoing tensions in Iran continued to dominate the oil market raising concerns about oil supply levels, providing strong upside momentum."
Meanwhile, Greece pushed on Friday to clinch a debt deal with private creditors ahead of a eurozone finance ministers meeting as it opened separate talks with EU-IMF bailout partners on a new loan to avert a March default.
Greece is seeking to slash around 100 billion euros ($129 billion) from its huge debt through a voluntary bond swap with creditors, a process that would unlock a new eurozone rescue package worth 130 billion euros overall.
Athens wants an outline of the deal to be ready by Monday, when the finance ministers meet, and a full agreement by January 30 when the European Union is to hold a summit.
"All eyes remain on the Greek talks with the IMF over the weekend that could provide a better insight about the future of Greece and its prospects in the eurozone," added Sokou.
Elsewhere, the OPEC oil cartel raised marginally its 2012 forecast for growth in global oil demand but warned of "a great amount of uncertainty" amid economic instability, especially in the eurozone.
However, the International Energy Agency shaved its 2012 global oil demand growth forecast, citing a weakening world economy.
By late Friday on London's Intercontinental Exchange, Brent North Sea crude for delivery in March eased to $110.05 a barrel from $110.52 for the February contract a week earlier.
On the New York Mercantile Exchange, West Texas Intermediate (WTI) or light sweet crude for February slid to $98.21 from $98.71.
COCOA: Cocoa extended gains, after soaring 12 percent the previous week on fears over the impact of dry weather in top global producer Ivory Coast.
"The market is underpinned by fears that dry weather ... in the Ivory Coast may weigh on production," added Unnikrishnan at Barclays Capital.
By Friday on LIFFE, London's futures exchange, cocoa for delivery in March surged to ?1,527 a tonne from ?1,515 a week earlier.
In New York on the NYBOT-ICE, cocoa for March jumped to $2,320 a tonne from $2,280.
COFFEE: Prices diverged in subdued tread.
By Friday on LIFFE, Robusta for delivery in March grew to $1,904 a tonne from $1,894 a week earlier.
On NYBOT-ICE, Arabica for March dipped to 225.80 US cents a pound from 234.70 cents.
SUGAR: Sugar futures soared to their highest level in two months, supported by hopes of strong Chinese demand and a large harvest in major producer Brazil.
"China is expected to be the main importer off the world market of sugar this year, although it seems it is restocking out of its own production for the time being," said Sucden analyst Nick Penney.
By Friday on LIFFE, the price of a tonne of white sugar for March increased to $649.70 from $616.50.
On NYBOT-ICE, the price of unrefined sugar for delivery in March rose to 24.86 US cents a pound from 23.35 cents a week earlier.
RUBBER: Rubber prices rose on strong buying interest, boosted by Thailand's plans to purchase 200,000 tonnes of rubber and China's resumption in purchases of the commodity.
The Malaysian Rubber Board's benchmark SMR20 rose to 367.20 US cents a kilo from 335.90 cents the previous week.
