Commodities Post Biggest Monthly Drop in a Year on Debt Woes

Commodities posted the biggest monthly drop in a year as the sovereign-debt crisis in Europe and accelerating inflation in China fanned speculation that global economic growth will slow.

This month, the Standard & Poor’s GSCI Spot Index of 24 raw materials dropped 6.8 percent, the first decline since August and the biggest drop since May 2010. Silver led the slide, slumping 21 percent, followed by nickel, and crude oil slid almost 10 percent.

The gauge gained 1.2 percent today. Central banks raised interest rates to slow inflation, which climbed to a 32-month high in China, exceeding the government’s 4 percent target. In May, the euro dropped against the dollar, snapping a five-month rally, amid the region’s escalating debt woes.

“The May sell-off is a broad-based risk-averse move coming from a combination of concerns about Europe’s debt crisis, China’s inflation and U.S. data,” said Andy Kaleel, the chief executive officer of Sydney-based H3 Global Advisors Pty Ltd., which manages about A$600 million $642 million.

via Commodities Post Biggest Monthly Drop in a Year on Debt Woes – Bloomberg.com.

Weather Hinders U.S. Wheat Plantings

Wet weather is preventing farmers in the Northern Plains from planting the spring wheat crop, prized for a high protein content crucial for baking bread. Growers in the southern Plains and western Europe have had the opposite problem, as drought cuts output in the other major regions where high-quality wheat is grown.

Futures prices for hard red winter wheat at the Kansas City Board of Trade are about 90% higher than year-earlier levels and are climbing back toward the two-and-a-half-year highs reached in February.

Conditions for planting spring wheat look poor heading into June, as rains will keep fields soggy, according to meteorologists. Farmers in North Dakota, the biggest spring wheat-growing state, had only planted 34% of the crop as of May 22, well behind the five-year average of 85%.

via Weather Hinders U.S. Wheat Plantings – WSJ.com.

Copper’s Streak Continues

The most actively traded contract, for July delivery, gained 7.50 cents, or 1.8%, to settle at $4.1860 a pound on the Comex division of the New York Mercantile Exchange. This was the highest settlement price in over three weeks and the fourth consecutive day of gains.

Copper futures settled at a three-week high on Friday as a weak dollar and cautious trading boosted prices.

The thinly traded June-delivery contract ended up 7.25 cents, or 1.8%, at $4.1795 a pound. The contract rose 1.5% over the week.

The dollar fell against the euro and hit a record low against the Swiss franc during the day as currency traders avoided the dollar on worries about slowing U.S. growth. The currency moves stoked the appeal of dollar-denominated commodities like copper, which seem cheaper to investors holding foreign currencies when the greenback weakens.

via Copper’s Streak Continues – WSJ.com.

U.S. Steel Mills Attempt to Halt Sliding Steel Prices

The U.S. flat rolled steel mills are attempting to stem the slide of steel prices in North America. Spot prices on hot rolled, cold rolled, galvanized and Galvalume have declined by more than $100 per ton over the past few weeks and four mills have stepped up and are trying to stop the slide.

A few thoughts regarding the events of the past two weeks:

Severstal was the first domestic mill to actively recognize the need to stabilize flat rolled steel prices. In a letter to their customers, they came out with base price levels which, according to the many buyers I speak with on a consistent basis, were a tad too high when compared to the offers being made in the spot market by Severstal competition (and perhaps even Severstal itself). Their new $42.00/cwt base price on hot rolled – if collected – would result in increases of $100 per ton for those at the lower end of the pricing spectrum. It is very rare to get increases of this magnitude – even in a good market – never mind one which has been in decline.

via U.S. Steel Mills Attempt to Halt Sliding Steel Prices | Steel Blog: “Steel Prices, News and Analysis” > Official Blog of STEEL.

Natural Gas Bounces Back from Six-Week Lows

Natural gas for June delivery settled up 13.6 cents, or 3.3%, at $4.23 a million British thermal units on the New York Mercantile Exchange.
Natural gas futures erased Thursday’s sharp losses, rising more than 3% as buyers re-entered a market at prices that had fallen to their lowest level in almost six weeks.

