Metals remained largely rangebound on Friday, with copper on the London Metal Exchange holding steady past $8,600/metric ton. Prices are hovering at three-week highs and heading for weekly gains for the second consecutive week. Boosted by expectations of lower interest rates in 2024, copper demand is expected to be shored up by greater global economic activity. Market insiders anticipate increased demand for copper due to the growing shift towards green energy and electric vehicles. Meanwhile, copper supplies are expected to tighten amid mine closures in Peru and Panama.
On the other hand, the global zinc market saw a deficit of 52,500 metric tons in October, down from a deficit of 62,000 tons in September, according to the International Lead and Zinc Study Group. However, data for the first ten months of 2023 showed a surplus of 295,000 tons, a significant shift from the deficit of 33,000 tons in the same period of 2022.
Gold and silver prices rose on Friday, extending gains from the previous session and putting the dollar at 5-month lows. With focus now on key inflation data, there is rising anticipation that the Federal Reserve will cut interest rates in 2024. Meanwhile, oil prices held near the $80 mark per barrel, amid ongoing tensions from Houthi attacks on ships in the Red Sea. Disruptions in global trade through the Suez Canal are ongoing, as shipping carriers are avoiding the Red Sea due to vessel attacks carried out by the Yemeni Houthi militant group. Separately, India has announced that it will continue to allow the import of edible oils at lower tax rates until March 2025.
In further developments, robusta coffee prices rallied to a new all-time high after the USDA cut its 2023/24 global robusta production estimate. This indicates a potential tightening of supply for robusta coffee. Overall, the commodities sector is facing shifting supply and demand dynamics, while global economic policies and geopolitical tensions continue to heavily impact market movements.
Additional Insight:
The ongoing tensions in the Red Sea and the decision of Angola to leave OPEC raise questions over the stability of oil prices in the near future. With maritime carriers and shipping companies avoiding the Red Sea due to geopolitical tensions, global trade disruptions have begun to affect various sectors of the economy. Meanwhile, the extension of lower import tax rates for edible oils by India signals a continued effort to manage local prices and support the food industry. The adjustments made to these tax rates reflect an ongoing balancing act between international trade dynamics and domestic economic concerns. Lastly, the rise in robusta coffee prices following a decrease in production estimates highlights the impact of changing supply trends on commodity prices. This, combined with geopolitical tensions and shifting trade patterns, underscores the continued volatility and complexity of the commodities market.
