| BDI | 809 |  |
2 | .25% |
| BCI | 1336 | |
3 | .22% |
| BPI | 795 | |
11 | 1.36% |
| BSI | 871 |  |
6 | .69% |
| BHSI | 533 | |
4 | .74% |
Commodity prices mainly drop on poor economic outlook
Commodity prices mostly retreated this week as traders sought safety in the midst of more bleak outlooks for the global economy.
Sentiment was downbeat after the Organization for Economic Cooperation and Development on Wednesday trimmed its world economic growth forecast for 2013 to 3.1 percent from 3.4 percent.
The OECD, representing industrialised nations, slashed its growth forecast for the world's most advanced economies, except Japan, but said growth should pick up later this year.
Adding to the pressure on demand of raw materials was news this week from the International Monetary Fund that it has cut its 2013 growth forecast for China to close to 7.75 percent, citing a sluggish global recovery which has hurt exports.
The IMF had previously predicted growth of 8.0 percent in the world's second-biggest economy this year.
Added to the mix, the eurozone unemployment rate hit a fresh record high level of 12.2 percent in April, with 19.2 million people on the dole as recession continued to sap the economy.
The Eurostat data agency said on Friday that in the 12 months to April, a total 1.6 million people lost their jobs in the 17-nation eurozone, and an extra 95,000 people joined unemployment queues in the month alone from March to April this year.
In the United States, official data released this week has shown that new claims for unemployment insurance benefits unexpectedly rose last week, by 10,000, and pending home sales edged up 0.3 percent in April, when 1.5 percent was forecast.
The US government's revised estimate of first-quarter economic growth meanwhile came in barely changed at 2.4 percent. Analysts had expected that it would hold unchanged at 2.5 percent.
OIL: World oil prices dropped as traders reacted to more news of economic strains, while taking OPEC's expected decision to maintain its output ceiling in their stride.
The Organization of Petroleum Exporting Countries on Friday decided at a meeting in Vienna to hold its output ceiling steady, avoiding a cut which would have risked higher oil prices at a time of weak global demand growth and fragile economic recovery.
OPEC, which pumps out about 35 percent of global oil supplies, said it would leave the cartel's output ceiling at 30 million barrels per day, where it has stood since late 2011, despite actual output slightly exceeding the target.
Official data on Thursday meanwhile showed US stockpiles hitting an all-time high level.
Crude stockpiles jumped by three million barrels in the week ended May 24 to 397.6 million barrels, striking a record peak since the start of the weekly data in 1982, the Department of Energy reported.
The supplies also were the highest since May 1931, according to the department's monthly inventories reports.
By Friday on London's Intercontinental Exchange, Brent North Sea crude for delivery in July dropped to $101.06 a barrel from $102.27 a week earlier.
On the New York Mercantile Exchange, West Texas Intermediate (WTI) or light sweet crude for July slipped to $92.67 a barrel from $93.91 a week earlier.
PRECIOUS METALS: Prices rose across the board.
"Precious metal markets look well set to post a second week of gains after speculation that the Fed will maintain bond purchases increased demand for gold and silver markets as an inflationary hedge, with a weaker greenback also helping dollar denominated asset," said Nicky Dale-Lace, senior sales trader at CMC Markets.
By late Friday on the London Bullion Market, the price of gold rose to $1,394.50 an ounce from $1,390.25 a week earlier.
Silver climbed to $22.57 an ounce from $22.38.
On the London Platinum and Palladium Market, platinum inched higher to $1,459 an ounce from $1,455.
Palladium grew to $744 an ounce from $729.
BASE METALS: Base or industrial metal prices were mixed, as traders tracked global economic uncertainty as well as strike action at a copper and gold mine in Indonesia.
"The downgrade to China's growth forecast by the IMF... seems to have set the weaker tone" for some metals, said William Adams, analyst at research group Fast Markets.
Thousands of workers at a US-owned mine in eastern Indonesia are meanwhile refusing to return to work until investigations into one of the country's worst mining accidents are completed, a union said Friday.
Freeport-McMoRan resumed some operations Tuesday at its Grasberg gold and copper mine in Papua province after an almost two-week shutdown caused by a tunnel collapse that killed 28 workers. Ten others were rescued.
"It seems that the (parts of the base metals) complex are staging modest rallies mainly on the back of a weaker dollar and Grasberg-related headlines, only for prices to get smacked down when poor macro headlines surface," said Ed Meir, analyst at financial services group INTL FCStone.
"We will be getting a number of reports out of China over the weekend and going into next week that should provide the London Metal Exchange group more direction," he added.
By Friday on the London Metal Exchange, copper for delivery in three months fell to $7,270 a tonne from $7,315.75 a week earlier.
Three-month aluminium rose to $1,902 a tonne from $1,854.50.
Three-month lead climbed to $2,183 a tonne from $2,055.75.
Three-month tin retreated to $20,900 a tonne from $21,200.
Three-month nickel decreased to $14,670 a tonne from $14,910.
Three-month zinc increased to $1,912 a tonne from $1,861.75
COCOA: Futures retreated in trading on both sides of the Atlantic despite the International Cocoa Organization (ICCO) hiking its forecast for cocoa's global deficit.
The ICCO is predicting a deficit of 60,000 tonnes for the 2012/13 season closing in September, up from its previous estimate of 45,000.
By Friday on LIFFE, London's futures exchange, cocoa for delivery in July slipped to £1,502 a tonne from £1,528 a week earlier.
On New York's NYBOT-ICE exchange, cocoa for July dropped to $2,210 a tonne from $2,267.
COFFEE: Prices slid on expectations of high supplies.
"There appears to be no limit to how far the price of Arabica can fall at the moment (...)The very high Brazilian harvest and forecasts of a renewed surplus on the international coffee market in the 2013/14 season are weighing on prices," Commerzbank analysts said in a note to clients.
