MUMBAI: Commodity investors have upped their bets on crude oil, gold, silver and base metals after receiving signals on global economic recovery. Import and export data for December 2009, showed a marked improvement in commodity imports as well as exports. Bullish data have revived hopes of global economy turning around and set to log positive growth this year.
Meanwhile, the markets saw a record surge in import of crude oil and soybean and a strong appetite for iron ore and copper, while aluminium and steel sectors saw a welcome increase in export volume for December 2009.
Positive outcome from import data fuelled growth in crude oil prices. Nymex crude oil futures for February settlement climbed above $83 a barrel in early Asian trade and continued to trend higher during European and trading session, boosted by a hobbled US dollar. Crude oil imports have surged to more than 20 million tonne in December. Nymex crude for February delivery rose $1.04 cents to $83.79 a barrel. The contract settled up 9 cents at $82.75 a barrel on Friday.
There are also supply concerns developing on the other hand. Chevron said on Saturday it had been forced to shut down 20,000 barrels per day (bpd) of crude oil production.
On MCX, crude oil traded in a narrow range as a stronger rupee kept a check on price gains. On MCX, crude oil contract for near-month settlement was last quoting at Rs 3,802 after having opened the session at Rs 3,797 a barrel.
Gold jumped to its highest level in more than a month on bullish Chinese data and weakening of the US dollar. Spot gold was quoted at $1,157.80 an ounce, up $20.30 from New York national close on Friday. It had risen as high as $1,159.55 an ounce, strongest level since December 8. Spot silver surged 43 cents to $18.84 an ounce.
The world's largest gold-backed exchange-traded fund, SPDR Gold Trust, said its holdings fell to 1,119.54 tonne as of January 8, down 3.96 tonne from the previous business day.
On domestic commodity markets gold and silver futures trended higher tracking overseas markets. MCX Gold for February settlement opened the session at Rs 16,911 per 10 gram and rose to an intra-day high so of Rs 17,083. The counter was last quoting at Rs 17,057 per 10 grams. MCX Silver March settlement contract traded higher at Rs 28,526 per kg, after having opened the session at Rs 28,280.
Chinese import-export data released on Sunday painted bullish picture for various commodities, which has given a thrust to commodity prices and helped them to shrug off last week decline. On Friday, base metals counters ended the week on a soft note, on London Metal Exchange (LME), as selling from commodity index investors outweighed support from a weaker US dollar.
Copper finished 1% lower on the day, although it eked out a 1.2% gain in the first week of 2010. Worse-than-expected jobs data triggered sharp swings in currency markets, leading to a volatile trading in metals. This morning, copper for three-month delivery traded at $7,695 a tonne, up $175. Other base metal counters too traded strong tracking copper.
Meanwhile, the annual rebalancing of commodity indexes began Friday, also forced index investors to sell commodities whose weight in the indexes will be reduced.
An estimated 8,100 lots of zinc and 1,900 lots of nickel will be sold in the re-weightings, a significant portion of weekly volumes. This is equivalent to 202,500 metric tonne of zinc and 11,400 tonne of nickel - about 41% of LME zinc stocks and 7% of nickel inventories.
On the domestic market, all metal counters shrugged off early low and kept trending higher following the global cues. Metal counters surged despite strong rupee looking to arrest price gains. Counters such as Lead, Nickel, and Zinc led the price recovery. MCX copper for February settlement traded 1.4% higher at Rs 349.45 per kg. MCX zinc January contract added over 1% to trade at Rs 117.10 a kg.
