Commodities: Mixed performance led by weaker fundamentals and softer USD - ANZ

Research Team at ANZ points out that commodities were mixed in the previous session amid a combination of weaker fundamentals and a softer USD.

Key Quotes

Crude oil prices fell a touch as concerns over rising output weighed on the sector. Another strong jump in the rig count in the US saw WTI prices fall over 1%. Baker Hughes data showed US drillers added another 14 rigs to bring the total to 631 currently operating. Elsewhere, reports that Libya was about to reopen ports closed by military clashes also kept downward pressure on prices: Es Sider and Ras Lanuf are two of the country’s largest oil ports. Libya’s total production rose to 646kb/d from 621kb/d on Sunday due to rising output from Waha Oil Co. However, it needs the ports to reopen to get it to the market.”

Base metals prices sold off heavily late in the trading day, after supply side issues had supported prices earlier. Nine top zinc smelters in China have, or are about to be suspended due to low treatment and refining charges as the concentrate market tightens. At least 640,000 tonnes would be affected, according to the China Nonferrous Metals Industry Association. Aluminium prices bucked the trend, ending the day higher after data showed global production fell. The International Aluminium Institute reported world output fell 166.3kt/d in February, from 170kt/d in Jan.”

Iron ore spot prices fell slightly after supply concerns returned. China’s stockpiles of ore held at ports rose to 131 million tonnes last week, according to SteelHome data. However this was counteracted by a fall in steel inventories. Stocks of rebar fell for the fourth straight week to 7.2 million tonnes. Coking coal prices remained unchanged as the market awaits news of second quarter contract negotiations. The elevated level of March quarter prices (at USD285/t) are complicating these discussions.”

Gold pushed to a two week high as investor sentiment continued to improve after the FOMC meeting last week. Losses in equity markets and rising political uncertainty ahead of the French elections have also been supporting prices.”

Agriculture markets were largely in the red amid a wave of selling from speculators. The reversal in positioning goes against some bullish signals in the markets. For wheat markets, concerns over dryness in the southern US Plans are rising.”