Gold Slips Below $1,090/oz as Dollar Firms

26 January 2010

LONDON - Gold prices slipped below $1,090 an ounce in Europe on Tuesday as China’s implementation of a clampdown on lending lifted the dollar versus the euro, undermining bullion’s appeal as an alternative asset. Higher-yielding and commodity-related currencies are sensitive to any hints that China may be putting the brakes on its economy. Spot gold was bid at $1,089.15 an ounce at 1210 GMT, against $1,097.95 late in New York on Monday. U.S. gold futures for February delivery on the COMEX division of the New York Mercantile Exchange fell $6.50 to $1,089.20 an ounce. “It looks as though gold has found some support here, but I wouldn’t be surprised to see more weakness,” said Standard Chartered analyst Daniel Smith. “A lot will be determined by the outlook for the dollar, so clearly the U.S. GDP number on Friday will be very important for that,” he added. “If it is stronger than expected, the dollar will strengthen and gold will suffer.” The outcome of the Federal Reserve’s meeting on interest rates, due to conclude on Thursday, will also be key for the U.S. currency, he said. The Fed is not expected to indicate a benchmark rate hike is imminent. Gold prices fell along with the euro on Tuesday as risk aversion increased, while equities also slipped. China’s central bank told banks that need to raise reserve ratios to implement the change on Tuesday, banking sources said. In addition, Standard & Poor’s cut its rating outlook on Japan, hitting investor confidence about global economic recovery. European shares fell for a fifth day, while stock futures pointed to a lower opening on Wall Street. Commodities pressured Gold might typically be expected to benefit at times of rising risk aversion as investors buy the metal as a haven, as happened a year ago while the financial crisis raged. However, if risk aversion is rising but still manageable, the benefits to the dollar — strength in which weighs on gold — generally puts gold prices under pressure. “(Gold’s) risk-averse qualities were hardly noticeable during the latest sell-off in equities, with bullion trading against the dollar as anything else in your average commodity basket,” said VTB Capital analyst Andrey Kryuchenkov in a note. Among other commodities, oil fell more than 1 percent, and industrial metals like copper and aluminium also fell. The asset class is suffering from fears tighter Chinese monetary policy may curb investment flows into commodities. On the supply side, the chief executive of Harmony Gold Mining, the world’s fifth-largest gold producer, sees spot gold prices flat for the next 12 months. He added the company was reviewing further operations based on the gold price versus costs after closing four shafts, and the company’s electricity bill could triple in four years if power utility Eskom’s tariff request is granted. Silver fell to a 2010 low of $16.74, tracking losses in gold, and was later at $16.78 an ounce versus $17.12. Platinum was at $1,517 an ounce versus $1,546.50, and palladium at $426.50 an ounce versus $441. Buyers cashed in on gains in palladium, the best performer of the precious metals so far this year, analysts said. However, “investors may view the correction as a further dip buying opportunity”, said TheBullionDesk.com analyst James Moore. Quoted from: Khaleejtimes.com

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Oil Drops Towards $74 on China Banks; Eyes Inventories

26 January 2010

LONDON - Oil fell towards $74 a barrel on Tuesday after China implemented a clampdown on lending, rekindling concern that tightening moves by the world’s second-largest oil user may limit demand. Crude approached a one-month low after the Chinese move, which analysts said was a setback for the bullish view in oil markets that puts the prospect of rising Asian demand ahead of the market’s weak current fundamentals. “The fundamental link to current prices is weak — hence oil prices need at least some general optimism that boom times are around the corner,” said Olivier Jakob, analyst at Petromatrix. “That general optimism depends a lot on China’s consumption, saving the rest of the world and that will be somewhat challenged by the Chinese government trying to regulate the formation of bubbles.” U.S. oil was down 76 cents at $74.50 by 1206 GMT, having traded as low as $74.14. On Friday, it touched a one-month intraday low of $74.01. Brent crude fell 65 cents to $73.04. Crude oil futures have fallen by more than 6 percent in January, set for their first monthly decline since July 2009. China implemented its planned increase in required reserves for some banks on Tuesday, sources told Reuters. Asian stocks fell, copper slipped and the dollar gained. European shares lost ground. “The Chinese tightening is making people concerned that it is going to damp down demand, but it won’t damp demand by very much,” said Christopher Bellew, a broker at Bache Commodities. “The market may be forming a base around these numbers, I think.” Recovery jitters Highlighting fears that a global recovery may be sputtering, South Korea reported weaker-than-expected growth in the fourth quarter. Britain came out of recession in the fourth quarter, but with a lower growth rate than expected. Standard & Poor’s cut its rating outlook on Japan. Economic reports this week have also raised doubts over the strength of the U.S. recovery. The Federal Reserve is not expected to indicate that it will raise its benchmark rate any time soon when it meets this week. The Federal Open Market Committee (FOMC), the Fed’s policy-setting group, begins a two-day policy meeting on Tuesday. Oil inventories in the United States, the top oil consumer, are expected to rise further in reports due this week. Crude stocks probably rose by 1.7 million barrels, a Reuters poll of analysts showed on Monday. The survey also forecasts gasoline stockpiles probably climbed 1.4 million barrels and distillates, which include heating oil and diesel, were predicted to have fallen 1.4 million barrels. Industry group American Petroleum Institute issues its weekly inventory report on Tuesday at 2130 GMT. The government’s Energy Information Administration (EIA) follows on Wednesday. Quoted from: Khaleejtimes.com

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Oil Rises Above $71 on Brighter Demand Outlook

(Reuters)11 December 2009

LONDON - Oil rose on Friday as forecasts for higher demand growth next year and strong Chinese industrial output boosted sentiment, ending a seven-day losing streak which saw prices dip below $70 a barrel for the first time in two months.