By Friday on NYBOT-ICE, Arabica for delivery in July slid to 126.65 US cents a pound from 130.40 cents a week earlier.
On LIFFE, Robusta for July dropped to $1,892 a tonne from $1,978.
SUGAR: Prices diverged after recent three-year lows caused by significant surplus expectations.
"News of another big production period in the first half of May in Brazil was negative"for prices, said Jack Scoville, analyst at traders Price Futures Group.
By Friday on NYBOT-ICE, the price of unrefined sugar for delivery in July slipped to 16.72 US cents a pound from 16.79 cents a week earlier.
On LIFFE, the price of a tonne of white sugar for August grew to $479.80 from $475.50.
Source: AFP
Sentiment was downbeat after the Organization for Economic Cooperation and Development on Wednesday trimmed its world economic growth forecast for 2013 to 3.1 percent from 3.4 percent.
The OECD, representing industrialised nations, slashed its growth forecast for the world's most advanced economies, except Japan, but said growth should pick up later this year.
Adding to the pressure on demand of raw materials was news this week from the International Monetary Fund that it has cut its 2013 growth forecast for China to close to 7.75 percent, citing a sluggish global recovery which has hurt exports.
The IMF had previously predicted growth of 8.0 percent in the world's second-biggest economy this year.
Added to the mix, the eurozone unemployment rate hit a fresh record high level of 12.2 percent in April, with 19.2 million people on the dole as recession continued to sap the economy.
The Eurostat data agency said on Friday that in the 12 months to April, a total 1.6 million people lost their jobs in the 17-nation eurozone, and an extra 95,000 people joined unemployment queues in the month alone from March to April this year.
In the United States, official data released this week has shown that new claims for unemployment insurance benefits unexpectedly rose last week, by 10,000, and pending home sales edged up 0.3 percent in April, when 1.5 percent was forecast.
The US government's revised estimate of first-quarter economic growth meanwhile came in barely changed at 2.4 percent. Analysts had expected that it would hold unchanged at 2.5 percent.
OIL: World oil prices dropped as traders reacted to more news of economic strains, while taking OPEC's expected decision to maintain its output ceiling in their stride.
The Organization of Petroleum Exporting Countries on Friday decided at a meeting in Vienna to hold its output ceiling steady, avoiding a cut which would have risked higher oil prices at a time of weak global demand growth and fragile economic recovery.
OPEC, which pumps out about 35 percent of global oil supplies, said it would leave the cartel's output ceiling at 30 million barrels per day, where it has stood since late 2011, despite actual output slightly exceeding the target.
Official data on Thursday meanwhile showed US stockpiles hitting an all-time high level.
Crude stockpiles jumped by three million barrels in the week ended May 24 to 397.6 million barrels, striking a record peak since the start of the weekly data in 1982, the Department of Energy reported.
The supplies also were the highest since May 1931, according to the department's monthly inventories reports.
By Friday on London's Intercontinental Exchange, Brent North Sea crude for delivery in July dropped to $101.06 a barrel from $102.27 a week earlier.
On the New York Mercantile Exchange, West Texas Intermediate (WTI) or light sweet crude for July slipped to $92.67 a barrel from $93.91 a week earlier.
PRECIOUS METALS: Prices rose across the board.
"Precious metal markets look well set to post a second week of gains after speculation that the Fed will maintain bond purchases increased demand for gold and silver markets as an inflationary hedge, with a weaker greenback also helping dollar denominated asset," said Nicky Dale-Lace, senior sales trader at CMC Markets.
By late Friday on the London Bullion Market, the price of gold rose to $1,394.50 an ounce from $1,390.25 a week earlier.
Silver climbed to $22.57 an ounce from $22.38.
On the London Platinum and Palladium Market, platinum inched higher to $1,459 an ounce from $1,455.
Palladium grew to $744 an ounce from $729.
BASE METALS: Base or industrial metal prices were mixed, as traders tracked global economic uncertainty as well as strike action at a copper and gold mine in Indonesia.
"The downgrade to China's growth forecast by the IMF... seems to have set the weaker tone" for some metals, said William Adams, analyst at research group Fast Markets.
Thousands of workers at a US-owned mine in eastern Indonesia are meanwhile refusing to return to work until investigations into one of the country's worst mining accidents are completed, a union said Friday.
Freeport-McMoRan resumed some operations Tuesday at its Grasberg gold and copper mine in Papua province after an almost two-week shutdown caused by a tunnel collapse that killed 28 workers. Ten others were rescued.
"It seems that the (parts of the base metals) complex are staging modest rallies mainly on the back of a weaker dollar and Grasberg-related headlines, only for prices to get smacked down when poor macro headlines surface," said Ed Meir, analyst at financial services group INTL FCStone.
"We will be getting a number of reports out of China over the weekend and going into next week that should provide the London Metal Exchange group more direction," he added.
By Friday on the London Metal Exchange, copper for delivery in three months fell to $7,270 a tonne from $7,315.75 a week earlier.
Three-month aluminium rose to $1,902 a tonne from $1,854.50.
Three-month lead climbed to $2,183 a tonne from $2,055.75.
Three-month tin retreated to $20,900 a tonne from $21,200.
Three-month nickel decreased to $14,670 a tonne from $14,910.
Three-month zinc increased to $1,912 a tonne from $1,861.75
COCOA: Futures retreated in trading on both sides of the Atlantic despite the International Cocoa Organization (ICCO) hiking its forecast for cocoa's global deficit.
The ICCO is predicting a deficit of 60,000 tonnes for the 2012/13 season closing in September, up from its previous estimate of 45,000.
By Friday on LIFFE, London's futures exchange, cocoa for delivery in July slipped to £1,502 a tonne from £1,528 a week earlier.
On New York's NYBOT-ICE exchange, cocoa for July dropped to $2,210 a tonne from $2,267.
COFFEE: Prices slid on expectations of high supplies.
