Asian financial storm hits commodities marts
Asian financial storm hits commodities marts
LONDON (AFP): Asia's financial turbulence wreaked havoc with
the commodities markets this week, as economic instability and an
expected slump in growth rates there ravaged consumption of
metals and edible goods.
Sharp losses in regional currencies, such as the Indonesian
rupiah, which tumbled below 10,000 to the dollar during the week,
set alarm bells ringing in dealing rooms across the City of
London.
Dealers forecast that the reduced buying power from the region
that was formerly a key consumer of metals and other commodities
would hit demand for a long time to come.
A slump on regional stock exchanges added to the downbeat
prognosis of western market-watchers.
The turmoil knocked gold prices down to their lowest level
since mid-1979 and base metal prices also slumped to their lowest
levels for several years.
U.S. soya and sugar prices also caught the eastern bug as the
yen fell sharply against the dollar.
Crude oil prices plummeted in the wake of a resumption of Iraqi
exports after a month-long pause.
Gold: meltdown. Gold plunged to an 18-1/2 year low this week
on the London Bullion Market in reaction to the financial turmoil
in East Asian markets.
Prices slumped below US$280 per ounce at one point, but
recovered slightly to $280.45 at the end of the week, far below
the $289.15 recorded last week.
The gold market was affected by the fall in Asian stock
markets and sharp losses in currencies across the region.
Silver: stable. Silver prices closed at almost the same level
as last week, after a sharp rise earlier in the week was reversed
amid rumors of legal proceedings to be launched against dealers
embroiled in a price fixing ring.
Prices closed at $6.04 per ounce from $6.03 last week.
Platinum and palladium: sparkling. The prices of these two
metals rose a little higher still, as supplies from Russia, by
far the biggest producer of the metals, have been held back from
the market so far this year. Shipments were suspended for several
months in 1997.
Palladium prices rose by $1.5 to $363.50 per ounce.
Platinum prices rose by $4.5 to $208.5 per ounce.
Copper: dulled. Copper prices fell sharply over the week under
pressure from the Asian financial crisis and an increase in
reserves on the London Metal Exchange.
The three-month copper price sank $78.5 to $1,674.5, the
lowest level since December 1993.
Aluminum: lighter. Aluminum prices fell amid heightened
turmoil across southeast Asia, where regional currencies slumped
further this week.
Dealers said that speculative U.S. investment funds were
behind the selling of metal contracts.
Three-month prices fell by $80 to $1,490 per ton.
Market reserves fell slightly to 619,425 tons from 626,050
tonnes last week.
Nickel: meltdown. Nickel prices fell to their lowest point
since August 1994 as demand from the troubled economies of
southeast Asia ran dry this week.
Three-month prices fell by $307.5 to $5,782.5 per ton.
Stocks of the metal held in LME warehouses fell marginally to
66,138 tonnes from 66,240 tonnes.
Tin: tumble. Tin prices tumbled under the weight of increased
stocks of the metal held in LME warehouses and persistent concern
over devaluation of east Asian currencies, which threatens to
further erode demand from the region.
Three-month prices fell by $157.5 to $5,257.5 per ton.
LME reserves rose to $13,100 tons from 12,950 tons last week.
Oil: Flooded. Oil prices fell sharply as Iraq was given the
green light to renew exports of crude under a United Nations (UN)
oil-for-food deal.
Brent North Sea oil, the benchmark for the commodity, fell
below the 16-dollar barrier to $15.73 a barrel, down 81 cents.
Prices were at this low level in October 1995.
Rubber: bouncy. The plunge in east Asian currencies hit the
rubber market, with the ringgit making Malaysian rubber a bargain
buy.
Prices on the RSS1 index rose to 46.75 pence a kilo, up 25
pence, while on the London index rubber was unchanged at 545
pounds a ton.
Cocoa: warm. Cocoa prices rose slightly this week, in the
light of a fall in the value of the pound which made sterling-
denominated contracts quoted on the London market relatively
cheaper to overseas investors.
Prices for delivery in March rose by three pounds to 1,085
pounds per ton.
The price rise was capped by a rise in European cocoa stocks
to 846,882 tons at the end of last year.
Coffee: strong. Robusta prices rose this week as demand from
roasting houses strengthened, while supplies of beans on the
export market started to slow.
Robusta prices for delivery in March rose by $28 to $1,760 per
ton.
The International Coffee Organization said that exports
totaled 5.11 million sacks in November 1997 compared with 6.9
million sacks the previous year.
Tea: strong. High grade Assam teas commanded strong demand in
the London auction houses this week.
Medium quality consignments were sold for between 152 and 166
pence.
Vegetable oils: flowing. The Malaysian palm oil market was
much stronger after the ringgit's plunge in value, which sparked
a wave of buying.
Palm oil for delivery in March traded at 2,492 ringgits a
ton, up 367 ringgits from the week before, in heavy trading and
with demand far outstripping supply, traders said.