U.S. crude for January delivery edged up 52 cents to $71.06 a barrel by 1107 GMT, after touching a session low of $69.81 a barrel on Thursday. Over the past seven trading days, front month crude has sunk almost $7 or 10 percent.

Brent crude futures rose 55 cents to $72.41 a barrel.

World oil demand will rise by almost 1.5 million barrels per day (bpd) in 2010 to 86.3 million bpd and the rate of demand growth will also accelerate, the International Energy Agency (IEA), which advises 28 industrialised nations, said on Friday.

“Oil demand looks a bit stronger,” said David Fyfe, head of the oil industry and markets division of the IEA. “Looking at 2010, it is an adjustment in a bullish direction.”

The report came after the U.S. Energy Information Administration revised its own world oil demand for 2009 lower on Tuesday

Strong industrial growth figures out of China also helped to reverse this week’s price slump.

China’s November industrial output surged to its strongest since June 2007, underscoring the economy’s robust recovery from the global downturn, and analysts expected the trend to continue in coming months.

Refining rates in the world’s second largest oil user also posted a record high in November, up 21 percent from a year earlier to 8.12 million bpd, signalling recovering demand.

“The IEA shows demand is slightly up and the Chinese data has been positive. Prices are likely to stabilise around these levels,” said Olivier Jakob of Petromatrix, adding $70 a barrel was set to be a key technical support level moving forward.
Oversupply

Analysts however cautioned the supply concerns that drove prices lower this week were likely to hold sway over the market and could temper any future rallies.

Earlier this week, the EIA reported stocks at the U.S. delivery hub of Cushing in Oklahoma rose 2.5 million barrels to 33.4 million barrels.

This inventory overhang has depressed front month U.S. crude prices relative to oil futures, resulting this week in the widest WTI crude market contango since August of more than $2 a barrel.

“There is a strong message in the oil market and that is weakness. The contango is widening significantly and this points to physical oversupply,” said analyst David Wech at JBC Energy, referring to both inventories on land and in floating storage.

The volume of refined oil products stored on ships floating in the sea increased to 98 million barrels at the end of November, the IEA said on Friday.

Data out of the United States later is likely to provide further direction as traders look for clues about the pace of demand recovery in the world’s largest oil consumer.

U.S. retail sales for November are due at 1330 GMT and preliminary December consumer confidence figures at 1455 GMT.

These data will also be important drivers for the U.S. dollar and this could in turn steer oil, analysts said.

Weakness in the U.S. dollar has been a factor behind this year’s oil price rally from below $40 a barrel last December.

A cheap dollar tends to drive oil higher as it makes it more attractive for buyers using other currencies.

quoted from: Khaleej Times

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LAS Prices Resilient Despite Low Demand

Gordon Graff -- Purchasing, 12/2/2009 1:58:26 PM

Despite a decline in demand, prices for surfactant linear alkylbenzene sulfonate have remained stubbornly higher than other chemicals, steadily increasing off a cyclical bottom in April. Prices did dip in November, however.

Overall business conditions in the surfactants market were "chronically depressed" during the first half of 2009, says Neil Burns, managing partner at Neil A. Burns a private equity firm that invests in specialty chemical companies. While activity began to recover in the second half of the year, he notes, total demand for surfactants in 2009 will be "significantly below that of 2008 in volumes, revenues and profitability."

Considering how much demand retreated, prices of surfactants have been fairly resilient. For example, according to Purchasingdata.com, tags for LAS hit a high point of $1.03/lb. in July 2008, slid to a low of 89¢/lb in April, and had bounced back to 97¢/lb by September.

quoted from: Purchasing.com

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Copper Prices Continue to Rise

Paul Teague -- Purchasing, 12/2/2009 2:01:33 PM

Buyers tell Purchasing that they paid more than twice as much for copper cathode in November as they paid in December 2008. The average transaction price last month, they said, was $3.06/lb versus $1.49 last December.

The transaction price has climbed steadily all year. Strong demand in China is among the reasons for the price increases. But another factor, especially lately, has been fears of supply shortages due to labor strife at two South American mines.

Another factor could be production slowdowns at Kazakhsatn-based copper miner Kazakhmys PLC, one of the world's ten largest producers. Reuters reported that the miner produced 13.5% less copper cathode from its own concentrate in the third quarter. The cutback, Reuters said, was part of the miner's efforts to cut its overall costs.

But a new source of copper is coming on line. The Chinese company Golden Dragon has opened a mine in northern Mexico expected to have a capacity of 120,000 tons, according to the Chinese news agency Xinhua.

Meanwhile, copper on the COMEX exchange was priced at $3.22 earlier today. The price on the London Metal Exchange was $3.17 yesterday.

quoted from: Purchasing.com

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Tantalum Capacitor Demand Falls 20%-30%

The worldwide tantalum capacitor market will decline over the next several years because of weak prices, sluggish demand and the greater use of ceramic capacitors instead of tantalum. Suppliers say tantalum capacitor demand this year has been down 20-30%, but some see business picking up in the second half compared to the first.

Researcher DECISION, based in Paris, says the global market for tantalum capacitors will decline from $2.3 billion in 2008 to $2.1 billion by 2010, but then increase to $2.3 billion by 2012.

One reason revenue has declines is that prices have fallen. Purchasing's monthly surveys on purchasingdata.com show that the price index for tantalum capacitors has dropped from 70.32 in January 2009 to 64.17 in September. The base year for the index is 1999, when it was 100.

"We started to see some an uptick in demand in the second quarter in the notebook market," says David Valletta, executive vice-president for worldwide sales at Vishay Intertechnology, based in Malvern, Pa. "It became more evident in the third quarter," he says. "We see improving conditions in all applications."

