Base Metals Plummet Amid Worsening Chinese Economy

Precious Metals Mostly Down on Strong Jobs Data

Gold bounced back from a nine-week high on Friday, declining as the Greenback rallied amid news that the US economy added much more jobs than anticipated last month. On the Comex division of the New York Mercantile Exchange, bullion futures for delivery in February settled at $1,097.90 a troy ounce by the end of Friday’s trade, dipping $9.90, or 0.89%, after rising to a session’s high of $1,113.10 earlier in the day, the most since early November. Despite slight losses, gold futures still jumped on the week, closing the trade 1.95% higher compared to the previous week’s end price, driven up by bolstered safe-haven demand, which was influenced by global equity market rout, China-led worries as well as heightened geopolitical tensions around the world. Meanwhile, the Fed’s rate hike cycle as well as loose monetary policies from the other Central Banks will continue to support traders’ demand for the Greenback, which will in turn be bearish for the precious metal.

Silver futures for March delivery slipped on Friday, settling 42.6 cents, or 2.97%, higher at $13.91 a troy ounce on the Comex division of the New York Mercantile Exchange by the end of trade. On the week, silver prices, however, managed to add advancing just 0.18%. Nevertheless, gains were limited due to a broadly firmer Greenback, which strengthened as the NFP data showed the US economy created more jobs than expected.

Platinum inched up at the end of the previous week, with metal’s futures for April delivery jumping $2.40 on Friday to settle at $878.80 per ounce. However, in spite of these gains, prices still finished 4.32% down from the previous week’s closing price on the Nymex.

Palladium exchanged hands for $493.50 an ounce by the close of trade on Friday, which is up 50 cents compared to the previous session’s end price. However, on the week, prices of the metal settled substantially lower, losing 12.84%.

Base Metals Plummet Amid Worsening Chinese Economy

Aluminum lead a rebound in base metals on Friday, as Chinese equities plunged on concerns that the biggest Asian economy is worsening. Aluminum futures for delivery in April jumped 1.2% compared to the previous session’s end price, settling at $1,492.50 a tonne, posting the biggest increase since December 23 by the end of Friday’s trade on the London Metal Exchange. Despite these gains, aluminum still did not manage to close the prior trading week higher, posting a weekly decrease of 0.93%. In the meantime, weak growth in emerging markets continue to dampen prices of the metal; thus, further production cuts would be needed to restore the balance on the market in 2016.

Copper futures for delivery in March dropped on Friday, plummeting 0.6 cents, or 0.28%, to finish the trading session at $2.022 a pound after dipping to $1.990 on Thursday, a level not seen in the last 6 years, on the Comex division of the New York Mercantile Exchange. Over the previous week, copper prices also did not manage to add, sliding 5.11%, or 5.4 cents, as Chinese stock market slump and a rapid Yuan depreciation weighed on traders’ sentiment. Meanwhile, fears that slower economic recovery in China would decrease the country’s demand for the red metal leaves the outlook for copper on the bearish side.

Nickel also closed Friday’s trade higher on the London Metal Exchange. However, in spite of these gains, over the previous trading week, nickel futures still plummeted 2.78%, as weak demand from China continued to leave the outlook for the metal uncertain.

Zinc rallied on Friday, right after it posted a remarkable loss in the previous session, plummeting 3.4% on the London Metal Exchange, being the week’s biggest faller in industrial metals. As concerns the whole trading week, prices of zinc slumped 5.56% even despite Friday’s gains on the LME.

Energy Commodities Post Losses Amid Oversupply Concerns

Crude oil posted a substantial drop on Friday, finishing the session close to the lowest level in more than a decade amid ongoing worries about China’s economic outlook, that bolstered concerns that a global supply glut may remain on the table for much longer than expected. On the New York Mercantile Exchange, crude oil futures for delivery in February finished at $33.16 a barrel by the end of Friday’s trade, bringing daily decline to 0.33%, or 11 cents. On Thursday, New York-traded oil futures fell to $32.10, a mark not seen since December 2003. Over the course of the prior trading week, Nymex oil futures plummeted around $5, or 14.55%, to settle at record lows, posting the eleventh week of declines over the last thirteen, as worries about ample domestic supply along with global crude oil supply glut concerns weighed on the traders’ sentiment. Meanwhile, one of the world’s most influential industry research groups, Baker Hughes, announced that the number of rigs drilling for oil in the US decreased by 20 to 516 last week, still leaving the current oil output near record-high levels.

