Commodities: Higher across the board - ANZ

Analysts at ANZ note that commodities were generally higher across the board in the previous session on a combination of a weaker USD and optimism about Chinese growth.

Key Quotes

“Crude oil prices started the day stronger on the back of the weaker USD. However weaker-than-expected US oil inventory data saw the sector sell off into the close. US stockpiles of crude oil rose by 1.56 million barrels to 535.5 million barrels. However, the strong refinery runs negated some of that weakness. Refineries operated at 90.8% last week, up 1.5% from the week prior and the highest since January. Data showed that US production of crude oil rose 52kb/d to 9.2mb/d.”

“Base metals prices advanced after news of a new economic zone in China boosted hope of stronger metals demand. The Xiongan special economic zone (in Hebei) is set to bolster investment in the construction sector with authorities looking to turn the region into a new growth centre. The combination of this announcement and the reopening of markets in China saw investor activity surge in asset classes such as commodities. Copper led the sector higher as news emerged of potential supply disruptions in Peru. Workers at Southern Copper operations in Peru are threatening to strike later this week around wages.”

“Spot iron ore prices pushed back above USD80/t as news of the new economic zone in Xiongan boosted sentiment in the sector. A fall in port inventories of iron ore also helped support prices. Stocks fell 0.3% to 132.1 tonnes last week, according to SteelHome. Spot coking coal prices surged higher again as the reality of the disruption to Australian exports hit home. Producers such as BHP Billiton announce force majeure as a result of the closure of the coal rail network. This comes on the back of weaker level of exports. Shipping data shows that February exports from Queensland fell nearly 10% to 15.86 million tonnes.”

“Gold rallied into the close as the FOMC minutes showed no changes to the outlook for rates in the US. The minutes also showed officials plan to start shrinking the balance sheet. Weaker equity markets also helped support gold.”

“Agriculture markets were mostly higher on the back of the weaker USD. Corn prices rose after reports that rain would curb Midwest corn sowing. However soybean led the sector higher as rain in Argentina threatened to reproduce the supply disruptions that flooding caused this time last year.”