In fact, demand has picked up to the point where "we are wrestling with capacity issues," says Valletta. He says the industry slashed production earlier in the year and suppliers are now "scrambling to bring it back up."

While demand decreased earlier in the year and prices declined, prices are now stabilizing, according to suppliers. "Demand was down so much no one had an appetite for reducing prices," says Valletta. "Buyers did not have volume to award so they weren't pushing too hard for price reductions. And suppliers were not willing to give up margin. It was a fight for survival at that point."

Tantalum capacitors' share of the capacitor market is eroding in part because more OEMs are designing ceramic capacitors into their products. Tantalums were traditionally used where high capacitance was needed because they provide higher capacitance values than ceramic caps. However, suppliers have been improving the capacitance values in ceramic capacitors as well.

Quoted from: PURCHASING.COM

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Sharq MEG Plant at Optimum Level, but Cracker yet to Start

SINGAPORE (ICIS news)--Eastern Petrochemical (Sharq)’s new 700,000 tonne/year monoethylene glycol (MEG) plant in Saudi Arabia is running at optimal levels, after starting up about two weeks ago, sources close to the company said on Thursday.

"The feedstocks were put in earlier this month, and gradually the operating rates were raised," said one of the sources familiar with the operations of the Al Jubail-based producer.

Another source said the greenfield 1.3m tonne/year cracker and other downstream facilities adjoining the so-called No 4 MEG facility had yet to start up.

"We are now using ethylene inventories from previous months to run the new MEG plant, but hopefully we would have the cracker up and running by September," the second source said.

Both sources refused to discuss what could happen to the MEG operations if the new cracker failed to start up by the end of September. The whole complex had previously faced several delays in starting up in the past year.

Sharq, a joint venture between petrochemical giant SABIC and a Japanese consortium of companies led by Mitsubishi Chemical, operates three existing MEG lines with a total nameplate capacity of 1.4m tonnes/year at Al Jubail.

A third source said operations at the three units had not been at full capacity since earlier this month but gave no other details. There was no immediate official comment on the operating rates.

Besides the new MEG plant, other new capacities downstream of the greenfield cracker include a 400,000 tonne/year high-density polyethylene (HDPE) line and a linear low-density polyethylene (LLDPE) unit of similar capacity, due to start up by the end of this year.

quoted from: ICIS.com

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LyondellBasell Targets €125/t Hike for Sept PP on High Propylene

LONDON (ICIS news)--Major plastics producer LyondellBasell is targeting a €125/tonne ($179/tonne) increase for September polypropylene (PP) in Europe following the unexpectedly high propylene settlement, a company source said on Friday.

The move came after propylene was agreed up €93/tonne at €778/tonne FD (free delivered) NWE (northwest Europe) on Thursday.

Another major PP producer said it would be looking for a €125/tonne increase also, as this would cover the propylene hike and also add some margin.

PP availability was tight, mainly due to reduced output rather than very strong demand.

Demand had improved during the second half of 2009, however, and PP producers were confident of achieving big increases in September.

Most buying sources acknowledged that they would have to pay a lot more for their material in September.

“We will have to live with these prices. It is the reality,” said one large PP buyer.

PP and polyethylene (PE) producers in Europe include LyondellBasell, Borealis, SABIC, Total Petrochemicals, Dow Chemical, Repsol, INEOS Olefins and Polymers, Polychim and Domo.

quoted from: ICIS.com

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Soda Ash Prices Trend Down on Lower Demand

Soda ash prices slipped down again in July to $195/net ton from their May peak of $202, but buyers say the ongoing battle between U.S. and Asian suppliers makes it extremely difficult to forecast true soda ash supply and demand trends. 

As reported earlier this year on Purchasing.com, soda ash prices spiked in January and continued up until recently, when they began to tick down. But the reason for the plateau and slight decline in prices is hard to put a finger on, while the future outlook for soda ash prices is even more complicated, involving import/export trends and soda ash's inter-relation with other materials. 
For buyers looking to source soda ash domestically and avoid costly transportation costs, the market is not in their favor. 

"The soda ash suppliers in the U.S. would rather export soda ash than sell it domestically because they can get more money by exporting the material," one soda ash buyer in the Midwest tells Purchasing.com. As a result, this buyer says it is difficult to get competitive soda ash pricing from U.S. suppliers because in many instances, the suppliers really don't want the U.S. business. 

"The U.S. suppliers seem to keep with their current customers and not try to add any additional business. It is kind of a ‘take it or leave it' kind of relationship."  

It's not just that buyer's imagination. On its second quarter earnings call, officials from FMC Corp. confirmed those sentiments saying "we intend to take full advantage of the low cost position of U.S. production to focus on gaining global market share at attractive margins. We intend to do so primarily by acquiring new customers export markets such as Asia."

And while U.S. producers are targeting Asia, Asian soda ash producers are targeting U.S. buyers. According to a recent Associated Press report, Chinese soda ash exports grew 40% in the first three months of 2009 vs. the same period last year. "They're exporting quite a bit more, and what they're doing in the process is lowering the sales price on the export market, which then makes it very difficult for the United States to compete," said Dennis Kostick, a senior minerals commodities specialist with the USGS, in the Associated Press report.

But while domestic demand for soda ash from some of its major end-market industries including glass and detergents is down, producers are also scaling back soda ash production in the U.S. drastically. According to the latest data from the US Geological Service, for example, "global economic problems have reduced world soda ash consumption, which in turn has reduced U.S. soda ash exports. To avoid an oversupply of soda ash inventories, domestic soda ash production has been cut back intentionally."

