WARNING: This is Version 1 of my old archive, so Photos will NOT work and many links will NOT work. But you can find articles by searching on the Titles. There is a lot of information in this archive. Use the SEARCH BAR at the top right. Prior to December 2012; I was a pro-Christian type of Conservative. I was unaware of the mass of Jewish lies in history, especially the lies regarding WW2 and Hitler. So in here you will find pro-Jewish and pro-Israel material. I was definitely WRONG about the Boeremag and Janusz Walus. They were for real.
Original Post Date: 2010-07-30 Time: 12:00:01 Posted By: News Poster
By Tim Cohen
Johannesburg – THE prices of industrial metals and some other key commodities are generally heading upwards again after a correction during the first half, but there is deep scepticism among some analysts whether these increases are justified.
This scepticism is by no means universal, but after prices of industrial minerals doubled last year and are now sitting at levels close to those last seen in the boom times of 2007, the scepticism seems understandable.
Indian-based research house First Global notes some big anomalies in the recent rise of industrial minerals and commodities, including the fact that inventories on the London Metals Exchange are increasing at the same time as prices are increasing, a relationship that ought to be inverted.
The other recent phenomenon is the advent of greater speculative trading in commodities themselves, as the appeal of first-world bonds and equities has worn off.
First Global, an adviser to hedge funds, suggests going light for a time on commodities themselves and proxy stocks, such as BHP Billiton and Anglo American.
“We strongly believe the recent correction in global metals and commodities, and their producers’ stock prices, is not merely a ‘healthy’ correction,” the report says. “We, on the contrary, firmly believe it is the beginning of a sustained downtrend in commodities and their producers’ stock prices.”
Other analysts are not quite so pessimistic. A commodities analyst for Rand Merchant Bank said the bank’s view was more that commodity prices were likely to move sideways in the medium term, with a gradual improvement in the global economy balancing out the existing high prices.
But the analyst agreed that at least some of the metals and commodity markets were seeing higher levels of speculative interest.
First Global argues the prices of all metals, or for that matter, all metal stocks, have corrected by 15%-40% in the past two months.
“While some view this as a usual summer correction, we disagree, as the demand fundamentals were never strong enough to support the mad run-up in commodities.”
China’s industrialisation was the key driver of the metals rally last year, which was boosted by the falling US dollar. But China is now cooling off and the rest of the world is still growing too sluggishly to take up the demand. What’s more, the dollar is generally speaking on a rising trend, the report suggests.
The copper price provides a good example. It vacillated between 1500 and 3000 a ton for two decades or more. Then in 2004, it took off like a rocket and by 2006, it was more than 8000 a ton.
The global recession in 2008 brought the price down to earth again. But shockingly, the price quickly jumped back up to almost peak levels. Benchmark copper for three-month delivery on the London Metals Exchange is currently trading at 7232 a ton.
At the same time, inventories recorded by the London Metals Exchange have been increasing from about 100 kilo-tons to just less than 550 kilo-tons . The continued rise in copper prices in tandem with the increase in London Metals Exchange stocks is a “big, glaring disconnect that we must not ignore”, the report says.
A possible explanation is China’s refined copper imports, and the report suggests such imports have remained fairly high, dipping in the middle of last year and rebounding somewhat. As at April this year, China was importing about 300 kilo-tons of copper a month.
Interestingly, aluminium prices have followed the same trend, including doubling last year and then retracing somewhat over the past few months. Once again, prices are now ticking up again, despite higher levels of inventory.
Aluminium does not compare with copper in one crucial respect: Chinese imports have stagnated and were actually negative in April. They are generally a small fraction of what they were early last year.
Spot iron-ore prices are hovering around their historic highs, and the average oil prices were 10% higher than 2007 levels, “when the global economy and oil demand had been at their respective peaks”.
The oil market is also revealing in another respect: increasing speculative investment. In 1995, the Nymex, ICE Futures Europe and the Brent futures market collectively were twice the physical trade. In the past two years, they were about 10 times the physical trade.
“Commodities are now financial assets rather than physical assets, as the degree of speculative trades far outstrips core demand-supply trades,” First Global warns.
Original Source: 
Original date published: 30 July 2010
Source: http://allafrica.com/stories/201007300639.html?viewall=1