"There appears to be no limit to how far the price of Arabica can fall at the moment (...)The very high Brazilian harvest and forecasts of a renewed surplus on the international coffee market in the 2013/14 season are weighing on prices," Commerzbank analysts said in a note to clients.
By Friday on NYBOT-ICE, Arabica for delivery in July slid to 126.65 US cents a pound from 130.40 cents a week earlier.
On LIFFE, Robusta for July dropped to $1,892 a tonne from $1,978.
SUGAR: Prices diverged after recent three-year lows caused by significant surplus expectations.
"News of another big production period in the first half of May in Brazil was negative"for prices, said Jack Scoville, analyst at traders Price Futures Group.
By Friday on NYBOT-ICE, the price of unrefined sugar for delivery in July slipped to 16.72 US cents a pound from 16.79 cents a week earlier.
On LIFFE, the price of a tonne of white sugar for August grew to $479.80 from $475.50.
Source: AFP
Abe Offers $32 Billion to Africa as Japan Seeks Resources
Japanese Prime Minister Shinzo Abe pledged 3.2 trillion yen ($32 billion) to Africa as his government seeks to catch up with China in pursuing resources, markets and influence on the continent.
Abe announced the five-year commitment of public and private support in a speech today at the Tokyo International Conference on African Development. Officials from about 50 nations are attending the meeting, held every five years, which is the biggest African development event outside the continent since it began in 1993.
Africa’s economic growth is luring Japanese exporters, while the government wants to tap the natural gas and oil there after the 2011 Fukushima disaster led to the closing of Japan’s nuclear plants. Chinese firms helped fuel $138.6 billion in China-Africa trade in 2011, almost five times Japan’s commerce with the continent, according to the Foreign Ministry, citing International Monetary Fund data.
“China has become a far greater presence than Japan in Africa -- it’s overwhelming,” said Kazuyoshi Aoki, a professor at Nihon University in Tokyo who specializes in African matters. “The difference lies in the level of determination. There’s a different perception of Africa’s importance.”
Encourage Investment
In his speech, Abe outlined policies to encourage investment by Japanese companies and support advances in health, education and agriculture. Today’s pledge compares with publicly funded assistance of about $9.2 billion from 2008-2012.
Abe hasn’t visited Africa since taking office in December, in contrast with Chinese President Xi Jinping, who stopped in Tanzania, the Congo Republic and South Africa in March as part of his first trip abroad less than a month into office.
While in Africa, Xi reiterated a pledge for $20 billion in loans over the next two years. China also paid for and built the African Union’s $200 million headquarters in Addis Ababa, Ethiopia that opened last year.
Most of Japan’s purchases from Africa consist of metals and fuels, including 10 percent of last year’s liquefied natural gas imports, according to Finance Ministry data compiled by Bloomberg. Japan exports mostly vehicles and machinery, according to the Japan External Trade Organization.
Mineral Deal
Japan is also seeking rare earth minerals and agreed with South Africa on May 16 to extend joint exploration for the elements used in manufacturing as Japan seeks to escape its reliance on imports from China.
The conference renews focus on Africa as a business partner and not just an aid recipient. For the first time, corporations will be invited to an official session, Masaji Matsuyama, a parliamentary senior vice minister for foreign affairs who holds responsibility for Africa, said in an interview.
Abe will hold individual meetings with about 40 African leaders, the Foreign Ministry said. South African President Jacob Zuma is attending with the leaders of Uganda and Zambia.
“The number one request from African nations is promotion of trade and investment,” Matsuyama said. He said the government’s role will be to smooth the way by investing in infrastructure and sealing accords to protect private investments from the risk of sudden nationalization.
Investment Pact
Japan signed an investment agreement today with Mozambique, its first with a country in sub-Saharan Africa, the Foreign Ministry said in a statement. The accord details rules for promoting and liberalizing bilateral investment, as well as for compensation in the case of expropriation.
Mozambique boasts one of the world’s largest natural gas reserves and Africa’s largest coking coal reserves, the ministry said in its statement.
Singaporean Prime Minister Lee Hsien Loong said in Tokyo last month that Japanese leaders turned their attention inward during the economic downturn, missing opportunities for overseas investment while China became more aggressive abroad.
“You have not been able to develop an overall national Japanese perspective of what is in Japan’s interests and make a decision,” Lee said. “The Chinese were able to do that.”
As an example, he said Japan is yet to sign an investment accord with the Association of Southeast Asian Nations, 13 years after announcing a plan to do so.
Asked about a rivalry between China and Japan in Africa, South Africa’s Ambassador to Tokyo said more top-level visits were needed to build relationships. Mohau Pheko told a news conference in Tokyo on May 21 that her suggestions about such trips had met with a negative response from the Japanese government.
“China does service the relationship,” she said. “Many top level visits. Japan is invisible. But you want my minerals at the same time. Terrible thing.”
Source: Bloomberg
Abe announced the five-year commitment of public and private support in a speech today at the Tokyo International Conference on African Development. Officials from about 50 nations are attending the meeting, held every five years, which is the biggest African development event outside the continent since it began in 1993.
Africa’s economic growth is luring Japanese exporters, while the government wants to tap the natural gas and oil there after the 2011 Fukushima disaster led to the closing of Japan’s nuclear plants. Chinese firms helped fuel $138.6 billion in China-Africa trade in 2011, almost five times Japan’s commerce with the continent, according to the Foreign Ministry, citing International Monetary Fund data.
“China has become a far greater presence than Japan in Africa -- it’s overwhelming,” said Kazuyoshi Aoki, a professor at Nihon University in Tokyo who specializes in African matters. “The difference lies in the level of determination. There’s a different perception of Africa’s importance.”
Encourage Investment
In his speech, Abe outlined policies to encourage investment by Japanese companies and support advances in health, education and agriculture. Today’s pledge compares with publicly funded assistance of about $9.2 billion from 2008-2012.