FMC in the first quarter temporarily curtailed production at its Granger facility, capacity which was brought on over the last few years to supply growing export demand. And Georgia-based OCI Chemical Corp. said this week it is laying off 38 of its 400 employees at a soda ash plant near Green River, Wyo. Company officials say the layoffs are a result of weakening global demand for soda ash. 

Another factor that may push soda ash prices down is its relationship to caustic soda, which has dropped off in price recently. Earlier this year, FMC officials said that when caustic soda prices are over $400, the demand for soda ash as a lower-cost substitute increases and, thus, prices for soda ash increase. But as reported by Purchasing.com recently, caustic soda prices have plunged, lessening the need for a lower-cost substitute such as soda ash.

quoted froml: Purchasing.com

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Polyester Boom in China Pushing up PTA, PX Prices

SINGAPORE (ICIS news)--The current boom in the Chinese polyester industry is supporting gains in feedstock purified terephthalic acid (PTA) pricing in the past two months, which in turn has pushed up paraxylene (PX) values.

But market participants said they believed the price uptrend was not merely demand-induced but also supply-led.

PTA spot prices hit as high as $950/tonne (€675/tonne) CFR China this week, a steep $70-80/tonne up from last Friday’s close of $870-880/tonne CFR China, according to ICIS pricing. 

Just a month ago, PTA values were no more than $830/tonne CFR China, and in early June were still struggling to break above $800/tonne CFR China.

As for PX prices, the gains were almost equally robust. Between mid-June and this week, prices had spiked $170-200/tonne. And between mid-June and early July, PX prices were hovering around $1,000-1,030/tonne CFR China.

“The gains had come well beyond most people’s imagination, frankly we didn’t expect it ourselves either,” said a source from BP, a major producer of PTA in Asia and a leading PX supplier globally.

In fact, PTA producers had been enjoying profits for the most of this year, a departure from the loss-making days between late 2006 and most of 2007-2008.

“It’s obvious that downstream demand is pushing up prices [of PTA], but at the same time, we’re also not producing enough to meet this strong demand,” said a source from Yisheng Petrochemical, a leading Chinese PTA producer.

PTA makers had been cautious with pushing their operating rates to 100% of nameplate capacity, after the losses seen in the past 2-3 years, traders said.

“Yes, we did not produce full this year, as we were so concerned [earlier in the year] that the more you produce, the more losses you’d make,” said a source from a major PTA producer in Taiwan.

Such cautiousness among PTA makers had also compelled them to commit to less feedstock paraxylene (PX) contract volumes.

A rough estimate by traders suggested that most PTA producers had only locked in about 50-60% of their PX needs in contracts this year, setting the stage for the spectacular price gains of both PTA and PX.

“For whatever reasons, the downstream [polyester] market was so bullish, and we found ourselves regularly running out of PTA to sell this year,” said a source from Formosa Chemical & Fiber Corp (FCFC), major PTA maker in Taiwan.

“So we changed our minds and really wanted to have more PX after all, but with outages here and there, and limited PX to begin with, we cannot produce that much PTA,” added the FCFC source.

Those who managed to chase down the PX successfully maintained optimal PTA operating rates, and enjoyed profitability, said a source from Oriental Petrochemical (Taiwan), a PTA maker which was one of the most aggressive buyers of spot PX in the past two months.

“The strong downstream demand pushed up PX prices too naturally, and you know, the [cautiousness] seen among [PTA makers] was also seen among [PX producers],” said a PX broker from Korea.

Indeed, PX producers in Asia had the concept that the market would soon become oversupplied, with new Chinese and Middle Eastern PX capacities coming onstream in the second half of this year.

As such, they kept low operating rates of no more than 80% on average, and were very careful with their spot sales, said a Korean trader based in Singapore.

“As we all know now, the opposite happened, and PX suppliers were also caught off-guard, and they did not have enough PX to sell to a hungry downstream market,” said another PX broker, based in Japan.

Of course, poor returns for refineries since crude oil prices collapsed late last year also contributed to the relatively low PX output, market sources said.

“Refineries are seeing poor returns, so they would not run too high [operating rates], so naturally we see less aromatics in the market,” said a Singapore-based trader representing a Middle-Eastern owned company.

Besides poor refinery returns, lacklustre margins for chief aromatic benzene also hampered aromatics output, said a source from Japan Energy, a leading aromatics producer.

“Benzene margins were very bad earlier this year, so even if we want more PX, even if our customers want more PX, we cannot give them,” added the source.

Hence, to many market watchers, this year’s PTA-PX price trend so far seemed to be a case of misjudgement and wrong calculations.

“I think it’s fair to say most of us got it wrong; we thought prices would collapse but the opposite happened, and nobody is talking about the supposed oversupply [of PTA and PX] now,” said a source from Sam Nam Petrochemical, a leading producer of PTA in Korea.

quoted from: ICIS.com

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Aluminum Prices Fall

Just as one aluminum company is trying to convince buyers that prices should rise due to tightening supply, another producer tells its workers that many are about to lose their jobs because of collapsed demand and a third says further cutback are possible.


Aluminum common alloy sheet, grade 3003, slipped back 10¢ to $1.38/lb this month because of weak demand, even though aluminum ingot increased 5¢ in the Midwest market. However, Novelis of Atlanta has announced a premium on prices for some sheet products offered through its Web sales program as a result of a spike in demand from its customers caused by low inventory levels within aluminum distribution industry. American Metals Market says service center destocking over the past six months has sparked a recent increase in demand for Web sales. "We've seen a spike in demand for products that we have available in stock because people haven't wanted to carry inventory," a company spokesman says.

