Base metals swept up in SE Asian turmoil
Base metals swept up in SE Asian turmoil
LONDON (AFP): The base metals were swept up this week by the
financial crisis in Southeast Asia, nearly all losing value from
fears that demand in Asia will drop as local economies weaken.
An analyst from Australian bank Macquarie said the market "had
reason to be nervous" about the possible consequences of an
economic slowdown in the region.
"The Japanese situation is the most worrying for the market,
which was very concerned at the drop in new housing construction
in Japan," he added.
To add to the nervousness, according to dealers, a number of
investment funds, including George Soros's Quantum, have abruptly
withdrawn from the base metals market.
Elsewhere on the commodities markets, gold was tarnished by
its inability to attract investors as a safe haven from the sharp
slide on global stock markets, as well as by the Swiss move to
sell 1,400 tons of gold reserves over the next ten years.
Gold: Tarnished. Gold prices continued to melt this week, as
investors moved only half-heatedly into the precious metal after
the financial upheaval in Southeast Asia, which caused a slump on
European and US stock markets.
The price of gold on the London Bullion Market lost six
dollars to $321 per ounce.
Silver: Stable. Silver prices held broadly stable, despite a
slight fall at the end of the week in the wake of the financial
turmoil in Southeast Asia.
Silver prices lost one cent to $5.12 per ounce.
Platinum and Palladium: Retreat. Palladium prices fell
sharply, as Tokyo and Moscow started to negotiate an agreement
over Russian metal sales to the archipelago in 1998.
Palladium prices shed $17.5 to $204.5 per ounce.
Its sister-metal platinum also lost ground, falling to eight
dollars to $423 per ounce.
Copper: Weak. Copper prices fell sharply this week, affected
by the financial turmoil in Southeast Asia.
Three-month copper prices dropped $34 to $2,068 per ton,
despite the continued decline in the worldwide stocks of the
London Metal Exchange (LME).
Lead: Resistant. Lead proved resistant to the financial crisis
in Southeast Asia, and the price of the metal gained $1.50 to
$611 per ton.
It was the only base metal to advance this week.
Zinc: Follower. Zinc prices continued to fall, in the wake of
the other metals, weighed down by the negative sentiment on the
market because of the economic problems in Southeast Asia.
The price of this metal, used in anti-corrosive treatments,
lost $27 to $1,278 per ton.
Aluminum: Weaker. Aluminum prices continued to lose ground
this week, dealers said.
Three-month prices for the metal lost $26 to $1,602 per ton.
The price of the metal could reach $3,306 per ton in 2000,
they.
Nickel: Molten. Nickel prices plunged to a three-year low,
after a wave of selling by investment funds, and ended the week
$315 down at $6,225 per ton.
According to traders, the Quantum fund, run by financier
George Soros, withdrew its investments from the LME.
"If Soros has left, that's not good for the market," a London
analyst said.
Tin: Depressed. Tin prices continued to lose ground, falling
$227.5 to $5,415 per ton, in a depressed market.
Oil: Recovery. Oil prices flared up again after an unexpected
drop in US petroleum stocks, ending the week above $20 per
barrel.
The price of Brent crude oil gained 50 cents over the week to
$20.30 per barrel.
Oil prices also were underpinned by market nervousness at the
possibility of the United Nations imposing further sanctions
against Iraq, dealers said.
According to London-based trading house GNI, oil prices are
likely to remain firm in the short-term, but in coming weeks they
could drop beneath $20 again.
Coffee: Weaker. Fears caused by searing drought in Indonesia
eased this week because of the prospect of a record harvest in
Vietnam which could make up for the fall in Indonesian output.
This hit the coffee market as speculators and investment funds
launched a wave of selling, and robusta prices fell by $120 to
$1,480 per ton.
However, one London analyst cautioned that El Nino could
damage the harvest in Indonesia, which produces more robusta
coffee than any other country in the world, even more than people
have feared until now.
Rubber: Sleepy. Rubber prices fell slightly, with the British
rubber index losing 10 pounds to 570 pounds per ton over the
week.
British trading house Lewis and Peat said the market was
"hibernating" in the absence of any strong demand.
Supplies of latex remained plentiful and buyers were treading
around the market, since manufacturers have big stocks of rubber,
a Lewis an
d Peat analyst said.