Commodity prices diverged last week amid weak Chinese growth data, renewed eurozone debt worries, strong supplies of major raw materials and following poor US jobs figures. Prices took a hit at the start of the week on delayed reaction to US jobs data published on April 6 when London and US markets were shut for Easter.
They won some support mid-week on rising political tensions over Iran and North Korea, before retreating once more on Friday following weak Chinese growth data. Financial markets have also been rocked this week by eurozone debt tension over Italy and Spain.
OIL: Prices fell as weaker Chinese growth, high US crude supplies and renewed worries surrounding the eurozone debt crisis helped to offset tensions over Iran, traders said. China's National Bureau of Statistics on Friday said the world's second-biggest economy expanded by 8.1 percent in the first three months of 2012, slower than the 8.9 percent year-on-year growth in the previous quarter.
China is the world's biggest user of energy, and the latest growth data reinforced worries that the nation's appetite for crude could weaken as industrial activity slows. "Oil looks set to fall to around $115 a barrel over the next few weeks as a drop in demand and indications of an economic slowdown in China finally drive prices below $120 a barrel for a sustained period," said Tom Pering, an analyst at energy consultants Inenco.
"Pointers include the continued building of US stockpiles and an indication that the Chinese economic machine may have started a slowdown." Oil prices may well however continue to win support from Iran tensions. Persuading the country to scale back its enrichment of uranium, which can be used for peaceful purposes but also for nuclear weapons, was set to be the key aim of world powers in talks this weekend.
The US, China, Russia, Britain, France and Germany may also press Tehran, at the meeting in Istanbul on Saturday, to give the UN nuclear watchdog more access to its facilities and answer accusations of a covert weapons programme. The Islamic republic has vehemently denied Western assertions that it is building a nuclear bomb and has threatened to shut the strategic Strait of Hormuz, a major passageway for a fifth of the world's oil supply, if it is hit with further sanctions.
"Talks between Iran and the UN Security Council this weekend will be key, with many investors buying ahead of the meeting as a poor outcome of the talks may cause short term rises in oil," said Pering. On Thursday meanwhile, the International Energy Agency maintained its forecast of moderate oil demand growth this year but said that a tighter market trend since 2009 seems to be easing after a first-quarter rise in global stockpiles.
The IEA kept its 2012 forecast for growth in oil demand at 0.8 million barrels per day (mbd) to 89.9 mbd, with consumption falling slightly over the summer as is normal and then picking up again. Also this week, the Organisation of Petroleum Exporting Countries put world demand this year at 88.64 mbd, up 0.86 mbd from 2011 and compared with 88.63 mbd in its previous monthly report.
By late Friday on London's Intercontinental Exchange, Brent North Sea crude for delivery in May dropped to $121.28 a barrel from $122.17 on Thursday of the previous week. On the New York Mercantile Exchange, West Texas Intermediate or light sweet crude for May fell to $103.01 from $103.33.
PRECIOUS METALS: Gold prices rebounded after striking a three-month low point the previous week, helped by its status of a safe haven investment in times of economic turbulence. "The euro crisis still has a major bearing on gold prices," said Austin Kiddle, an analyst at traders Sharps Pixley. "Europe is simultaneously facing three crises: banking, debt and economic growth crises." By late Friday on the London Bullion Market, gold climbed to $1,666.50 an ounce from $1,631 on Thursday of the previous week.
Silver gained to $32.36 an ounce from $31.27. On the London Platinum and Palladium Market, platinum rose to $1,600 an ounce from $1,592. Palladium advanced to $643 an ounce from $635.
BASE METALS: Prices diverged, with copper and aluminium falling and lead rising. "Renewed global growth concerns, in particular concerns of a hard landing in China, are again weighing on base metals prices," said Barclays Capital analyst Gayle Berry.
By late Friday on the London Metal Exchange, copper for delivery in three months slumped to $8,040 a tonne from $8,405 on Thursday of the previous week.
----- Three-month aluminium slipped to $2,078 a tonne from $2,094.
----- Three-month lead rose to $2,062 a tonne from $2,020.
----- Three-month tin fell to $22,525 a tonne from $22,750.
----- Three-month nickel grew to $18,400 a tonne from $18,219.
----- Three-month zinc climbed to $2,008 a tonne from $1,988.
COCOA: Prices rebounded strongly as traders snapped up bargains after cocoa futures had struck fresh January-lows early in the week amid the prospect of solid supplies from the commodity's leading producer Ivory Coast. By Friday on Liffe, London's futures exchange, cocoa for delivery in July climbed to £1,454 a tonne from £1,404 on Thursday of the previous week. In New York on the NYBOT-ICE, cocoa for July stood at $2,188 a tonne compared with $2,080 for the May contract eight days earlier.
COFFEE: Coffee mirrored the performance of cocoa, falling at the start of week as a stronger dollar hit demand before rallying late on as the International Coffee Organisation forecast a drop in global supplies. The ICO on Wednesday forecast that coffee supplies from exporting nations for the 2011-12 season ending in September would drop by 2.4 percent to 131 million bags compared with 2010-11. By Friday on NYBOT-ICE, Arabica for May fell to 182.10 US cents a pound from 183.25 cents on Thursday of the previous week. On Liffe, Robusta for delivery in July stood at $1,995 a tonne compared with $1,988 for the May contract eight days earlier.
SUGAR: Sugar futures hit one-month lows this week on the prospect of ample Brazilian supplies. By Friday on Liffe, the price of a tonne of white sugar for delivery in May retreated to $622.20 from $637.80 on Thursday of the previous week. On NYBOT-ICE, the price of unrefined sugar for May slipped to 24.11 US cents a pound from 24.42 cents.
GRAINS AND SOYA: Corn and wheat fell, while soyabean gained. By Friday on the Chicago Board of Trade, maize for delivery in May rose to $6.28 a bushel from $6.58 on Thursday of the previous week. Wheat for May dropped to $6.21 a bushel from $6.38. July-dated soyabean meal - used in animal feed - rose to $14.39 a bushel from $14.37.
RUBBER: Rubber prices eased on weak demand. By Friday, the Malaysian Rubber Board's benchmark SMR20 fell to 364.85 US cents a kilo from 369.40 cents the previous Friday.