Abe hasn’t visited Africa since taking office in December, in contrast with Chinese President Xi Jinping, who stopped in Tanzania, the Congo Republic and South Africa in March as part of his first trip abroad less than a month into office.
While in Africa, Xi reiterated a pledge for $20 billion in loans over the next two years. China also paid for and built the African Union’s $200 million headquarters in Addis Ababa, Ethiopia that opened last year.
Most of Japan’s purchases from Africa consist of metals and fuels, including 10 percent of last year’s liquefied natural gas imports, according to Finance Ministry data compiled by Bloomberg. Japan exports mostly vehicles and machinery, according to the Japan External Trade Organization.
Mineral Deal
Japan is also seeking rare earth minerals and agreed with South Africa on May 16 to extend joint exploration for the elements used in manufacturing as Japan seeks to escape its reliance on imports from China.
The conference renews focus on Africa as a business partner and not just an aid recipient. For the first time, corporations will be invited to an official session, Masaji Matsuyama, a parliamentary senior vice minister for foreign affairs who holds responsibility for Africa, said in an interview.
Abe will hold individual meetings with about 40 African leaders, the Foreign Ministry said. South African President Jacob Zuma is attending with the leaders of Uganda and Zambia.
“The number one request from African nations is promotion of trade and investment,” Matsuyama said. He said the government’s role will be to smooth the way by investing in infrastructure and sealing accords to protect private investments from the risk of sudden nationalization.
Investment Pact
Japan signed an investment agreement today with Mozambique, its first with a country in sub-Saharan Africa, the Foreign Ministry said in a statement. The accord details rules for promoting and liberalizing bilateral investment, as well as for compensation in the case of expropriation.
Mozambique boasts one of the world’s largest natural gas reserves and Africa’s largest coking coal reserves, the ministry said in its statement.
Singaporean Prime Minister Lee Hsien Loong said in Tokyo last month that Japanese leaders turned their attention inward during the economic downturn, missing opportunities for overseas investment while China became more aggressive abroad.
“You have not been able to develop an overall national Japanese perspective of what is in Japan’s interests and make a decision,” Lee said. “The Chinese were able to do that.”
As an example, he said Japan is yet to sign an investment accord with the Association of Southeast Asian Nations, 13 years after announcing a plan to do so.
Asked about a rivalry between China and Japan in Africa, South Africa’s Ambassador to Tokyo said more top-level visits were needed to build relationships. Mohau Pheko told a news conference in Tokyo on May 21 that her suggestions about such trips had met with a negative response from the Japanese government.
“China does service the relationship,” she said. “Many top level visits. Japan is invisible. But you want my minerals at the same time. Terrible thing.”
Source: Bloomberg
US shale glut changes coal export game
Origin Energy managing director Grant King has warned that the global fallout from the US shale oil and gas revolution will increase pressure on Australian coal exporters.
The glut of US gas is threatening to choke off further expansion of the local gas export sector, beyond what is already under construction.
Cheap gas in the US is forcing more US coal into export markets - in Europe and Asia - which has cut across export growth prospects for much of the local coal industry, Mr King told a conference in Sydney on Friday.
Developers of export gas projects in Queensland, for example, were already beneficiaries of the changes unfolding, with an increase in labour availability as coalminers retrench staff and contractors.
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The shale revolution has catapulted the US to a cheap manufacturing centre, with ''implications for Europe'', which is increasingly uncompetitive especially with high energy prices.
In the Australian coal industry, several planned expansion projects and proposed new mines are now not expected to proceed.
The withdrawal of capital from the coal projects has resulted in ''much more labour available'' for the export gas projects being developed in Queensland.
Mr King said Europe was ''struggling with the high level of subsidies required'' to sustain its renewables energy sector, in areas such as wind and solar energy. ''Spain is largely bankrupt due to subsidies'' on renewable energy. ''Europe's economic circumstances are increasingly uncompetitive. Subsidies will be withdrawn,'' he said, arguing that the ''global consensus'' in favour of a price on carbon no longer existed.
Despite criticism over the high cost of developing export gas projects in Australia, Mr King said the projects now being planned in the US would be only slightly less expensive, although the US did have the advantage of using existing infrastructure, which needs to be reconfigured from, for example, import to export terminals.
With the US benefiting from falling energy prices, electricity prices in Australia will rise further unless renewables energy schemes are revised, Mr King said.
The high cost of the household solar subsidy in Australia, which the Queensland Competition Authority estimated at $200 a household a year will ''need to be reversed … inevitably''.
US coal export capacity could more than double to about 400 million tonnes by the end of the decade, with most of that growth aimed at the Asian market.
Source: Sydney Morning Herald
The glut of US gas is threatening to choke off further expansion of the local gas export sector, beyond what is already under construction.
Cheap gas in the US is forcing more US coal into export markets - in Europe and Asia - which has cut across export growth prospects for much of the local coal industry, Mr King told a conference in Sydney on Friday.
Developers of export gas projects in Queensland, for example, were already beneficiaries of the changes unfolding, with an increase in labour availability as coalminers retrench staff and contractors.
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The shale revolution has catapulted the US to a cheap manufacturing centre, with ''implications for Europe'', which is increasingly uncompetitive especially with high energy prices.
In the Australian coal industry, several planned expansion projects and proposed new mines are now not expected to proceed.
The withdrawal of capital from the coal projects has resulted in ''much more labour available'' for the export gas projects being developed in Queensland.
Mr King said Europe was ''struggling with the high level of subsidies required'' to sustain its renewables energy sector, in areas such as wind and solar energy. ''Spain is largely bankrupt due to subsidies'' on renewable energy. ''Europe's economic circumstances are increasingly uncompetitive. Subsidies will be withdrawn,'' he said, arguing that the ''global consensus'' in favour of a price on carbon no longer existed.
