Gold extended its record breaking run, oil was weak, but the big mover in commodities was the sharp rise in the freight market late last week.
The Baltic Dry index, the global benchmark for freight costs for dry bulk commodities, jumped 21.2% to 4,111 points over the week thanks to surging demand for so-called Capesize vessels that transport iron ore and coal to China.
(Capesize bulk carriers are big enough to sail economically around South Africa and into the Atlantic or Indian Ocean/Pacific carrying dry bulk cargoes like coal or iron ore.)
That’s despite a downturn in iron ore shipments to China last month of around 30%, revealed in the October import figures released last week.
Growing ship congestion outside key ports in China and Brazil has also driven the Baltic Index higher – up 85.2% since the start of October, but still very low compared to the highs of 18 months ago.
The demand for Capesize vessels also boosted demand for Panamax sized ships (they can fit through the Panama Canal).
Average Panamax rates hit a 14 month high on Thursday of last week, thanks to strong demand for grain, iron ore and coal within the Asian trading region.
The Financial Times reported that freight brokers noted a growing interest in hiring vessels for several months rather than single voyages and said this indicated confidence that shipping demand would remain firm.
This will be good news for Australia and a sign that demand for our iron ore, coking and thermal coal from Asia remains firm.
Gold hit a record price of $US1,122.85 an ounce on Thursday before slipping Friday, to finish up 2% for the week.
Crude prices came under pressure after US inventories data indicated a broad weakening in demand conditions, while there are still solid stock levels outside the US.
Nymex December West Texas Intermediate eased 59 cents to $US76.35 a barrel on Friday in New York, down 1% for the week.
ICE December Brent lost 47 cents to $US75.55 and was flat over the week.
The New York close was the lowest in a month.
The big driver was the 3% fall on Thursday after the US Energy Information Administration reported crude and product stocks in the world’s largest energy consumer rose more than expected last week.
A weaker US dollar helped, but couldn’t offset the weaker sentiment.
Exxon Mobil Corp CEO, Rex Tillerson helped maintain this negative outlook when he said winter heating demand in the US alone was unlikely to significantly reduce the global fuel inventory glut.
The International Energy Agency said on Thursday the world would use more oil in the fourth quarter of this year than in 2008 due to a rebound in energy demand in Asia, but not in Europe and the US.
And OPEC said last week it saw global oil demand this year falling 1.63% year-on-year to 84.31 million barrels per day (bpd).
However, the world economic recovery would push world oil demand to increase 0.9%t to 85.07 bpd next year, according to OPEC.
OPEC forecast that crude oil demand of next year would grow 3.7% in China and 3.3% in the Middle East, but would fall 1.25% in Western Europe.
Copper prices rose Friday and finished the week higher. Comex March copper rose 2.65 cents, or 0.9%, to $US2.9995 a pound on Friday in New York.
The price rose 0.8% this week.
The market ignored the news of a sharp fall in Chinese copper imports in October.
Stock monitored by the London Metal Exchange rose for the ninth straight session to 403,625 tonnes last week, the highest they have been since late April, increasing downward pressure on the market.
China’s imports will fall by more than half in 2010 because of ample stockpiles, according to the Beijing-based Antaike Information.
Copper for delivery in three months rose 0.3% to $US6,520 a tonne ($US2.96 a pound) on the LME.
Lead, zinc and tin prices also climbed in London. Nickel and aluminum prices fell.
Gold ended up 1% Friday, and almost 2% on the week.
Comex December gold rose $US10.10, or 0.9%, to end at $US1,116.70 an ounce..
Gold earlier slipped below $1,105 an ounce.
Among other metals, December silver rose 12 cents, or 0.7%, to $US17.38 an ounce, while January platinum gained $US25.50 an ounce, or 1.9%, to $US1,385.50 an ounce.
And wheat
rose for the fifth straight day on Friday on hopes that some of the huge US crop will be used to feed livestock after a 22% rise in corn prices in the past month.
March Chicago wheat futures rose 7.5 cents, or 1.4%, to $US5.5975 a bushel on Friday.
That left it up 13% over last week, the strongest gain since early January.
Wheat has risen 20% in the past month, despite the big summer crop now being harvested and stored across the US.
