From the Financial Times. Note the purchasing of gold by a Swiss bank ...
Copper price falls despite strong demand
By Kenneth Gooding and Paul Solman
Speculative selling forced down the copper price on the London Metal Exchange after it failed to break above $1,720 a tonne. Traders said there was voracious demand for physical copper from European rod makers as they attempted to fill orders before holiday closures in July.
Macquarie Equities said copper demand in Europe and the US so far this year appeared to be stronger than expected, creating some regional market tightness. "In both markets the scarcity of scrap [unavailable because of current low prices] has increased the demand for primary metal."
The International Copper Study Group reported that world refined copper markets showed a supply surplus of 129,000 tonnes in the first quarter at a time when global consumption continued to grow by an annual 3.3 per cent in spite of the Asian economic crisis. Primary refined production was up 10 per cent but "low prices have resulted in a reduction of supply of refined metal from copper recycling."
Copper closed $16 a tonne lower on the LME at $1,696.
On the London bullion market gold again dropped below $290 a troy ounce as buyers withdrew, dealers said. Ted Arnold, analyst at Merrill Lynch, said he calculated a Swiss bullion bank had bought between 50 and 100 tonnes of gold in the past few days. "We cannot work out what on earth for."
Crude oil prices fell yesterday following several days of weakness. The bellwether Brent blend for July delivery was quoted at $12.87 a barrel in late trading on London's International Petroleum Exchange compared with Wednesday's close of $13.33.
Prices have dropped heavily in recent days despite attempts by Saudi Arabia to build on last week's agreement in Amsterdam to trim 450,000 b/d from world production. The market still appears to doubt that promises of cuts will have a lasting effect.
Oil producers both inside and outside the Organisation of Petroleum Exporting Countries have committed to cuts of 1.5m b/d since March.
Sugar market prices have collapsed under pressure from exporters' surpluses, according to F. O. Licht, the German analysts. "Prices have fallen below production costs of even the most efficient producers, with little relief in sight," it said yesterday.
World sugar production is forecast to rise to 125.5m tonnes (raws value) in the 1997-98 season compared with 123.7m tonnes in the 1996-97 season.
Surplus stocks in exporting countries are expected to grow to more than 5m tonnes by the end of August 1998, compared with 4.2m tonnes a year earlier and 1m tonnes in 1995.
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