Despite criticism over the high cost of developing export gas projects in Australia, Mr King said the projects now being planned in the US would be only slightly less expensive, although the US did have the advantage of using existing infrastructure, which needs to be reconfigured from, for example, import to export terminals.
With the US benefiting from falling energy prices, electricity prices in Australia will rise further unless renewables energy schemes are revised, Mr King said.
The high cost of the household solar subsidy in Australia, which the Queensland Competition Authority estimated at $200 a household a year will ''need to be reversed … inevitably''.
US coal export capacity could more than double to about 400 million tonnes by the end of the decade, with most of that growth aimed at the Asian market.
Source: Sydney Morning Herald
Iron ore price: China's weekend surprise could stop slump turning into rout
Iron ore prices fell again on Friday bringing the week's losses for the commodity to 8.7%, the worst performance since October 2011.
The benchmark import price of 62% iron ore fines at China's Tianjin port is now trading at $110.40 a tonne, the weakest level since October 4.
The steelmaking ingredient is also down 30% from its 2013 high of $159 hit in February.
Iron ore's recent sharp pullback is beginning to resemble the declines suffered in the fall of 2011 and again in 2012.
Any acceleration in the sell-off on Monday could turn the slump into a full blown rout with traders already talking about market panic.
Iron ore hit an all time record in February 2011 of over $190 and famously eight months later suffered a $60 drop over the duration of 28 days.
The market suffered a similar shock in August-September last year when the Chinese import price dropped 25% over a month to a three-and-a-half year low of $86.70.
On both occasions the rally in prices was equally as impressive as the falls – so much so that China characterized the 2012 comeback market manipulation.
Things may be different this time around with market fundamentals considerably weaker.
A slowdown in China which consumes more than 60% of the seaborne trade and overcapacity in that country's steel industry have been cited as reasons for the panic in markets, but the primary factor driving down prices is vast new supplies coming onto the market.
In a research note this week investment bank Barclays said new capacity will push prices down to "the mid-$90s by 2014 in our base case, with potential to drop to the low $80s in even a modest downside case in which softer demand growth magnifies the effect of the supply increase."
However there are also factors counting in iron ore's favour.
Inventory levels at Chinese ports are still down more than 25% from year ago levels of around 100 million tonnes and the country's steel output continues to run at a near record rate of 2 million tonnes a day.
And China is still able to surprise on the upside.
On Saturday, China PMI figures – the most reliable data point to gauge economic activity in the country – showed a surprise jump with production and trade rebounding. Expectations were for static growth or contraction.
Source: Mining
The benchmark import price of 62% iron ore fines at China's Tianjin port is now trading at $110.40 a tonne, the weakest level since October 4.
The steelmaking ingredient is also down 30% from its 2013 high of $159 hit in February.
Iron ore's recent sharp pullback is beginning to resemble the declines suffered in the fall of 2011 and again in 2012.
Any acceleration in the sell-off on Monday could turn the slump into a full blown rout with traders already talking about market panic.
Iron ore hit an all time record in February 2011 of over $190 and famously eight months later suffered a $60 drop over the duration of 28 days.
The market suffered a similar shock in August-September last year when the Chinese import price dropped 25% over a month to a three-and-a-half year low of $86.70.
On both occasions the rally in prices was equally as impressive as the falls – so much so that China characterized the 2012 comeback market manipulation.
Things may be different this time around with market fundamentals considerably weaker.
A slowdown in China which consumes more than 60% of the seaborne trade and overcapacity in that country's steel industry have been cited as reasons for the panic in markets, but the primary factor driving down prices is vast new supplies coming onto the market.
In a research note this week investment bank Barclays said new capacity will push prices down to "the mid-$90s by 2014 in our base case, with potential to drop to the low $80s in even a modest downside case in which softer demand growth magnifies the effect of the supply increase."
However there are also factors counting in iron ore's favour.
Inventory levels at Chinese ports are still down more than 25% from year ago levels of around 100 million tonnes and the country's steel output continues to run at a near record rate of 2 million tonnes a day.
And China is still able to surprise on the upside.
On Saturday, China PMI figures – the most reliable data point to gauge economic activity in the country – showed a surprise jump with production and trade rebounding. Expectations were for static growth or contraction.
Source: Mining
After GMO wheat discovery, US races to reassure global buyers
Major global importers expressed alarm over U.S. wheat supplies after the first-ever discovery of an unapproved strain of genetically modified grain in Oregon, as U.S. officials raced to contain the fallout.
Japan cancelled a tender offer to buy U.S. western white wheat and the European Union said it would test incoming U.S. shipments and block any containing genetically modified wheat. U.S. wheat merchants did not report any cancellations of purchases on Thursday, but some analysts feared a potentially damaging blow to the $8 billion export business.
"Unless there's a quick resolution, this is not going to be good for the export market," said Art Liming, grain futures specialist with Citigroup.
The U.S. Department of Agriculture said nine investigators were collecting evidence in and around Oregon, the west coast state where the genetically modified, or GM, wheat was found growing. A USDA spokesman said the investigators are taking witness statements, records and samples.
"We have increased the number of investigators throughout this month to work quickly and carefully to cover as much ground each day to determine what we are dealing with, how it got there, and where it might have gone," he said.
The USDA said the GM wheat found in Oregon posed no threat to human health, and also said there was no evidence that the grain had entered the commercial supply chain.
GM crops tolerate certain pesticides, allowing farmers to improve weed control and increase yields. Many consumers are wary of GM food, and few countries allow imports of such cereals for direct human consumption.
While most of the U.S. corn and soybean crops come from genetically modified plants, no GM wheat varieties are approved for general planting in the United States or elsewhere, the USDA said. The EU has asked Monsanto, the maker of the GM wheat, for a detection method to allow its controls to be carried out.
Scientists said the wheat found in Oregon was a strain field-tested from 1998 to 2005 and deemed safe before St. Louis-based Monsanto withdrew it from the regulatory process. On Wednesday, Monsanto said there was "considerable reason" to believe that the presence of its product was "very limited".
