On Monday, commodities markets experienced a calm trading in absence of US players. The front-month contract on Brent (ICE) settled barely changed at 111.70 USD per barrel (USD/bbl). Over the past two sessions, improved refining margins provided some support for the price of oil in the physical market.
Regarding the gasoil market, despite wide backwardation in the front-end of ICE gasoil forward curve, spot differential flipped into a positive territory due to cold weather in Europe. However, the largest spread between the front-month and second-month ICE gasoil contract continues to weigh on demand, according to sources quoted by Reuters.
In the past six sessions, the three-month contract on aluminium (LME) has been trading in a relatively narrow range between 2030 and 2070 USD per ton (USD/t) while copper has been trading above 8000 USD/t since Thursday’s evening.
Regarding fundamentals, more specifically, China’s production of copper and aluminium, it rose in both cases by more than 10 percent year-on-year in 2012. The production of refined copper is expected to rise further this year as nearly a million tones of new production capacity is expected to start production (this year’s production reached about 6 million tones).
Moreover, about a million tones of the red metal is, according to Reuters, stored in Shanghai’s bonded warehouses (i.e., about three times more than current LME stocks).