Brent oil futures for delivery in February also shed by the end of Friday’s trade to settle at $33.55 a barrel on the ICE Futures Exchange, which is down almost 0.6%, or 20 cents, on a daily basis. In the previous session, futures sank to $32.16, the lowest since April 2004. For the week, London-traded Brent oil futures slipped 15.23% due to meltdown on China’s equity market and a fast depreciation of the Nation’s currency.

Natural gas futures rocketed more than 3.78% on Friday, jumping to an eleven-week high, as weather forecast pointed to much lower temperatures across the US east coast until the end of January. On the New York Mercantile Exchange, natural gas futures for February delivery settled at $2.472 per million British thermal units by the end of Friday, after rising ro $2.495 earlier in the week, the most since October 20. For the week, futures rose 2.66%, as data showed stocks fell more than expected.

Grains Finish Mixed on Investor Short-Covering

Corn fell over the course of the previous week; however, losses were still limited, because the whole grain market managed to rally on Friday, as world markets closed a little bit more stable, after being heavily hurt by a sharp drop in Chinese equities earlier in the week. At the Chicago Board of Trade, the most actively-traded corn futures for delivery in March posted a slight gain of 3.5 cents, or 1%, to settle at $3.56 a bushel by the close of trade on Friday, while on the week prices added 0.07% amid the short-covering from market players’ side.

Wheat prices rose on Friday, reaching their nearly three-week high, as global financial markets recovered, providing a bit of support to some commodity markets, following a slump in Chinese equities, which roiled other stock markets all over the world on Thursday. At the Chicago Board of Trade, wheat futures for delivery in March, the best-traded contract, added 10 cents, or 2.1%, to finish Friday’s session at $4.78 a bushel, after hitting the level of $4.80 earlier in the day, the best mark since December 22. As concerns the whole trading week, US grain prices managed to post an increase of 2.35%.

Soybean prices closed out the last trading day of the previous week on an up note, rising to a two-week high, being supported by firmer world markets along with inverstors’ short-covering ahead of the weekend, following a substantial plunge in Chinese stocks that earlier in the week caused prices of soybeans dropping significantly. At the Chicago Board of Trade, soybean futures for delivery in March rose 0.5%, or 4.5 cents, to settle at $8.69 a bushel, while on the week prices managed to tack on 0.61%.

Raw sugar was among the worst performers of the last week on the grain market. Over the course of the prior trading week, the most actively-traded raw sugar futures dipped 5.48% at the Chicago Board of Trade.

EXPLANATIONS

Commodities

• Gold - COMEX active contracted (USD/t o.z.)

• Silver - COMEX active contract (USD/t o.z.)

• Platinum - New York Mercantile Exchange active contract (USD/t o.z.)

• Palladium - New York Mercantile Exchange active contract (USD/t o.z.)

• Aluminum - Active contract of primary aluminum of minimum 99.2% purity at the LME (USD/MT)

• Copper - Active contact of electrolytic copper at the LME (USD/MT)

• Zinc - Active contract of zinc od minimum 99.995% purity at the LME (USD/MT)

• Nickel - Active contract of nickel of 99.8% purity at the LME (USD/MT)

• Crude oil - light, sweet crude oil active contract on the New York Mercantile Exchange (USD/bbl.)

• Brent oil - Brent oil active contract on the ICE Futures Europe (USD/bbl.)

• Natural Gas - natural gas active contract on the New York Mercantile Exchange (USD/MMBtu)

• Heating oil - heating oil active contract on the New York Mercantile Exchange (USD/gal.)

• Wheat - wheat active contract on the Chicago Board of Trade (cents/bu)

• Corn - corn active contract on the Chicago Board of Trade (cents/bu)

• Coffee - benchmark Arabica coffee active contract on the NYB-ICE Futures Exchange

• Soybeans - active contract on the Chicago Board of Trade (cents/bu)

Indices

• S&P GSCI Precious Metals Total Return Index - commodity group subindex composed of gold and silver; the index reflects return on underlying commodity futures price movement

• S&P GSCI Industrial Metals Total Return Index - commodity group subindex composed of futures contracts on aluminium, copper, lead, nickel and zinc

• S&P GSCI Energy Total Return Index - commodity group subindex composed of futures contracts on crude oil, Brent oil, RBOB gas, heating oil, gas oil and natural gas

• S&P GSCI Agriculture Total Return Index - commodity group subindex composed of futures contracts on wheat, red wheat, corn, soybeans, cotton, sugar, coffee and cocoa

Indicators

Long-term price forecasts - aggregated price forecasts based on predictions of 20 international banks forecasts

USDA Wasde Total Estimated Inventories (Today) - current level of inventories of wheat in 1000 MT, corn in 1000 MT, soybeans in million bushels and green coffee in 1000 bags

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