The benchmark contract shed 10.4 cents Thursday after the Energy Information Administration reported the largest injection of gas into U.S. storage so far this year, narrowing the deficit between current and typical storage levels for the first time in two months.

Friday’s buying was bolstered by forecasts for warmer-than-normal weather in the eastern U.S. during the next two weeks—potentially lifting demand for gas-fired electricity to power air conditioners—and a declining number of drilling rigs aiming for natural gas.

via Natural Gas Bounces Back from Six-Week Lows – WSJ.com.

Polypropylene prices up 10 cents per pound; PVC up 8 cents

Since May 1, regional prices for PP have climbed an average of 10 cents per pound, according to buyers and sellers contacted recently by Plastics News. It’s the third time already this year that prices have absorbed a double-digit monthly increase. The previous double-digit spikes were of 17 cents in January and 15 cents in April.

Regional polypropylene prices now are up a net of 37 cents per pound since Jan. 1, driving PP prices to an all-time high. The May increase was tied in to a jump of 9.5 cents per pound on propylene monomer feedstock. Propylene supplies have tightened in the short-term because of production issues in the Gulf Coast, and in the long-term because of increased use of natural gas-based feedstocks, which produce less Propylene than crude oil-based feedstocks.

via Plastics News – Polypropylene prices up 10 cents per pound; PVC up 8 cents.

Commodities Jump as Drought, Lower Inventories May Curb Supplies

Commodities gained the most in a week as drought in Europe and the U.S., lower energy stockpiles and crop delays in Brazil revived speculation of reduced supplies. Copper for July delivery rose 11.3 cents to $4.1115 a pound on the Comex in New York.

Inventories of the metal in warehouses monitored by Comex have dropped for 12 days in a row, the longest streak since Dec. 20.

Crude oil gained $3.57 to $100.48 a barrel on the New York Mercantile Exchange. Gasoline demand advanced 2 percent to the highest level in a month, a report showed.

Gold for immediate delivery rose as much as 0.9 percent to $1,499.90 an ounce after three days of declines.

Raw sugar climbed 0.83 cent to 22.76 cents a pound on ICE Futures U.S. in New York.

via Commodities Jump as Drought, Lower Inventories May Curb Supplies – Bloomberg.com.

Sharp price increase for Titanium Dioxide / TiO2

North American TiO2 prices reached $1.30-1.44/lb €0.80-1.00/lb, up by 6-7 cents from the start of the fourth quarter 2010.
TiO2 has seen a sharp global upward price spiral over the last twelve months. European prices for the pigment increased by €100-200/tonne in the first quarter of 2011.

The increase continued a trend seen throughout 2010, when prices soared by €450-470/tonne over the course of the year. According to pricing service ICIS, free delivered NWE north west Europe TiO2 prices were trading between €2,300-2,550/tonne in early March.

Asian TiO2 prices jumped by $100-200/tonne €69-138/tonne at the beginning of the year to $2,800-3,000/tonne €1,900-2,100/tonne CFR cost and freight Asia, following the price hike announcements of $150-200/tonne €100-138/tonne by major producers in November.

via European Plastics News.

US ethylene spot prices rise 5% on growing flood fears

US ethylene spot prices rose by 5% in the last three days, market sources said on Friday, citing growing fears that flooding will affect operations at crackers near the Mississippi river.

Ethylene for May traded at 70.50 cents/lb ($1,554/tonne, €1,088/tonne) on Friday, up from deals done at 67 cents/lb early in the week.

Market sources said the surge in spot prices stemmed from concerns that expected flooding next week could disrupt production at a number of crackers near the Mississippi river in Louisiana.

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Oil Reclaims $100, as $4-a-Gallon Gasoline Seems Likely

Light, sweet crude for June delivery rose $5.37, or 5.5%, to settle at $102.55 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange settled up $6.77, or 6.2%, to $115.90 a barrel.

Oil futures clawed back some of the ground lost last week, reclaiming the $100 mark after heavy flooding and problems at a Mississippi refinery triggered a surge in gasoline prices.

The rally erases a sizable portion of last week’s decline and raises the likelihood that U.S. drivers will soon be paying an average $4 a gallon at the pump.

via Oil Reclaims $100, as $4-a-Gallon Gasoline Seems Likely – WSJ.com.