Showing posts with label markets. Show all posts
Showing posts with label markets. Show all posts

Tuesday, June 26, 2012

Iron-ore spot rally may stall on weak China steel market

Spot iron-ore prices may struggle to stretch gains this week, as supply out paces demand
with China's steel market staying sluggish, raising the risk for traders hoping to resume a recent 10-day rally.

Price offers for imported iron-ore cargoes in China, the world's biggest buyer of steel's raw material, were steady on Monday, although major miners Vale and BHP Billiton are slated to sell cargoes via tenders, traders
"It seems we are in an oversupplied market but there are some people out there who have a lot of cargoes and are trying to keep the market artificially up," said a Singapore-based iron-ore trader.

"If you're a trader and you have 3-million tons which you bought at $135/t, you have an interest to try and keep the market up to be able to sell those 3-million tons at a higher level."

Benchmark iron-ore with 62% iron content was unchanged on Friday at $137.40 a ton, with
China away on a public holiday, after a 10-day rally that pushed up the price to a six-week high on Thursday, based on data from Steel Index.

The 10-day rise was iron-ore's longest winning streak since mid-November, when it climbed for 14 days in a row. Behind the rally were traders betting that high steel output in China will push mills back into the spot market to restock.

Iron-ore prices usually rise along with steel prices in China. But the recent rally transpired even if Chinese steel prices remained largely weak amid soft demand in the world's top steel market, suggesting prices of the raw material may struggle to build on recent gains.

"If it's up to the mills, I don't think they're going to be very excited at the moment," said another trader in Singapore. "It's still hand-to-mouth for a lot of them. So sooner or later, fundamentals will prevail and the market will inevitably come down."

The most-traded steel rebar contract for October delivery on the Shanghai Futures Exchange was down 0.2% at
4 112 yuan ($650) a ton by the midday break. It hit a session trough of 4 095 yuan, its lowest since June 14.
Physical iron-ore prices were largely flat, said a Hong Kong trader, ahead of sale tenders by Vale and BHP Billiton.
Brazil's Vale is offering 250 000 t of 60% grade iron-ore, while BHP Billiton will sell a combined 170 000 t of 62.7% grade Australian Newman iron-ore fines and 57.7% grade Yandi fines, traders said.

Edited by: Reuters

Friday, May 4, 2012

Platinum demand game changer needed to balance market

A game-changing shift in demand would be required to alleviate the global platinum surplus, which stood at 735 000 oz last year, precious metals consultancy Thomson Reuters GFMS global head of precious metals Paul Walker said this week.

“My fear is that we are entering a period of structural surpluses in the platinum market where there is a degree of agility on the supply side and nothing in terms of demand that will bring about a balanced market.”

Visible platinum stocks rose to 4.5-million ounces in 2011 and could rise to more than 5-million ounces by the end of this year. Headline supply stood at 7.97-million ounces, while fabrication demand was 7.23-million ounces, resulting in a gross surplus of 735 000 oz in 2011. Although the surplus shrunk from 962 000 oz in 2010, GFMS said it remained substantial by historical standards.

Growth in demand was recorded in the autocatalyst, jewellery and retail investment sectors, but industrial demand decreased.

In terms of identifying a fundamental demand game changer, Walker said he did not think it would lie in the autocatalyst sector, certainly not in the short term.

Although demand in the sector grew by 4%, it remained 25% below 2007’s record high. Gains were limited by sluggish recovery in Europe’s automotive market, Japan’s natural disaster and ongoing substitution losses in gasoline and light diesel, in favour of sister-metal palladium.

In contrast, platinum in heavy-duty diesel applications posted robust gains, but volumes only accounted for 10% of platinum autocatalyst demand.

“We do not see the same flow-through in demand in this sector as we did four to five years ago, especially in the diesel sector. Companies in the automotive sector have indicated that the increased internal focus on thrifting and substitution is absolutely paramount since price hikes in platinum,” Walker explained.

On the palladium front, the gross deficit was anticipated to rise in 2012 and although declining demand in the jewellery sector was expected to persist, palladium’s penetration in the diesel segment would continue.

Headline supply in 2011 was 8.5-million ounces, while fabrication demand was 8.8-million ounces. A gross deficit of 0.3-million ounces was measured, and although this was an improvement from 0.6-million ounce deficit in 2010, Walker said it was still disappointing.

He pointed out that a substantial amount of above-ground stocks in Zurich and London were being held onto by buyers who were awaiting parity between palladium and platinum prices.

“We will not see a change in interest rates anytime soon, but I wonder how a healthy dose of higher interest rates will focus the minds of holders. The gross deficit will have to be significantly higher to start seeing a material rundown of stock, but currently there is no cure application on the demand side to motivate this,” Walker said.