On the other hand, Ormet is poised to further curtail operations at its 260,000 metric ton/year smelter in Hannibal, Ohio. Despite a lack of confirmation from the company, union and market sources say a shutdown to 20% of capacity is planned for Hannibal this summer. The smelter already is down to operating 77% of its potlines in an economicallydepressed region of southeastern Ohio.

The Aluminum Association reports that producer shipments during the first half of 2009 totaled an estimated 7.912 billion pounds, 26.7% below the 2008 six-month total of 10.790 million. And, while analysts suggest there has been a pickup in orders in North America in recent weeks, its 2% six-month rate of growth pales versus the 17% improvement in global bookings.

Meanwhile, Century Aluminum reported a third consecutive quarterly loss last week and slashed production to combat weak demand for aluminum amid a more than 65% drop in sales. "The demand outlook has improved somewhat in certain regions and sectors," CEO Logan Kruger says in a statement. "However, we remain convinced the industry must take additional supply side actions for a global balance to be achieved."

Since the economic downturn late last year, metal demand and prices have plummeted and Century has cut production capacity at its Ravenswood, W.Va., and Hawesville, Ky., aluminum smelters. Kruger now says that "despite recently improving metal prices, we believe the balance of risk remains on the downside."

quoted from: Purchasing.com

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Ban on Raw Sugar Import Causes Rise in Price

ISLAMABAD: Retail price of sugar shot up to its highest ever level of over Rs48 per kg after the government rejected an advice from the ministry of industries to lift a ban on import of raw sugar in view of poor sugarcane crop.

Sources told Dawn that the continuing ban, despite repeated requests from the ministry and sugar mills, had benefited big farmers, some federal ministers among them, who sold sugarcane at prices higher than the official rate.

The official price was set at Rs80 per maund, but farmers sold sugarcane to millers at Rs100 to Rs120 because of the shortage.

For the next season, the provincial governments have increased the price to 

Rs100. This is likely to cause a further increase in the price of sugar.

According to an official, the price is likely to go up in Ramazan because Utility Stores cater to the needs of only about 10 per cent of consumers. 

The government had decided to keep the price of sugar at the stores at Rs38 per kg, the official added.

Sources in the industries ministry said the federal cabinet and the Economic Coordination Committee (ECC) had been informed in advance that a shortage of cane would lead to an increase in price.

‘We moved summaries to the highest forums, but these were turned down with the contention that import of raw sugar would lower the profit of farmers,’ the sources said.

Millers had also asked the government to import up to 400,000 tons of raw sugar, at least half of it during November last year when the crushing of the new crop began. 

According to the sources, imported raw sugar costs $80 to $90 a ton less than refined sugar. ‘If we had imported raw sugar at that time the sugar price could have gone down by at least Rs5 per kg,’ the sources said.

An official said that the ministry was now proposing to allow the import to meet the shortage next year. ‘We are proposing to the government to allow the private sector to import raw sugar.’

For keeping the sugar price under control, the government will have to raise the subsidy for consumers and increase supply to utility stores from the current 30,000 tons to 100,000 tons.

The retail rate is hovering between Rs44 and Rs48 in major cities. However, some cities have witnessed a price of more than Rs50 per kg in the open market and consumers in some rural areas are paying up to Rs60.

quoted from: DAWN.com

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Oil Rises as Earnings Boost Economic Outlook

NEW YORK - Oil touched a two-week high above $65 a barrel on Tuesday as a slew of rosy corporate earnings reports fed into hopes for an economic recovery that could revive global energy demand. 


U.S. crude gained 74 cents to settle at $64.72 a barrel, after climbing to a two-week high of $65.53. London Brent rose 43 cents to $66.87. 

The rise in the oil market came as a raft of major companies, including Caterpillar Inc and Merck & Co, reported stronger-than-expected results in the second quarter that many analysts took as a sign of economic improvement. 

Weakness in the U.S. dollar also supported commodities markets, analysts said, in part by strengthening the purchasing power of buyers using other currencies. 

“The (crude) market is trading more off the equities than the dollar, with the economic indicators and earnings lending support to sentiment,” said Andy Lebow, a broker at MF Global in New York. 

News that a powerful storm hobbled two oil refineries in Alberta also played into gains, tightening up already thin gasoline stockpiles in the Canadian province. Petro-Canada said Tuesday it was making arrangements to have additional gasoline supplies shipped into the area. 

The front-month August U.S. contract expires at the close of trade Tuesday and will be replaced by the September contract, which rose 32 cents to $65.61 a barrel. 

The American Petroleum Institute release its weekly figures after oil settled Tuesday, showing U.S. crude stockpiles rose unexpectedly by 3.1 million barrels. 

Oil stocks in industrialized countries equated to 62.5 days of demand cover at the end of May, according to the latest figures from the International Energy Agency — around 10 days more than the Organization of the Petroleum Exporting Countries considers comfortable. 

Algerian Energy and Mines Minister Chakib Khelil on Monday predicted prices would stay in a $65-$70 range this year as long as the market remained oversupplied and said OPEC could cut output when it next meets in September.

quoted from: Khaleej Times

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Tyre Makers in Asia Raise Concerns Over Feedstock BD Surge

SINGAPORE (ICIS news)--Tyre makers in Asia have raised concerns on Tuesday over soaring feedstock butadiene (BD) prices, which may hamper a recovery in demand and impact their fourth-quarter contract negotiations with styrene butadiene rubber (SBR) producers.

BD is the feedstock for SBR, which in turn is used in the manufacture of tyres for the automotive industry.

“The feedstock BD price surge is keenly watched by tyre makers as it may hamper the recovery of the market and any price volatility is not healthy for the industry in the long run,” a major tyre maker said.

BD spot prices have hit $1,000-1,050/tonne (€700-735/tonne) CFR (cost and freight) northeast (NE) Asia, up $200/tonne from a month ago, according to global chemical market intelligence service ICIS pricing.

