Growth concerns in the US and European countries have put downside price pressure on most commodity markets, with crude oil and copper losing the most. The Reuters CRB Commodity Index has fallen below the level seen in early January, indicating that commodities have lost the gains of 2011.
The index stands at 327 points, down from 333 points in early January. Most metals are six to nine per cent lower compared to the levels seen in January. Only gold and silver were up 17.83 per cent and 27.87 per cent, respectively. Base metals have lost over two per cent on the London Metal Exchange, while on domestic commodity futures exchanges metals were down between 2.5 and 4.5 per cent.
While the difference between Nymex and Brent crude oil has been hovering around $13-$14 over the past few months, the gap has further widened in the last two days to $22.
With yesterday’s sharp fall in Brent crude oil prices, the Indian basket of crude oil yesterday was quoted higher to Brent.Yesterday, brent closed at $107.36, while the Indian basket was $108.33.
Gold was up Rs 145 per 10 gram to Rs 24,170, while silver closed 3.63 per cent lower to Rs 59,400 at Mumbai’s Zaveri Bazaar.
Copper fell to its lowest in more than a month on Friday as investors retreated from the industrial metal on rising concerns over economic and demand growth in the US and Europe — both regions mired in a debt crisis. Benchmark copper on the London Metal Exchange touched $9,143 per tonne, the lowest since June 29. The workers’ strike at BHP Billiton’s Escondida unit has been called off, which has helped soften prices.
Aluminium fell to $2,453 a tonne, lead slid to a two-month low of $2,392 and nickel to $23,000. Zinc and tin also fell to two-month lows at $2,230 and $24,700 a tonne, respectively.
A Barclays Capital commodity analyst said: “Yesterday’s precipitous fall was exaggerated by a combination of technical triggers and broad based risk aversion rather than any direct changes in underlying oil market fundamentals. As long as the market remains engulfed in this mesh of bearish sentiment, oil prices are likely to be weighed down.”
An analyst, however, said the overall commodity market “is fundamentally well supported and those who are turning bearish are running the risk of being fooled by the gloomy macroeconomic environment and overlooking the bigger picture of a market.”
Rubber was down in the Japanese market by almost three per cent, but in Kochi’s rubber market, prices have remained stable at Rs 210 per kg for RSS-4 natural rubber.
Jayant Manglik, president, Religare Commodities Ltd, said: “The western world is no more driving commodity prices and emerging markets, led by China and India are becoming key. Demand from the east has become crucial for commodities. Since the debt problems are mostly in the western world, commodities will find support from demand from east. Money will keep on moving from west to east over the next decade.”