U.S. wheat futures on the Chicago Board of Trade dipped on Thursday. CBOT wheat for July delivery closed 4 cents per bushel lower at $6.98-3/4 per bushel.
Asian wheat importers South Korea, China and the Philippines said they were monitoring the situation. The world's biggest wheat importer, Egypt, said it had no fears yet over supplies.
FOUND IN OREGON
The wheat was discovered this spring in an Oregon field that grew winter wheat in 2012. USDA officials said that when a farmer sprayed the so-called "volunteer" plants with a powerful herbicide meant to kill off standard, unaltered wheat plants, some of them unexpectedly survived.
Environmental activists expressed alarm at the discovery.
"The developers of GE wheat have repeatedly said that GE wheat will not contaminate conventional or organic wheat because it is predominantly self-pollinating. Despite these empty promises, GE contamination has happened," Greenpeace International scientist Janet Cotter said.
"The only way to protect our food and environment is to stop the releases of GE crops to the environment - including a ban on field trials."
Past discoveries of unapproved corn and rice varieties in the supply chain have shuttered export markets for months and cost billions of dollars in lost revenue.
The latest finding revives memories of farmers unwittingly planting genetically modified rapeseed in Europe in 2000, while in 2006 a large part of the U.S. long-grain rice crop was contaminated by an experimental strain from Bayer CropScience , prompting import bans in Europe and Japan.
The company agreed in court in 2011 to pay $750 million to growers as compensation.
But some said the more apt precedent involved StarLink corn, a GMO variety not approved for human consumption that was found in a shipment of corn in Japan in 2000. Shipments to Asia were cut deeply for more than a year afterward.
Wayne Bacon, president of French-based grain trader Hammersmith Marketing said some consumers would have a knee-jerk reaction.
"We all buy things with GM products in it every day, we just don't know about it, but if suddenly we know that the loaf of bread we are buying is made from GMO wheat then it becomes a very negative thing with the consumer."
ASIA JITTERY
Asia imports more than 40 million tonnes of wheat annually, almost a third of the global trade of 140-150 million tonnes. The bulk of the region's supplies come from the United States, the world's biggest exporter, and Australia, the No. 2 supplier.
"Asian consumers are jittery about genetically modified food," said Abah Ofon, an analyst at Standard Chartered Bank in Singapore. "This is adding to concerns that already exist on quality and availability of food wheat globally."
European traders said any buyers who grow leery of U.S. grain could opt for Black Sea and EU wheat.
China emerged this year as a key buyer of U.S. wheat, taking around 1.5 million tonnes in the past two months. Chinese purchases in the year to June 2014 are estimated to rise 21 percent to 3.5 million tonnes, according to the USDA, with most shipments coming from the United States, Australia and Canada.
The Philippines, which buys about 4 million tonnes of wheat a year and relies mainly on U.S. supplies, is waiting for more details before acting, an industry official in Manila said.
Genetically modified crops cannot be grown legally in the United States unless the government approves them after a review to ensure they pose no threat to the environment or to people.
Source: Reuters (By Charles Abbott and Charlie Dunmore, Additional reporting by Chuck Abbott in Washington, Naveen Thukral in Singapore, Niu Shuping in Beijing, Erik dela Cruz in MANILA, Jane Chung in SEOUL, Yayat Supriatna in JAKARTA, Valerie Parent, Michael Hogan and Sarah Mcfarlane; writing by Veronica Brown and Karl Plume; editing by Richard Pullin, Keiron Henderson, Jonathan Leff and David Gregorio)
Japan cancelled a tender offer to buy U.S. western white wheat and the European Union said it would test incoming U.S. shipments and block any containing genetically modified wheat. U.S. wheat merchants did not report any cancellations of purchases on Thursday, but some analysts feared a potentially damaging blow to the $8 billion export business.
"Unless there's a quick resolution, this is not going to be good for the export market," said Art Liming, grain futures specialist with Citigroup.
The U.S. Department of Agriculture said nine investigators were collecting evidence in and around Oregon, the west coast state where the genetically modified, or GM, wheat was found growing. A USDA spokesman said the investigators are taking witness statements, records and samples.
"We have increased the number of investigators throughout this month to work quickly and carefully to cover as much ground each day to determine what we are dealing with, how it got there, and where it might have gone," he said.
The USDA said the GM wheat found in Oregon posed no threat to human health, and also said there was no evidence that the grain had entered the commercial supply chain.
GM crops tolerate certain pesticides, allowing farmers to improve weed control and increase yields. Many consumers are wary of GM food, and few countries allow imports of such cereals for direct human consumption.
While most of the U.S. corn and soybean crops come from genetically modified plants, no GM wheat varieties are approved for general planting in the United States or elsewhere, the USDA said. The EU has asked Monsanto, the maker of the GM wheat, for a detection method to allow its controls to be carried out.
Scientists said the wheat found in Oregon was a strain field-tested from 1998 to 2005 and deemed safe before St. Louis-based Monsanto withdrew it from the regulatory process. On Wednesday, Monsanto said there was "considerable reason" to believe that the presence of its product was "very limited".
U.S. wheat futures on the Chicago Board of Trade dipped on Thursday. CBOT wheat for July delivery closed 4 cents per bushel lower at $6.98-3/4 per bushel.
Asian wheat importers South Korea, China and the Philippines said they were monitoring the situation. The world's biggest wheat importer, Egypt, said it had no fears yet over supplies.
FOUND IN OREGON
The wheat was discovered this spring in an Oregon field that grew winter wheat in 2012. USDA officials said that when a farmer sprayed the so-called "volunteer" plants with a powerful herbicide meant to kill off standard, unaltered wheat plants, some of them unexpectedly survived.
Environmental activists expressed alarm at the discovery.