The hefty BD price increases had wiped out SBR producers' margins, which require a spread of $400-500/tonne between SBR and BD to post any profit. 

“We are closely watching the feedstock BD price trend. If it continues to go up unabated, this will definitely push SBR prices higher and impact our [fourth-quarter] contract negotiations with the SBR makers,” a tyre maker said.

Another tyre maker said: “We can’t see BD prices going up further to $1,100/tonne, as no SBR maker will accept BD at this price level, given that the [third-quarter] SBR contracts have been concluded at $1,300-1,400/tonne.” 

In light of the feedstock BD price escalation, several SBR producers in Asia have raised SBR prices. Some have cut operating rates and may consider extending their SBR plant shutdowns. 

However, the SBR price hikes had met with strong resistance from tyre makers, who have been hard hit by the global recession.

Although tyre makers in Asia are in a relatively better position than their counterparts in Europe and the US, given the double-digit growth in emerging markets such as China and India, they have not been completely insulated from the global recession, which has seen global auto makers such as Toyota Motor post massive losses and General Motors and Chrysler go bankrupt.

Major tyre producer Goodyear announced this week that it will shut down its tyre plant in the Philippines, which will see 500 jobs go. 

“The Philippine plant is not competitive and Goodyear chose to shut it down as a long-term strategic decision. It also reflects the current weak global market conditions, as we do not expect the US auto market to recover until the second half of next year, at the earliest,” an industry source said.

In Europe and the US, several major tyre producers such as Continental and Michelin have shut down production lines and laid off workers.

quoted from: ICIS.com

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Oil Rises Above $64, Buoyed by Asian Stocks

PERTH - Oil rose above $64 a barrel on Monday, extending last session’s 2.5 percent gains, bolstered by a rally in Asian stocks and fall in the dollar on hopes of a global economic recovery. 



Oil jumped 6.1 percent last week — its first weekly gain in a month — thanks to a series of positive economic data and a rally in the equities markets, which came on the back of better-than-expected U.S. corporate earnings. 

The increase in risk appetite also knocked the dollar, with the euro rising to a three-week high on Monday. 

U.S. crude oil for August delivery rose 65 cents to $64.21 a barrel by 0645 GMT, after settling up $1.54 at $63.56 on Friday. London Brent crude for September rose 62 cents to $66.00. 

“Gains in the stock markets are lifting risk appetite, which is helping to push oil prices higher,” Ben Westmore, a commodities analyst at the National Bank of Australia. 

The MSCI index of Asia Pacific stocks outside Japan climbed for a fifth session to the highest since late September 2008 on Monday, with hopes for corporate earnings lifting sentiment across the board. 

Oil’s gains on Friday were boosted by a government report that showed construction of new homes and the issue of building permits in the United States rose more than expected in June, signaling a potential economic recovery. 

Tensions in Iran, the world’s fifth-largest crude exporter, as well as worries about a tropical wave in the Central Atlantic, which has a small chance of developing into a tropical cyclone — also helped buoy oil prices. 

Iran’s President Mahmoud Ahmadinejad has come under fire from leading hardliners for naming as his top deputy a man who said Iran was friends with everyone, including arch-foe Israel, local media said on Sunday. 

But with oil prices having rebounded by nearly $4 last week, some analysts are cautioning against excessive optimism as the latest inventory data in the United States was still painting a bearish picture for energy demand. 

“As was the case with the March-June upward trend and the subsequent correction, price action in recent days has been, in our view, driven by non-fundamentals,” Michael Wittner, global head of oil research at Societe Generale, said in a report. 

“When prices are being driven by non-fundamentals, we are cautious, and doubly so when trying to call a turn,” Wittner said, adding that technical analysis indicates that another downward move on oil prices should be expected this week. 

In a sign that investors were now more bullish on oil prices, crude oil speculators on the New York Mercantile Exchange increased their net long positions in the week to July 14, according to data from the Commodity Futures Trading Commission released on Friday. 

Open interest was concentrated at the $65 and $70 September call crude oil option and at the $60 put option, according to Reuters data on Friday.

quoted from: Khaleej Times

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Caustic Soda Prices Continue to Plunge

Buyers in Purchasing's monthly survey continue to report that caustic soda prices are dropping fast due to declines in demand and oversupply. In fact, according to the latest survey, prices for rayon grade caustic soda are less than half of what they were at their peak in October and diaphragm grade is less than one-third its October price.

"Caustic soda prices are going down due to low demand and lower energy costs," says a caustic soda buyer at a major U.S. chemical firm. "Unless business picks up, price should stay down the rest of the year."

"We saw caustic soda prices drop $150/dry short ton this month," says the purchasing manager at a chemicals producer in Mississippi.

"Prices for caustic soda are dropping very quickly because of demand destruction," says the chemicals buyer at a Canadian manufacturer. "Prices will remain low until demand picks up or high cost North American production plants are closed."

This matches up with the information reported by ICISPricing.com, which says caustic soda producers report caustic soda demand continues to decline in major industrial sectors such as alumina and pulp-and-paper, but tight supply conditions in the co-product chlorine market have kept caustic production rates at moderate levels, oversupplying the market.

"As domestic [U.S.] spot prices continue to slide below contract price levels, sources said another reduction appears likely for July contract prices," ICISPricing reports.

In fact, 59% of buyers polled this month by Purchasing say they expect caustic soda prices to drop even further in the next 30 days.

