Cocoa futures, meanwhile, edged higher again at midweek after falling from last week’s highs, as the market worries about the global supply deficit for the key chocolate-making ingredient.
Cocoa Futures
May cocoa on Liffe rose £6 to settle at £1,827 a tonne on Feb. 26 while cocoa futures on New York’s ICE exchange finished $14 up at $2,929.50 a tonne. ICE cocoa futures hit a 28-month intraday high of $2,975 on Feb. 21.
Platinum and other platinum group metals, including palladium, have yet to show much response to the ongoing mine strike in South Africa. The labour dispute affecting the platinum mines of the world’s three largest producers, Anglo American Platinum (Amplats), Impala Platinum (Implats) and Lonmin, now has entered its sixth week.
At the time of writing, there were reports that a fresh round of wage talks between the country’s Association of Mineworkers and Construction Union (Amcu) and the three platinum companies would start on Feb. 28, but this could not be confirmed.
The walkout of more than 80,000 mineworkers is reported to be costing the three platinum companies around 9,900 ounces of platinum daily and an estimated 5,000 ounces of palladium daily in lost output.
Spot platinum was variously fixed at between $1,429 and $1,439 an ounce on the London market in the first half of this week, and was fixed at $1,432 an ounce in the pm session on Feb. 26. This is $37.50 shy of the three-month high briefly seen in the days before the strike began on Jan. 23. April platinum futures on the Comex division of the New York Mercantile Exchange (Nymex) settled at $1,429.10 an ounce at midweek.
Similarly, spot palladium was various fixed at between $733 and $741 an ounce in the first half of this week. This compares to around $745-$746 in the days leading up to the start of the strike.
PGM prices have been unresponsive to the strike largely because the affected producers and fabricators had built up stocks ahead of the labour dispute. However, the longer the strike goes on, the more concerns will increase about supply shortages which will start to drive up prices in response, analysts said.
Standard Bank Commodities Strategist Walter de Wet believes South African producers may have around three months’ worth of platinum inventory stockpiled in London and Zurich. In a Global Commodities note earlier this week, he said the closer the market gets to the three-month mark, the greater the price support may become.
Meanwhile, Amplats, Implats and Lonmin on Feb. 24 starting showing in real time revenue and earnings lost to the strike in the sector on the website portal designed to provide updates on behalf of the platinum producers on the 2014 wage negotiations (http://www.platinumwagenegotiations.co.za). As at 1700 GMT on Feb. 27, revenues lost were over R.5.556 billion ($515.9 million) and employees’ lost earnings were more than R2.469 billion.
Gold continued to add gains early week, with gold futures for April delivery on the Comex division of Nymex rising on Feb. 25 to its highest settlement for a most active-contract since Oct. 30. April gold finished at $1,342.70 an ounce, up $4.7 on the day. But the precious metal fell back below $1,330 an ounce the following day as investors were lured away from the precious metal on better-than-expected monthly U.S. new home sales data. Gold settled the day over $14 down at $1,328 an ounce.
Copper slips to 12-week low
Concerns about China’s economic growth and renewed worries about turmoil in emerging markets driven by recent events in Ukraine, weighed on copper this week. London Metal Exchange (LME) copper prices have been trading in a narrow range of $7,000-$7,200 a tonne for much of February. But the benchmark three-month price on Feb. 26 fell below the $7,000 level to touch $6,994 a tonne, its weakest price since early December, before recovering to $7,076.
Investors were spooked by China’s Central Bank’s move to push the yuan lower against the U.S. dollar over the past week as well as early signs of a slowing property market in that country. The move by China to drive the yuan lower is a reversal of its strategy for most of 2013. Last year, the authorities were pushing the yuan ever higher against the dollar, which saw money pouring into the country to take advantage of the rising currency. This week’s move has brought the yuan to its weakest level in seven months.
However, some analysts, including Macquarie Group, believe the fears over China’s slowing property market are overdone.
Among base metals, copper has the least exposure to China’s property sector of just 20 percent, the bank also noted.
“Forty percent of the country’s copper use goes into infrastructure, most notably power infrastructure, This latter category will be boosted by over 12 percent year-on-year growth in grid investment budget from two major grid corporations,” Macquarie said.
Global supply concerns helped support oil futures in London and New York this week. Brent North Sea crude for April delivery on London’s ICE Futures Europe exchange recorded its highest settlement so far this year of $110.64 a barrel on Feb. 24, although had eased back to finish at $109.52 on Feb. 26. U.S. light, sweet crude for April delivery settled at $102.59 a barrel on Nymex at midweek.
In addition to Libyan output now running at less than half the early January levels of 570,000 barrels a day, according Agence France-Presse (AFP), citing the state-owned National Oil Corp, the market is fretting about supply reductions elsewhere, including Venezuela and Nigeria.
While care has been taken to ensure that the information contained in this report is accurate, it is supplied without guarantee. The author can accept no responsibility for any errors or any consequence arising from the information provided.