"The developers of GE wheat have repeatedly said that GE wheat will not contaminate conventional or organic wheat because it is predominantly self-pollinating. Despite these empty promises, GE contamination has happened," Greenpeace International scientist Janet Cotter said.
"The only way to protect our food and environment is to stop the releases of GE crops to the environment - including a ban on field trials."
Past discoveries of unapproved corn and rice varieties in the supply chain have shuttered export markets for months and cost billions of dollars in lost revenue.
The latest finding revives memories of farmers unwittingly planting genetically modified rapeseed in Europe in 2000, while in 2006 a large part of the U.S. long-grain rice crop was contaminated by an experimental strain from Bayer CropScience , prompting import bans in Europe and Japan.
The company agreed in court in 2011 to pay $750 million to growers as compensation.
But some said the more apt precedent involved StarLink corn, a GMO variety not approved for human consumption that was found in a shipment of corn in Japan in 2000. Shipments to Asia were cut deeply for more than a year afterward.
Wayne Bacon, president of French-based grain trader Hammersmith Marketing said some consumers would have a knee-jerk reaction.
"We all buy things with GM products in it every day, we just don't know about it, but if suddenly we know that the loaf of bread we are buying is made from GMO wheat then it becomes a very negative thing with the consumer."
ASIA JITTERY
Asia imports more than 40 million tonnes of wheat annually, almost a third of the global trade of 140-150 million tonnes. The bulk of the region's supplies come from the United States, the world's biggest exporter, and Australia, the No. 2 supplier.
"Asian consumers are jittery about genetically modified food," said Abah Ofon, an analyst at Standard Chartered Bank in Singapore. "This is adding to concerns that already exist on quality and availability of food wheat globally."
European traders said any buyers who grow leery of U.S. grain could opt for Black Sea and EU wheat.
China emerged this year as a key buyer of U.S. wheat, taking around 1.5 million tonnes in the past two months. Chinese purchases in the year to June 2014 are estimated to rise 21 percent to 3.5 million tonnes, according to the USDA, with most shipments coming from the United States, Australia and Canada.
The Philippines, which buys about 4 million tonnes of wheat a year and relies mainly on U.S. supplies, is waiting for more details before acting, an industry official in Manila said.
Genetically modified crops cannot be grown legally in the United States unless the government approves them after a review to ensure they pose no threat to the environment or to people.
Source: Reuters (By Charles Abbott and Charlie Dunmore, Additional reporting by Chuck Abbott in Washington, Naveen Thukral in Singapore, Niu Shuping in Beijing, Erik dela Cruz in MANILA, Jane Chung in SEOUL, Yayat Supriatna in JAKARTA, Valerie Parent, Michael Hogan and Sarah Mcfarlane; writing by Veronica Brown and Karl Plume; editing by Richard Pullin, Keiron Henderson, Jonathan Leff and David Gregorio)
World Grain Outlook Raised by IGC on China Corn, India Wheat
The world’s grain harvest will be bigger in the 2013-14 season than predicted a month ago on increased estimates for corn in China and larger wheat crops in India and Canada, the International Grains Council said.
Output of grains excluding rice may rise to 1.92 billion metric tons from an estimated 1.79 billion tons in 2012-13, the London-based IGC wrote in its monthly market report today, raising its outlook for the new harvest by 10.3 million tons.
The outlook for rising grain production in the U.S., Europe and the Black Sea region has hurt corn and wheat prices. Corn is the second-worst performer on the S&P GSCI Commodity gauge behind silver this year, sliding 19 percent.
For corn, “carryovers in 2013-14 will be much more comfortable compared to the previous year, especially in the U.S., where stocks are expected to more than double,” the grains council wrote.
World corn production may jump 10 percent to 944.6 million tons from 855.7 million tons in 2012-13, the IGC forecast, raising the outlook by 5.7 million tons. That will boost ending stocks to 149 million tons from 122 million tons, it said.
The outlook for China’s corn crop was lifted by 4 million tons to 214 million tons, climbing from production of 208 million tons in the previous season. U.S. farmers may gather 355 million tons of corn from 273.8 million tons in 2012, the IGC forecast, cutting its outlook by 2 million tons.
The European Union’s corn harvest may jump to 64.4 million tons from 54.8 million tons on production gains in Romania and Hungary, which suffered from drought last year, while Brazil’s output may fall to 72 million tons from 78 million tons.
Corn
Global trade in corn may climb to 97.5 million tons from 94.5 million tons, with imports by China advancing to 7 million tons from 4 million tons. EU overseas purchases are predicted to fall to 6.5 million tons from 10 million tons.
The U.S. is expected to reclaim its spot as the world’s biggest corn exporter from Brazil, with shipments climbing to 32 million tons from 21.5 million tons. Brazil’s corn exports are seen falling to 20.5 million tons from 27 million tons.
Farmers across the world are forecast to reap 682.1 tons of wheat, 4.1 percent more than a 2012-13 crop estimated at 655.1 million tons and 2.2 million tons more than predicted last month, according to the IGC.
Stocks of the world’s most-traded grain are seen climbing to 180 million tons from 178 million tons.
Wheat production in the EU may climb to 137.1 million tons from 130.3 million tons on bigger crops in Spain and Romania, even as the U.K.’s harvest is predicted to slide to 11.8 million tons from 13.3 million tons.
Production Up
Russia, Ukraine and Kazakhstan are all forecast by the IGC to boost wheat production, with farmers in the former Soviet Union lifting output to 99.9 million tons from 77.2 million tons.
The U.S. wheat crop will probably decline to 52 million tons from 61.8 million tons, while Canada’s may rise to 29 million tons from 27.2 million tons, according to the IGC, which raised the forecast for the latter by 1 million tons.
“Although there is continued uncertainty about harvest prospects in some major producers, global wheat availabilities are still set to be ample over the year ahead,” the IGC said.
