Crude
Commodities prices grew across the board on Wednesday, supported mainly by slightly better than expected China’s Q4/2012 GDP reading. The figure fuelled a rally in base metals prices – its impact on the price of oil was rather modest as Brent crude posted only small gains on Tuesday.
EU diplomats gave more concrete shape to a planned ban on Iranian crude imports. Denmark, who holds the rotating EU presidency, proposed that the embargo could come into effect on 1st July. Given the improving physical market fundamentals (ramping up of Libya’s production, Saudi’s high production, favourable weather), the impact of the measure (if it passes) would probably be seen in the longer-term contracts, i.e. the timespreads (1M – 6M) might further tighten and maybe even turn to be negative. Such conditions were last observed in June last year.
Base Metals
A positive result of China’s Q4/2011 GDP particularly bolstered base metals prices – copper closed above 8200 USD per ton and aluminium even gained more than 3 percent (see the chart).
Despite recent gains, we remain rather cautious. We believe that a more sustainable rally is still difficult as long as there is no outright good news from Europe.
Precious Metals
Precious metals prices posted modest gains on Tuesday although India decided to hike its gold import duties. Nonetheless, such a move will probably have no significant impact on the demand for the yellow metal over the long term, according to Reuters, as after a hike in duties in Feb 2010, India’s gold consumption soared 66 percent in the respective year.
Chart of the day:
Both aluminum and copper are trading at the highest level since the end of October 2011.