In March, Purchasing.com reported that "over the past few months, demand for caustic has softened, causing market watchers to project a moderate downturn in its pricing over the next year."

quoted from: Purchasing.com

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Oil Jumps Above $70 on Nigerian Platform Attack

SIOUX FALLS, South Dakota - Oil prices jumped back above the $70 a barrel threshold Monday as Nigerian militants damaged and partly shut down an offshore oil platform belonging to Royal Dutch Shell PLC. 


Benchmark crude for August delivery gained $1.74 at $70.90 a barrel on the New York Mercantile Exchange. On Friday, it fell $1.07 to settle at $69.16. 

Shell spokesman Precious Okolobo confirmed the attack and partial shutdown. Past militant attacks on infrastructure in Nigeria’s restive southern oil region have trimmed output in Africa’s biggest crude producer by about 25 percent. 

The jump in oil prices came despite a report from the International Energy Agency predicting a slower rebound in global energy demand. 

The Paris-based IEA said demand is likely to grow by an average of 0.6 percent annually over the 2008-2014 period. It would reach 89 million barrels a day by 2014 assuming the International Monetary Fund’s current forecast of a return to 5 percent annual economic growth by 2012, the agency said. 

Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates, said there seemed to be little else driving oil prices, as both the dollar and stocks were relatively flat. 

Ritterbusch said a barrel of oil is sitting about where it started the month, and he expects the trend of sideways trading will likely continue. Volume is typically low in the days leading up to a holiday weekend. 

“Right now we’re showing some gains, but by the end of the day we could be right back down again,” he said. 

Meanwhile, retail gasoline prices, which fell for the first time in nearly two months a week ago, continued their pullback as the average price of a gallon of regular unleaded gas fell overnight by four-tenths of a cent to $2.639, according to AAA, Wright Express and Oil Price Information Service. 

That’s still about 15 cents a gallon higher than last month, but $1.44 cheaper than this time last summer. 

Oil prices, which yo-yoed near $70 a barrel last week, have doubled since March. 

Investors will watch economic data this week, including the Labor Department’s June unemployment report. The jobless rate hit a 25-year high of 9.4 percent in May, jumping from 8.9 percent in April. 

The latest indicators of consumer confidence and manufacturing activity will also be released. 

In other Nymex trading, gasoline for July delivery gained 6.58 cents at $1.9399 a gallon and heating oil rose 4.91 cents to $1.7794 a gallon. Natural gas for July delivery fell 10.4 cents to $4.001 per 1,000 cubic feet. The IEA report forecast natural gas demand this year will drop for the first time in 50 years. 

In London, Brent prices rose $1.55 to $70.47 a barrel on the ICE Futures exchange.

quoted from: Khaleej Times

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Oil, Copper Pause from Sharp Fall, Outlook Shaky

LONDON - Oil moved into positive territory after falling below $67 a barrel, while a weak dollar lifted copper and gold from their lows, but investor jitters on the global economic outlook left some prices on shaky ground. 


After showing some vulnerability to a broader sell-off in commodities during Asian trade earlier, gold prices were sustained as dollar weakness combined with its traditional role as a hedge against jittery sentiment in other asset classes. 

The picture on industrial metals and crude was less clear, as doubts crept in about how sustainable recent strong rallies were looking, with a reassessment of share price gains and the global economic outlook fanning worries about potential demand. 

“What people are concerned about now is was the rally a true growth story or was it a temporary re-stocking?” said Kona Haque, commodities strategist with Macquarie Group. 

The World Bank said on Monday prospects for the global economy remained “unusually uncertain” as it cut 2009 growth forecasts for most economies. 

“The World Bank report did not make it any easier...There’s a lot of doubt there and speculators have been a little bit less pro-risk,” Haque said. 

U.S. crude was last up 50 cents at $68.04 per barrel, having earlier fallen below $67. 

“The stock markets and global economic outlook pushed oil through key support levels but they (prices) now seem to be finding support,” said Christopher Bellew, a broker at Bache Commodities. 

The dollar fell 0.7 percent against a basket of major currencies ahead of the Federal Reserve’s policy meeting later in the day, with concerns about reserve diversification away from the U.S. currency also weighing. 
Shaky ground 

Copper prices firmed after falling more than 5 percent on Monday with three months metal trading at $4,845 a tonne, up from $4,761 on Monday. 

“Sentiment is a little bit fragile. People want to be sure economic growth is on the rebound but the data has not been uniformly strong,” said Citi base metals analyst David Thurtell. 

Copper prices have more than doubled on the year as a surge of buying from China and an improving economic outlook had helped the metal used in power and construction to recover from a slump in the second half of 2008. 

On the corporate front, South Africa’s mining minister said the government was opposed to a possible merger between Xstrata and Anglo American Plc, calling such a move unacceptable. 

Gold touched a six-week low before rallying, with spot metal moving into positive territory at $923.75, up from $921.90 quoted late in New York on Monday. It hit a six-week low of $912.90 in Asian trade. 

“All eyes are on whether the dollar is going to be subject to a fresh selling wave. The only source I see for that would be if the Fed gets more vocal in communicating on the next batch of Treasury buying,” said Ashraf Laidi, analyst with CMC Markets. 

“Anything short of that, will remain neutral or positive for gold.” 

Grains and oilseed prices also firmed. Chicago Board of Trade soybeans for July delivery rose 1.13 percent to $11.64-1/2 a bushel while July corn gained 0.1 percent $3.85-1/2 a bushel. Wheat for July delivery rose 0.7 percent to $5.49-3/4 a bushel. 

Major crop-growing regions in the United States are set for warm, dry weather in the week ahead, which would boost young spring plantings and help the harvesting of winter wheat.

quoted from: Khaleej Times

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Gold Extends Climb on Weaker Dollar

LONDON - Gold rallied from a six-week low hit earlier in the global session, rising above $923 per ounce with currency fundamentals proving the dominant factor as the dollar got stung by concerns over U.S. indebtedness. 


