Iron ore prices have dipped again, and are now close to going under $US54 a tonne, adding further pressure to local markets today and taking the gloss off what was an OK week for most commodities.
The fall in the global iron ore spot price overnight Friday came after a 4% fall in futures prices in China on Friday for the key Chinese steel product, reinforcing bar, which is used extensively in the construction and housing sectors.
The benchmark price for Australian ore for immediate delivery into China (62% iron oxide content) fell to $US54.10 a tonne, down 70c, from Thursday and from the previous week’s close of $US55 a tonne (according to The Steel Index). But the Metal Bulletin said the price fell 4% to $US53.14 on Friday.
It was the lowest price since the current indexed base price setting mechanism started in 2008-09.
It continues the bad news for the Australian iron ore export sector, with Fortescue still in the gun after its shares fell 5.6% to $2 on Friday on the ASX.
And while oil, gold and silver all had gains last week, they were trimmed on Friday, especially oil.
Oil futures settled fell in trading in the US and Europe on Friday night for the first time in six sessions, despite another fall in the number of rigs drilling for oil and gas in the US.
But US crude futures still gained about 4.9% for the week (thanks to the 4.5% jump on Thursday), with strength fuelled in part by an escalating conflict in Yemen. Though the impact of that conflict faded quickly on Friday.
West Texas Intermediate crude for delivery in May settled at $US48.87 a barrel in New York, down $US2.56, or 5%. May Brent crude in London fell $US2.78, or 4.7%, to $US56.41 a barrel, leaving it with a weekly gain of just 2%.
The weekly report on US oil rig use from Baker Hughes showed a fall for a 16th week in a row, but the count showed that the rate of fall in the rig counts continues to slow.
On Friday, Baker Hughes reported that the number of rigs looking for oil and gas in the week to March 27 fell to 1,048, a drop of 21 rigs from a week earlier against the previous week’s fall of 56 in the prior week and more than 80 a week in February.
One thing to look out for is the fate of the nuclear talks continuing between Iran and leading Western countries in Switzerland which are supposed to have a deadline tomorrow night, our time.
Any agreement or move towards a breakthrough is seen as being negative for oil because it could result in Iran being allowed to ship more oil to market.
The deepening conflict in Yemen between Iranian-backed Shia militia and Saudi (Sunni) forces could complicate the nuclear talks.
Meanwhile gold futures lost ground on Friday, ending seven-sessions of gains that had lifted prices to their highest level in more than three weeks.
Weakness in the value of the US dollar and the turmoil in Yemen helped buoy safe-haven investment demand for the metal on Thursday especially.
But on Friday Comex gold for April delivery lost $US5, or 0.4%, to settle at $US1,199.80 an ounce.
That left prices up 1.3% for the week and nearly 5% in just over a week.
Comex May silver settled dropped 7.1c, or 0.4%, at $US17.069 an ounce on Friday, for a weekly gain of 1.1%.
Other metals weakened along with gold and silver.
May copper in New York dropped 4.35c, or 1.6%, to $US2.7675 a pound — up roughly 0.2% for the week.
