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to the nervousness, according to dealers, a number of investment funds, including George Soros's Quantum, have abruptly withdrawn from the base metals market.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.