Spot gold stood at $923.40 per ounce by 1132 GMT, having earlier hit a six-week low at $912.90 in Asian trade. That compared with $921.90 quoted late in New York on Monday. 

Traders said that bullion prices, having hit three-month highs recently just shy of $1,000 an ounce, were ripe for the falls seen over the past few days with speculators looking to clear out stale long positions. 

But the metal’s traditional role as a hedge against jittery sentiment in other asset classes was also kicking in as investors, spooked by doubts about growth prospects for leading economies, shift into risk-averse gear. 

Concerns about reserve diversification away from U.S. assets caused the dollar to turn lower against the euro ahead of the Federal Reserve’s monthly meeting, after Moody’s said one risk to the U.S.’ triple-A rating is if the dollar is challenged as the main reserve currency.. 

“Gold is tracking the dollar closely today, but we’ll have to wait for the FOMC statement tomorrow night for the market to choose to move clearly in one direction or another,” said David Thurtell, analyst at Citigroup. 

A weaker dollar makes metals and other commodities priced in the U.S. unit cheaper for non-U.S. investors. 

Crude oil prices rallied to $68 a barrel on Tuesday ahead of data expected to show a fall in U.S. oil stocks, reversing losses and renewing the appeal of gold as a potential inflation hedge. “The key driver here is basically crude oil, the dollar and inflation expectations, and I think gold at the moment is pricing in a huge amount of inflation expectations,” said Jesper Dannesboe, an analyst at Societe Generale. 
Investor caution 

U.S. gold futures for August delivery rose nearly half a percent to $924.80 per ounce on Monday on the COMEX division of the New York Mercantile Exchange. 

Overall investor caution was stirred by the World Bank on Monday, which said prospects for the global economy remained “unusually uncertain” as it cut 2009 growth forecasts for most economies. 

“Investor risk appetite has lost forward momentum as the market begins to question the extent to which the green shoots of the financial risk rally have roots in the real economy,” Tullet Prebon said in a note to clients. 

“There is nothing like a 3.1 percent drop in the S&P on a day to get the bears out of the woods..., but the joke aside it is beginning to look like those who hoped for a V-shaped recovery will find that we are looking at the tail end of it.” 

The world’s largest gold-backed exchange-traded fund, the SPDR Gold Trust, said its holdings fell to 1,131.24 tonnes as of June 22, down 0.91 tonnes from the previous business day. 

It was the first change in the holdings since June 5. The holdings hit a record 1,134.03 tonnes earlier in the month. 

In other metals, silver firmed slightly to $13.83, up from $13.72 quoted late in New York on Monday. Platinum rose slightly to $1,167.50 from $1,159.50, while palladiumfirmed to $234.50 from $232.00.

quoted from: Khaleej Times

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Cocoa Futures Bounce From Lows

LONDON - Cocoa futures bounced higher on Tuesday, partly due to industry buying, and were seen well-supported after hitting lows in London and New York on Monday. 


Coffee futures traded lower, weighed by renewed uncertainty over the outlook for the global economy, while sugar remained rangebound supported by trade, fund and investor buying, dealers said. 

The euro rose against the dollar as equity markets stabilised after steep losses in Asia and the U.S., but investors remained cautious ahead of Wednesday’s U.S. Federal Reserve policy meeting. 

The slightly weaker dollar and pound make dollar and sterling-denominated futures better value in terms of other currencies. 

Cocoa dealers said the market was set for a recovery, having been on a downward trend since June 10. 

“I think the market was due a bit of a bounce,” a cocoa trader said. “There’s big support in London and quite a bit of industry around these levels.” 

London September cocoa was up 9 pounds at 1,592 pounds a tonne at 1251 GMT, after touching a low of 1,578 pounds a tonne on Monday, the lowest level for the second month since mid-December 2008. 

September cocoa on ICE was up $9 at $2,489 a tonne, having hit a session low of $2,472 a tonne earlier. 

“Technically we are on quite a key level of support and I think the longs will protect it and industry needs to buy, so I think the market will come up from here,” the trader said. 

“I think London’s leading the way,” he said, adding there is investor and fund interest in the market. 
Downward trend 

Coffee futures were pushed lower by renewed concerns about the outlook for the global economy. 

“It’s just a general economic picture, everything took a bit of a hammering yesterday,” a coffee trader said. “The bearish sentiment is generally there.” 

London robusta coffee futures for September were down $20 at $1,359 per tonne, having sunk to $1,330 on Friday, the lowest level for the benchmark second month since the contract was relaunched in January 2008. 

New York’s September arabica contract was down 0.85 cents at 1.11960 per lb. 

The London-based trader said coffee futures need to go through a period of consolidation. 

He said there was a bit of origin selling, and a lack of buying at present. 

However, coffee sales in Vietnam are expected to pick up this week after domestic prices, tracking gains in London, rose 2.5 percent on Tuesday from late last week, traders said. 

Sugar futures edged up slightly. 

“We’ve moved away a little bit from following the wider commodity picture,” a sugar trader said. “Recently the market has been caught in a slightly tight range.” 

ICE October raw sugar was up 0.41 cent at 16.65 cents per lb, while July was up 0.41 at 15.49 cents. London August white sugar was up $11.10 at $434.00 per tonne. 

“The bigger factor remains we still have a positive set of fundamentals underlying the market,” the trader said, referring to a buoyant South Asian appetite for the sweetener. 

“There’s good underlying trade buying and also support from some of the funds just looking to hold the market on the dips.” 

Dealers also said they were keeping an eye on the slow progress of the monsoon in India, which has swung to a net importer from a net exporter of sugar.

quoted from: Khaleej Times

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