Daily FNArena News - Commodities

With China again leading the way steel industry consultant MEPS expects global steel output to rise by 5.7% in 2008.

Merrill Lynch has revised its gold price forecasts significantly higher and the broker is not alone in suggesting US$950 per ounce or higher is possible in 2008.

If history repeats itself spot uranium should soon be rising again.

With solid demand growth and supply concerns to keep the market tight NAB has revised up its forecast for average oil prices in 2008 to US85 per barrel from US$65 previously.

Sugar prices have rallied since the September quarter but analysts continue to have diverse views on the price outlook.

The oil market looks tight at present but as CBA notes this may reflect stronger seasonal demand that traditionally eases as the northern hemisphere moves from winter to spring.

Steel industry consultant MEPS notes more producers are considering introducing alloy surcharges and in its view this bodes well for stainless steel prices.

GFMS suggests central bank gold selling in 2008 will not test the levels seen in 2007.

Gold market activist group GATA is about to challenge the US Treasury in a move that observers suggest could spark a big rally in gold, even from here.

Barclays Capital suggests rather than reducing exposure to commodities when volatility increases it should be retained as there is little link between equity market and commodity price returns.