He told Mining Weekly Online that the platinum and palladium markets could take an interesting turn from 2013 and 2014 onwards when the global economic backdrop was expected to improve.

“You will have demand drivers looking good, which should speak to platinum and palladium doing well; however, on the other side you will have investors exiting their stock positions and may not be buying new metal that is coming on.

“Take platinum for instance, even if surplus goes down, somebody has to buy it and if the investors are not there, it leaves the question of what the clearing price will be that eventually prevails.”

He suggested that this would lead to an interesting conundrum, as a lack of investors could lead to lower prices, despite growing demand.

“It would be fascinating to see how this plays out,” Walker said.

He said the market had priced in a premium on platinum because of supply risks in South Africa, with investors willing to take the metal off the market, as an insurance policy against any major production disruptions.

“Only if we were to see stocks well north of two, three years’ demand, do I think this argument will dissipate,” Walker noted.

The ninth edition of the ‘Platinum & Palladium Survey’ puts the platinum price forecast at between $1 475/oz and $1 775/oz this year. Platinum traded at $1 528/oz on Friday.

Thursday, March 1, 2012

Comex Gold, Silver Post Modest Recoveries On Bargain Hunting

Comex gold and silver futures prices ended the U.S. day session higher and near their daily highs Thursday, which was encouraging to the bulls following the big downdraft on Wednesday. Some bargain hunting was featured. The key “outside markets” were mixed for the precious metals markets Thursday, as the U.S. dollar index was slightly higher and crude oil prices were also slightly higher. April gold last traded up $11.00 at $1,722.30 an ounce. Spot gold was last quoted up $24.60 an ounce at $1,721.75. March Comex silver last traded up $0.967 at $35.55 an ounce.

The gold and silver markets recovered somewhat from Wednesday’s unexpected steep drop in prices. Bargain hunters did step in to “buy the dip” in prices, but only in a modest fashion for gold. Gold bulls need to show better power soon.

The precious metals sold off Wednesday morning when U.S. Federal Reserve Chairman Ben Bernanke, in remarks to the U.S. Congress, made no mention of another round of quantitative easing in the works by the U.S. central bank.

The gold market bulls can take solace from the fact the 11-year-old price uptrend in the yellow metal remains fully in place, and Wednesday’s sharp sell-off, by itself, is so far insignificant from a longer-term technical perspective. And if the market price history of the past 11 years repeats itself, which technical odds suggest will be the case, this dip in gold prices will eventually prove to be a bargain-hunting buying opportunity. From a longer-term technical perspective, the path of least resistance for gold prices remains up, and will remain up until the longer-term price downtrend is broken. It would take a move in nearby Comex gold futures below the $1,500.00 level to begin to inflict significant longer-term chart damage to just begin to suggest the longer-term uptrend is ending.

The U.S. dollar index traded slightly higher Thursday, on more short covering after prices hit a fresh 3.5-month low Wednesday. Nymex crude oil futures prices traded higher, but have backed off from this week’s high. The recent rally in crude oil prices has been a bullish factor for the precious metals.
On the European Union sovereign debt crisis front, the big European Central Bank refinancing operation was very well subscribed Wednesday and the European bond markets are feeling the positive impact on Thursday, with generally lower yields. Still, the overall EU debt crisis remains a major underlying bullish factor for safe-haven gold.

The London P.M. gold fixing was $1,714.00 versus the previous P.M. fixing of $1,770.00.

Technically, April gold futures prices closed nearer the session high Thursday. The gold market bulls need to show more power soon to regain upside technical momentum. If there is strong selling pressure on Friday, more serious chart damage could be inflicted. The bulls’ next upside price breakout objective is to produce a close above solid technical resistance at this week’s high of $1,792.70. Bears' next near-term downside price objective is closing prices below solid technical support at this week’s low of $1,688.40. First resistance is seen at $1,740.00 and then at $1,750.00. First support is seen at $1,706.70 and then at $1,700.00. Wyckoff's Market Rating: 6.5.

March silver futures prices closed near the session high Thursday and made a decent recovery from the big losses Wednesday. Prices are still in a two-month-old uptrend on the daily bar chart. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at this week’s high of $37.48 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at the February low of $32.64. First resistance is seen at $36.00 and then at $36.50. Next support is seen at $35.00 and then at Thursday’s low of $34.505. Wyckoff's Market Rating: 6.5.

March N.Y. copper closed up 525 points 392.30 cents Thursday. Prices closed near the session high. Higher crude oil prices supported copper Thursday. Copper bulls have the overall near-term technical advantage. Copper bulls' next upside breakout objective is pushing and closing prices above major psychological resistance at 400.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at the February low of 369.35 cents. First resistance is seen at this week’s high of 395.25 cents and then at 397.50 cents. First support is seen at 390.00 cents and then at 387.50 cents. Wyckoff's Market Rating: 6.5.