Global commodity markets were gripped this week by the Malaysia Air MH17 crash in Ukraine, which has raised tensions between Russia — a key producer of many raw materials — and the West.
Investor sentiment was already hit by broadened US sanctions on Russian energy, defence and financial firms to punish what Washington charges are violations of Ukraine’s sovereignty.
“If Russia turns out to have played any part in [Thursday’s] shooting down of a passenger plane over east Ukraine, there is a risk of sanctions being further tightened,” Commerzbank analysts said in a research note. “In this case, it would not only be gas prices in Europe that would react, but also the prices of oil, nickel, copper, aluminum, wheat and palladium — after all, Russia is one of the world’s biggest producers and exporters of these commodities.”
Traders also tracked events in the Middle East, where Israel launched a ground assault on Gaza.
OIL: Crude futures rose following the plane crash and Israel’s incursion into the Gaza Strip.
The crash fueled fears about the Ukraine’s role as a key conduit for Russian gas exports to Europe and Sucden analyst Myrto Sokou said Israel’s assault had stoked oil supply worries in the crude-rich Middle East, but that “market participants remained cautious, holding a wait-and-see approach to the issue.”
By Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery in September rose to US$107.66 per barrel from US$106.99 for next month’s contract one week earlier.
On the New York Mercantile Exchange, West Texas Intermediate, or light sweet crude, for next month jumped to US$103.72 a barrel from US$101.35.
PRECIOUS METALS: Gold prices had a roller-coaster week, hitting a three-and-a-half-week low on Tuesday before surging on Thursday due to haven demand.
“The news from east Ukraine has caused the safe haven that is gold to rise noticeably for a time,” Commerzbank analysts said.
Palladium forged a new 13-year pinnacle at US$889.30 per ounce — last seen on Feb. 23, 2001 — propelled by fears over supplies from top producer Russia.
“Any potential supply disruptions [due to sanctions on Russia] will keep palladium bid in a market expected to record large deficits,” Standard Bank analyst Walter de Wet said.
Palladium also won support in recent weeks from strikes in key producer South Africa, but the industrial action ended last month.
By Friday on the London Bullion Market, the price of gold fell to US$1,307.25 an ounce from US$1,335 a week earlier, as silver dropped to US$20.94 from US$21.41.
On the London Platinum and Palladium Market, platinum declined to US$1,497 an ounce from US$1,506, while palladium advanced to US$881 an ounce from US$867.
SUGAR: Prices hit a three-month low in London at US$445.60 per tonne, hit by plentiful supply.
By Friday on LIFFE, London’s futures exchange, the price of a tonne of white sugar for delivery in October stood at US$451, compared with US$457.10 a week earlier.
On the ICE Futures US exchange, unrefined sugar for October dropped to US$0.1698 a pound (0.45kg) from US$0.1716 a week earlier.
COFFEE: Prices went off the boil, falling to a five-month low at US$0.15925 per pound in New York on hopes of a bumper harvest in main producer Brazil.
On ICE Futures US, Arabica for delivery in September slipped to US$0.1638 a pound from US$0.16425 a week earlier.
On LIFFE, Robusta for September dipped to US$2,000 a tonne from US$2,015 a week earlier.
Merida Industry Co (美利達) has seen signs of recovery in the US and European markets this year, as customers are gradually depleting their inventories, the bicycle maker told shareholders yesterday. Given robust growth in new orders at its Taiwanese factory, coupled with its subsidiaries’ improving performance, Merida said it remains confident about the bicycle market’s prospects and expects steady growth in its core business this year. CAUTION ON CHINA However, the company must handle the Chinese market with great caution, as sales of road bikes there have declined significantly, affecting its revenue and profitability, Merida said in a statement, adding that it would
i Gasoline and diesel prices at fuel stations are this week to rise NT$0.1 per liter, as tensions in the Middle East pushed crude oil prices higher last week, CPC Corp, Taiwan (台灣中油) and Formosa Petrochemical Corp (台塑石化) said yesterday. International crude oil prices last week rose for the third consecutive week due to an escalating conflict between Israel and Iran, as the market is concerned that the situation in the Middle East might affect crude oil supply, CPC and Formosa said in separate statements. Front-month Brent crude oil futures — the international oil benchmark — rose 3.75 percent to settle at US$77.01
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RECORD LOW: Global firms’ increased inventories, tariff disputes not yet impacting Taiwan and new graduates not yet entering the market contributed to the decrease Taiwan’s unemployment rate last month dropped to 3.3 percent, the lowest for the month in 25 years, as strong exports and resilient domestic demand boosted hiring across various sectors, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday. After seasonal adjustments, the jobless rate eased to 3.34 percent, the best performance in 24 years, suggesting a stable labor market, although a mild increase is expected with the graduation season from this month through August, the statistics agency said. “Potential shocks from tariff disputes between the US and China have yet to affect Taiwan’s job market,” Census Department Deputy Director Tan Wen-ling
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