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In recent days, platinum prices held steady, while palladium prices continued to slide. In its Platinum 2002 interim report, Johnson Matthey, the London-based metals group said it expected the white metal to trade at between $550 and $650 an ounce over the next six month, with jewellery demand from China expected to grow 13 per cent this year.
The platinum price is holding up. It failed a few weeks ago to go above $600 and now its sort of drifting around the $585-$590 area.
Meanwhile, palladium, hit by a drop in industrial demand from the automobile and electronics sectors, fell to a 31/2 -year low on November 11. The while metal, widely used in catalytic converters for exhaust system, was $288 an ounce at the London afternoon fixing on November 11, compared with $300 an ounce on November 8.
Carmakers, the largest users of palladium, are thought to have accumulated large inventories of the metal in recent years and are running those stocks down rather than coming to the market.
Johnson Matthey forecasts in a recent report, that the metal is heading for eight year lows this year, with demand expected to fall by 28 per cent to 4.88 million ounces over the year. It forecasts that the metal would trade in the range of $250 to $330 an ounce over the next six months. At the beginning of this year, palladium was trading at $440.
Palladium’s use in motor vehicle exhaust catalysts has declined in favour of platinum. The catalyst market’s demand for palladium has fallen 38 per cent this year as the US motor vehicle companies have run down their stocks of the metal.
Oil prices slumped to eight month lows on November 13, when Iraq accepted a UN resolution forcing it to disarm, easing market fears.
The move, seen as averting the immediate threat of war in the oil-rich Middle East, triggered a sell-off that took IPE December crude futures to an eight-month low of $22.60 a barrel.
The contract was down $1.02 at $22.70 at the close in London. The previous low for front-month Brent crude was $22.18 a barrel in early March. By the close of trading in New York Nymex December WTI was 71 cents lower at $25.19 a barrel.
Until the decision was announced, there was an element of uncertainty, said Lawrence Eagles of brokers GNI Research. A trader at FIMAT International Banque said oil market attention was now shifting to the next UN deadline on December 8, when Baghdad must supply a list of weapons.
Iraq was the eight largest oil exporter in the world last year, and traders fear a US led war on Iraq could lead to a wider disruption of supplies from the oil-rich Middle East.
These fears pushed oil prices to $30 in September, but the ‘war premium’ evaporated in October as exporters in the Opec group began pumping far in excess of official quotas.
As cold winter weather began to bite in the key US northeast region, heating oil stocks were also lower by 1.1 million barrels last week.
There is also the problem of overproduction by members of the Organisation of Petroleum Exporting Countries (Opec), who between them are estimated to be breaking their agreed production quotas by as much as two million barrels per day.
According to the International Energy Agency, the 10 Opec members subject to quotas last month produced 2.48 million barrels a day above the ceiling of 21.7 million barrels per day. Their output grew by 760,000 barrels per day.
Iraq - a member of Opec but not subject to quotas because of UN sanctions - has boosted its exports by 910,000 barrels per day since September. Ahead of September’s Opec meeting, the IEA argued that Opec should raise its output to ensure market stability. The cartel formally retained the 21.7 million barrels per day ceiling but in practice members have relaxed their level of compliance.
Saudi Arabia has the most significant spare capacity in Opec and is currently one of the major over-producers. As Opec production has risen, so has non-Opec output as Norwegian fields rebounded after maintenance. But with the OECD oil stocks at the bottom end of five-year averages and seasonal increases in demand, the market should have been able to absorb extra crude.
The IEA suggests several reasons why it could not, and why prices fell $4 a barrel in October and further since. First, the extent of the overall increase of 1.3 million barrels per day was unforeseen. Second, weak margins and maintenance work reduced refineries’ ability to absorb extra crude. Third, hurricanes in the US caused shutdowns.
World tea supply is tightening because Kenya, Bangladesh, and Indonesia all suffered production setbacks in the first nine months to September. Kenyan production is down 12.5 million kgs to 204.3 million kgs.
However, Sri Lanka, the world’s largest tea exporter and the second-largest producer after India, bucked the trend by lifting the nine-month production by 11 million kgs to 227.3 million kgs.
The CTC (crush, tear and curl) tea of Assam origin is being sold at Rs76 ($1.57) per kg, up Rs14 on the price this time last year. Darjeeling orthodox is up Rs10 per kg at Rs102. Indian tea production between January and September 2002 is down 36.5 million kg to 597.3 million kg from the same period last year.
