A mixed bag for commodities last week as gold rose to a two-month high, oil recovered but still showed a net loss, copper marked time, iron ore plunged and silver enjoyed a small gain.
Gold rose to a two-month high on Friday as bond yields plunged and the dollar fell after the United States reported a better-than-expected rise in employment in October.
The US Bureau of Labor Statistics said 531,000 new jobs were created last month, which was 80,000 more than the forecast from the market, while a further 235,000 new jobs were found for August and September, making well over 750,000 new jobs reported in the month.
Comex Gold for December delivery closed up $US23.30 to US$1,816.80 an ounce, the highest since September 3.
Bond yields fell with the yield on US 10-year securities falling 12.3 basis points to 1.458%. The dollar also fell, with the ICE dollar index down 0.09 to 94.26 points. At the close the 10-year yield was around 1.43% and the dollar index ended at 94.22.
That saw the Aussie dollar end the week just over 74 US cents. That was down around 1.6% from the previous Friday’s close.
Silver is also regained some ground to end at USD 24.15 for a rise of 0.86% for the week.
Aluminium again lost ground for the week, ending at fell to $US2,640, a tonne on the London metal Exchange and LME copper steadied at a still high $US 9,700 a tonne. Traders say there is still a shortage of metal stocks in the LME system.
Comex copper ended at $US4.3490 a pound, up 0.6% for the week.
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Iron ore prices were crunched again on Friday for another big fall after tougher conditions were imposed on emissions (and therefore steel production and processing) in the major steel hub of Tangshan.
It was the second time in several weeks thaat production cuts were forced on steel producers, coke sintering plans and steel processors in the city – which is China’s biggest steel producing centre.
The price of 62% fe fines shipped to northern China from the Pilbara dropped 7% on Friday to end at $US93.14, a new 20 month high. That took the fall for the week to more than 13% or over $US14 a tonne.
The price of 58% Fe Fines dropped more than 13% to end at $US65.78. That left it down more than 16% for the week. 65% Fe Fines (from brazil) ended at $US120.80, down $US6.60 a tonne which was most of the fall for the week.
Capacity utilisation rates of 163 blast furnaces at mills across the country fell to 62.39%, as of November 5, from the Mysteel website from 66.17% the Friday before with analysts say the drop was due to the capacity cuts ordered in northern steel cities to cut pollution and smog emissions in the cool, still late autumn weather.
The most-traded iron ore futures on the Dalian Commodity Exchange, for January delivery (62% Fe fines), ended down 3.2% at 561 yuan ($US87.65) per tonne. The contract fell 12.1% last week.
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Crude prices rose more than 2% on Friday on renewed supply concerns after OPEC+ producers rebuffed US calls to accelerate output increases even as demand nears pre-pandemic levels.
Brent crude was up $US2.20 or 2.7%, at $US82.74 a barrel, while West Texas Intermediate crude (WTI) crude futures settled up $US2.46, or 3% to $US81.17.
The solid US jobs report helped traders shake off the previous day’s worries and push prices higher, even though the OPEC+, agreed on Thursday to stick to their plan to raise oil output by 400,000 barrels a day (bpd) from December.
US President Joe Biden had called for extra output to cool rising prices and there were rumours of a release from America’s strategic reserves, but that remained just talk.
OPEC’s decision to stay the course and the Biden administration’s lack of a substantial response saw the oil rally continuing, said Bob Yawger, director of energy futures at Mizuho Bank of Japan.
The weekly rig numbers for the US showed a rise of 6 in the total number of rigs in use to 550, thanks to six extra rigs looking for oil (to a total of 444. The number in the gas sector in use was steady on 100).
After the OPEC+ meeting, the White House said it would consider all tools at its disposal to guarantee affordable energy, including the possibility of releasing oil from strategic petroleum reserves (SPR).
“Markets know that the release of strategic reserves can only have a temporary bearish effect on prompt prices and is not a lasting solution for an imbalance between supply and demand,” Rystad Energy head of oil markets Bjornar Tonhaugen said in a note.
China made a release from its reserves in October and it had no impact on prices in the domestic market at all – they continued rising.
Brent saw a second straight weekly decline, down about 1.1%, while WTI lost 2.4%.
Meanwhile, signs are emerging that the ‘hot’ LNG market is cooling for Australian exporters and others.
Reuters reported on the weekend that LNG prices in Asia fell for a third straight week last week, as improved gas supply in Europe reduced the competition for LNG across the region
The average LNG price for December delivery into Northeast Asia fell to $US29.50 per metric million British thermal units (mmBtu), down $US1.50 or about 5% from the previous week, Reuters reported quoting ‘industry sources’.
Chevron has completed maintenance at its Wheatstone LNG plant in Western Australia, with cargo exports expected to go up in the fourth quarter.
Spot demand continues to be firm with some Chinese buyers scouting the market for cargoes for delivery over the winter, one of them said.
