Daily FNArena News - Commodities

Apparent steel demand is pushing up prices faster than expected in Europe. Are we talking bubble?

We, and everyone else, have been saying it for long enough, and while there may be further downside it’s clear there are buyers lined up for metals as they correct somewhat. But what about agriculture?

While negotiations between the world’s largest producers of iron ore and Chinese steel manufacturers have not led to an agreement yet, CVRD has signed off on a 19% price increase with major European customer Thyssen Krupp.

The oil price may dip from here, but don’t expect anything below US$56 per barrel in the foreseeable future, experts say. Risks remain to the upside.

A presentation by BHP CEO Goodyear places India behind China in the future commodities demand time schedule. Simple calculations show that if anything supply won’t be able to keep pace.

As metals prices accelerate higher the risks of some form of correction are greater, but there is no relief in sight from supply/demand fundamentals.

Relief at last? The IEA has revised down world oil demand, but Barclays Capital questions the numbers.

The base and precious metals markets are moving at unheard of speed. There will have to be increases in exchange margins, and this could ignite a violent sell-off.

Hope or reality? The Chinese government’s latest five year plan has reignited speculation of a Chinese build up of strategic stockpiles of commodities.

Prices cannot run up indefinitely, not even for precious metals. Scotia Mocatta preaches caution for the short term.