Base metals have seen good gains. Copper and lead continue to be the outperformers in LME. Copper prices have gained 19% YTD and we have seen lead prices gain by 23% YTD. The underperformer continues to be aluminium, which has declined 14% in 2009 after declining 37% in 2008.
The currency market has also seen a lot of movement in prices and that is what has impacted commodities. We did see the US dollar slide a bit on Friday. The dollar index is of course off the year’s highs. But most of these currencies actually have not been able to capitalise on risk aversion. We haven’t seen too much of buying happen in the Japanese yen or the euro for that matter. Euro is trading at a one-week high at this point but has not been able to breach 1.2650 against the dollar on the higher side.
So, there is a little bit of underlying strength in the US dollar which continues. That is what is impacting precious metals because the strength in US dollar is not doing too much for precious metals. We did see a high of USD 942 per ounce earlier in the Asian markets for gold. But it has come down on profit taking in the European markets at this point. Silver is down by nearly a percentage point at this point.
There has been buying in the Indian markets though. The rupee depreciation continues to support the Indian markets. The strength continues in crude. We saw 8% gains in the last week and it has seen a gain of 2% today as well. It is holding quite well above USD 46, and USD 46.80 has been the highest point of the day so far that we saw as soon as the European markets opened. The OPEC meeting on March 15 is supporting the prices. The markets are awaiting the OPECs assessment of the price and supply and also some policy decisions on how they would want to cut more supplies in the future. Most of the OPEC members have been saying that USD 75 per barrel is a fair price for that commodity. Most of the members like Qatar, Algeria and Venezuela have been making aggressive cuts as well.
The contango also has gone down. If you are looking at April, it is at USD 46.50 per barrel. The May futures are trading at around USD 47.50. So there is just a USD 1 difference. Support continues for crude and many people are now calling USD 50 per barrel on crude.
Base metals have seen good gains. Copper and lead continue to be the outperformers in LME. Copper prices have gained 19% YTD and we have seen lead prices gain by 23% YTD. The underperformer continues to be aluminium, which has declined 14% in 2009 after declining 37% in 2008. So the selling continues there. The inventories in aluminium are at all-time highs, above 3 million tonnes. That is nearly 36 weeks of global consumption.