China’s harvest, the world’s biggest, may drop to 118 million tons from 120.6 million tons, the IGC forecast. India may produce 93.5 million tons of wheat, down from 94.9 million in 2012 and 1 million tons more than predicted a month ago.
Global wheat trade is expected to fall to 136.8 million tons in 2013-14 from 138.5 million tons in the previous season, with Russia cutting imports to 100,000 tons from 1.2 million tons on a bigger domestic harvest.
Barley production worldwide is forecast to climb to 137.7 million tons from 129.7 million tons, lifted by bigger crops in Russia, Ukraine, Turkey and Morocco, according to the IGC.
Source: Bloomberg
Output of grains excluding rice may rise to 1.92 billion metric tons from an estimated 1.79 billion tons in 2012-13, the London-based IGC wrote in its monthly market report today, raising its outlook for the new harvest by 10.3 million tons.
The outlook for rising grain production in the U.S., Europe and the Black Sea region has hurt corn and wheat prices. Corn is the second-worst performer on the S&P GSCI Commodity gauge behind silver this year, sliding 19 percent.
For corn, “carryovers in 2013-14 will be much more comfortable compared to the previous year, especially in the U.S., where stocks are expected to more than double,” the grains council wrote.
World corn production may jump 10 percent to 944.6 million tons from 855.7 million tons in 2012-13, the IGC forecast, raising the outlook by 5.7 million tons. That will boost ending stocks to 149 million tons from 122 million tons, it said.
The outlook for China’s corn crop was lifted by 4 million tons to 214 million tons, climbing from production of 208 million tons in the previous season. U.S. farmers may gather 355 million tons of corn from 273.8 million tons in 2012, the IGC forecast, cutting its outlook by 2 million tons.
The European Union’s corn harvest may jump to 64.4 million tons from 54.8 million tons on production gains in Romania and Hungary, which suffered from drought last year, while Brazil’s output may fall to 72 million tons from 78 million tons.
Corn
Global trade in corn may climb to 97.5 million tons from 94.5 million tons, with imports by China advancing to 7 million tons from 4 million tons. EU overseas purchases are predicted to fall to 6.5 million tons from 10 million tons.
The U.S. is expected to reclaim its spot as the world’s biggest corn exporter from Brazil, with shipments climbing to 32 million tons from 21.5 million tons. Brazil’s corn exports are seen falling to 20.5 million tons from 27 million tons.
Farmers across the world are forecast to reap 682.1 tons of wheat, 4.1 percent more than a 2012-13 crop estimated at 655.1 million tons and 2.2 million tons more than predicted last month, according to the IGC.
Stocks of the world’s most-traded grain are seen climbing to 180 million tons from 178 million tons.
Wheat production in the EU may climb to 137.1 million tons from 130.3 million tons on bigger crops in Spain and Romania, even as the U.K.’s harvest is predicted to slide to 11.8 million tons from 13.3 million tons.
Production Up
Russia, Ukraine and Kazakhstan are all forecast by the IGC to boost wheat production, with farmers in the former Soviet Union lifting output to 99.9 million tons from 77.2 million tons.
The U.S. wheat crop will probably decline to 52 million tons from 61.8 million tons, while Canada’s may rise to 29 million tons from 27.2 million tons, according to the IGC, which raised the forecast for the latter by 1 million tons.
“Although there is continued uncertainty about harvest prospects in some major producers, global wheat availabilities are still set to be ample over the year ahead,” the IGC said.
China’s harvest, the world’s biggest, may drop to 118 million tons from 120.6 million tons, the IGC forecast. India may produce 93.5 million tons of wheat, down from 94.9 million in 2012 and 1 million tons more than predicted a month ago.
Global wheat trade is expected to fall to 136.8 million tons in 2013-14 from 138.5 million tons in the previous season, with Russia cutting imports to 100,000 tons from 1.2 million tons on a bigger domestic harvest.
Barley production worldwide is forecast to climb to 137.7 million tons from 129.7 million tons, lifted by bigger crops in Russia, Ukraine, Turkey and Morocco, according to the IGC.
Source: Bloomberg
Tata Steel, SAIL improve global rankings among league of top 25 steel producers
Tata Steel and Steel Authority of India Limited (SAIL) have improved their rankings in list of top 25 global steel producers in 2012 , according to data released by World Steel Association (WSA).
With 23 million tonne production, Tata Steel was positioned in the 11th rank along with Chinese steel maker Shandong Group during the year. In 2011, Tata Steel had secured the 12th rank with a production of 23.8 million tonne.
State-owned SAIL produced 13.5 million tonne of steel in 2012 to bag the 24th rank. In the process it went up two slots compared to its previous year's ranking of 26th. SAIL had the same output of steel in 2011, WSA said in the report released on May 30, 2013.
The two companies are likly to improve their rankings further this year. with both of them adding fresh steel making capacities.
Tata Steel has recently implemented three million tonnes per annum (mtpa) brown-field expansion at Jamshedpur taking the plant capacity to 10 mtpa. SAIL is also in the process of hiking its capacity by five million tonnes to 19 mtpa in the current fiscal.
Source: Economic Times India
With 23 million tonne production, Tata Steel was positioned in the 11th rank along with Chinese steel maker Shandong Group during the year. In 2011, Tata Steel had secured the 12th rank with a production of 23.8 million tonne.
State-owned SAIL produced 13.5 million tonne of steel in 2012 to bag the 24th rank. In the process it went up two slots compared to its previous year's ranking of 26th. SAIL had the same output of steel in 2011, WSA said in the report released on May 30, 2013.
The two companies are likly to improve their rankings further this year. with both of them adding fresh steel making capacities.
Tata Steel has recently implemented three million tonnes per annum (mtpa) brown-field expansion at Jamshedpur taking the plant capacity to 10 mtpa. SAIL is also in the process of hiking its capacity by five million tonnes to 19 mtpa in the current fiscal.
Source: Economic Times India
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