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Cobalt, which is used in battery production and for colourings in paints, reached its highest level since September 2001. The key cobalt 99.80 per cent grade was indicated at $8.25 to $8.75 a pound, up $0.50 from a week ago. However, it is still well below its $20 a pound price reached in 1999 and the $30 peak touched in 1995.
“The cobalt market is very small; it does not take much for it to jump around,” said Mark Seddon, sales director at metals market analyst group Roskill Information Services. He said cobalt’s annual production of 40,000 tonnes was a fraction of copper, aluminium or nickel annual outputs.
War talk remained the dominant influence over oil markets this past week, with Brent crude futures reaching their highest levels on March 7, since hitting a post Gulf war peak in September 2000. The IPE Brent for April delivery peaked at $33.85 per barrel. The front month Brent contract at post Gulf war high of $34.46 in September 2000 is still well short of its Gulf war high of $40.45. Its the US counterpart, the Nymex WTI for April delivery gained 35 cents to $37.35, still more than $2.50 off its post Gulf war high of $39.99 hit a week earlier.
Oil prices were unfazed by the prospect that global strategic reserves would be released by the US and the International Energy Agency if necessary to reinforce extra Opec output during any war with Iraq.
Calls for the release of strategic reserves have come from the US consumer and industry groups, hurt by rising energy prices in a period when the US oil market is operating with stock levels at their lowest in 27 years.
Aside from war fears, oil and gas prices in the US have been surging due to low inventories. The US Energy Information Agency report showed that the US gas stocks are 52 per cent below last year and 42 per cent below the five-year average.
Rising oil prices are not due to Iraqi crisis alone. Analysts stress historically low reserves and short supplies of Venezuelan crude are also behind the surge. The US oil reserves are at their lowest levels in 28 years.
In 2002, the average price of a barrel hovered around $26 in New York, which by 2003 it had risen to almost $32. Venezuelan crude takes just four days to get to the US shores compared to 40 days for crude from the Middle East, and the Venezuelan state oil giant PDVSA is a key US supplier.
Reportedly Opec is working on a ‘contingency plan’ to provide for shortages on the oil market if there is a war with Iraq. In case of war, oil ministers have to decide what to do with the four million barrels per day Opec has in excess oil capacity. Opec had agreed in January to raise its combined output ceiling by 6.5 percent to 24.5 million barrels per day to try to cool feverish world oil markets. But the oil prices are rocketing as war seems to approach.
At a recent meeting in Vienna, Opec decided to leave oil production quotas unchanged at 24.5 million barrels per day.
With most in Opec already pumping to the limit, the cartel will be stretched to cover the loss of Baghdad’s 1.7 million barrels daily to the 77 million barrels per day world market. Kuwait in addition may close up to 700,000 barrels per day near its northern border with Iraq, where the US troops are poised for war.
Needing a recovery in the world economy to restore oil demand growth, Opec wants to prevent another spike in crude prices that already are near 1990-1991 Gulf war highs.
Platinum prices briefly moved above the $700 mark to $701.50 an ounce on the London market on March 5, but failed to hold the gains by the close of the day and was fixed at $695 an ounce. It is expected to move above $700 and test recent highs.
Coffee futures plunged as investment funds liquidated their positions ahead of the forthcoming expiry of the New York futures contract on March 19. On LIFFE, Robusta quality for May delivery dived to $787 per tonne from $825 the previous week.
On New York’s CSCE market, Arabica for May delivery sagged to 60.85 cents a pound on February 28 from 64.75 cents the previous week. Refco analyst Ann Prendergast added that the London market had been hit by technical selling after failing to hold above technical support at $800.
Cocoa prices fell back for the second week running on news that supplies had reached the ports of Ivory Coast, the world’s leading producer, despite a five-month old uprising. On LIFFE, London’s financial futures exchange, the price of cocoa for May delivery slipped to 1,349 pounds a tonne on February 28, from 1,363 pounds the previous week. On the CSCE, the New York futures market, the May contract fell back to $2,038 per tonne from $2,072.
