Iron Ore Leads Commodities In February
February was a mixed month for commodities - oil, gold and copper slid, but iron ore rose by almost 8%.
Bond yields rose, led by the US, while the US dollar jumped by around 1.7% in February, a partial reversal of January’s sharp 3.3% slump.
The Aussie dollar shed 4% against the greenback, falling from 80.95 at the end of January to 77.70 US cents on February 28.
Driving these moves has been the growing belief the pace of US interest rate increases is going to quicken as inflation edges higher.
The yield on US 10 year Treasuries jumped from 2.705% on January 21 to 2.866 yesterday (after finishing above 2.90% on Tuesday. Yields topped 2.95% on February 21.
While the Metal Bulletin’s iron ore prices slid below $US79 a tonne shipped to northern China on the final day of February, the close was still sharply higher than that on January 31.
The Metal Bulletin’s iron ore index ended at $US78.61 per tonne cfr northern China, up $US5.69 a tonne, or 7.8% from the January 31 price of $US72.92 a tonne. The Metal Bulletin said the
February average: price was $US77.35 a tonne, up from January’s average of $US75.83 a tonne.
Oil prices however saw its first monthly price fall since last August as growing concerns about rising US production and a more volatile tone to markets hit investor confidence.
Oil prices in the US and Europe fell around 4% in February.
A bigger-than-expected weekly climb in US crude stockpiles and a fresh weekly record in domestic production contributed to oil’s losses for the session.
April West Texas Intermediate crude fell $US1.37, or 2.2%, to settle at $IS61.64 a barrel in New York, the lowest finish since mid February. That was a fall of nearly 5%.
In Europe, April Brent crude futures (which expired at the day’s settlement, lost 85 cents, or 1.3%, to end at $US65.78 a barrel . The contract fell 4.7% lower for the month, with Brent sufferng its first monthly loss since June.
The US Energy Information Administration reported on Wednesday that US crude oil supplies rose by 3 million barrels for the week last week, while domestic production rose 13,000 barrels a day to 10.283 million barrels a day, the highest on record.
Meanwhile metal prices were weaker on the day and the month.
Comex April gold futures lost 70 cents, or less than 0.1%, to settle at $US1,317.90 an ounce after spending much of the day trading higher. Gold lost 1.8% in February.
Comex May silver shed 2.7 cents, or 0.2%, to $US16.407 an ounce, with the contract losing more than 5% for the month.
And Comex May copper fell 1.7% to $US3.133 a pound, with the contract down about 2.4% in February.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.