The latest commodity figures show that gold and oil increased in value this weekend; the former was up by 0.88% and the latter was by 0.11% when compared to last week’s figures. This is particularly interesting given that this has been a month in which the price of oil has been moving sharply up and down in response both to the US presidential elections and to volatile forecasts about the situation in the Middle East. There are two key factors that are behind the fact that this commodity is valuable at the moment, though, and these are outlined below.
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Chinese iron ore imports rose in September, according to Reuters data, as the country’s steelmakers ramped up output in the face of global trade tensions about the country’s steel exports.
Thomson Reuters Supply Chain and Commodity Forecasts data showed 82.5 million tonnes of iron ore, which is used in steelmaking, arrived at Chinese ports in September – up 2.5 percent on August and not far off July’s near record levels.
The data, based on ship tracking and port figures, does not completely tally with official Chinese customs figures, but typically doesn’t vary from them by more than 4 percent. China, which consumes some two-thirds of global sea-born iron ore, will release official trade figures for last month on Oct 8.
The world’s biggest gold miners are taking a cautious approach in their hunt for bullion, spending more money to explore around existing mines rather than new territory in a strategy that may have short-term gains but risks future production growth.
Top producers are relying more than ever on small companies to do the heavy lifting of searching for new deposits and increasingly taking 10 to 20 percent equity stakes in the junior miners.
Exploring close to home is more cost efficient and improves the odds of discoveries. But the chances of making major new finds are limited, diminishing global gold output, which is expected to decline by nearly 9 percent in the next three years.
G20 leaders have pledged to work together to address excess steel capacity that has punished the global industry with low metal prices for years while raising tensions between China and other major producers.
A statement from the White House said that leaders at the G20 summit in Hangzhou, eastern China, on Monday (September 5) accepted that overcapacity in steel and other industries is a global issue that requires a collective response.
Proposals for the formation of a global forum that would seek a global solution and report back to the G20 next year underscore the growing resolve to support a sector that has long been grappling with chronic oversupply and sluggish demand.
Oil prices fell early on Monday (August 29) as output from Iraq rose and as Iran said it would only cooperate in upcoming producer talks to freeze output if fellow exporters recognised its right to fully regain market share.
International Brent crude oil futures LCOc1 were trading at $49.54 per barrel at 00.43 GMT, down 38 cents from their previous close.
U.S. West Texas Intermediate (WTI) crude futures were down 43 cents at $47.21 a barrel.
Oil companies and even Nigerian officials are losing faith in a deal anytime soon with militants who have slashed the nation’s oil output, casting doubt on a production recovery in what is typically Africa’s largest oil exporter.
In the six months since the first major attack on Nigeria’s oil – a sophisticated bombing of the subsea Forcados pipeline – dozens of attacks have pushed outages to more than 700,000 barrels per day (bpd), the highest in seven years.
Talk in the country has shifted from ceasefire optimism, and oil companies’ assurances that repairs were under way, to hedged comments from the government and radio silence from oil majors.
Oil prices rose on Monday (August 15) to their highest in nearly a month, with benchmark Brent crude trading more than 10 per cent above the start of August, as speculation intensified about potential producer action to support prices in an oversupplied market.
Brent crude oil futures rose to a high for the month of $47.67 a barrel on Monday (August 15) before dipping back to $47.10 per barrel at 0943 GMT, up 13 cents from their last settlement, and 11.3 per cent above the last close in July.
US West Texas Intermediate (WTI) crude futures rose to a high of $45.15 a barrel before dipping to $44.63 a barrel, still up 14 cents from their last close. WTI has gained more than 7 per cent in August.
Indonesian thermal coal miners will be unable to ramp up output this year due to logistical and debt constraints, despite a strong price rally in recent months, the Indonesian Coal Mining Association said.
Global thermal coal prices have risen sharply on an unexpected jump in imports from top consumer China as it curbs local capacity, as well as demand from other emerging Asian markets and even developed economies, particularly South Korea.
However, Indonesian coal producers that slashed output in recent years due to slumping prices are not expected to be in a position to quickly boost output, association chairman Pandu Sjahrir told news agency Reuters.
Consultancy Strategie Grains cut its estimate for the European Union’s rapeseed harvest for the third month in a row on Monday (August 1) due to lower than expected yields in major producing countries where harvesting is in full swing.
It said the EU should harvest 20.7 million tonnes of rapeseed this year, a forecast revised down by 570,000 tonnes from last month, and now nearly 6 per cent below 2015.
Strategie Grains mainly cut its estimates for France, Germany and Poland due to lower yields. The cuts were only partly compensated by smaller rises in Hungary, Bulgaria, the Czech Republic, Denmark and Lithuania.
Chinese steel futures swung to losses after a moderate gain on Monday (July 25) as cooling demand in flood-hit regions outweighed output cuts in a key industrial region.
Spot steel prices in some northern regions fell after the floods interrupted transportation and sales as well as hit demand, despite a mandated output cut in Tangshan, a key steel producing area, traders said.
“The positive news is a bigger output cut, particularly for coking plants, in Tangshan, but demand has also been hit by floods in some regions. The market could be volatile this week,” said Yu Yang, an analyst with Shenyin & Wanguo Futures in Shanghai.