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Commodities: China factor casts shadow on iron-ore prices

For the most part the commodities space found a good bid on Friday, but analyst commentary was a tad wary.

Buying pressure might have been expected, given the better-than-expected gross domestic product (GDP) figures seen out in the likes of France, Germany and the Nertherlands, alongside a weak US dollar.

However, over the last few days different research outfits have been raising a red flag following the release of the latest set of very strong import data out of China. In particular, they highlighted the rise to all-time highs in imports of iron-ore (18% year-on-year), refined copper (53%), crude oil (12%) and even soybeans.

The former is the most noteworthy development perhaps, given that there has been a big increase in bonded warehouse stocks, ‘which suggests to us that some of this import demand is for raising credit rather than making wire or tubes’, analysts at Barclays Research explained to clients last Friday.

Three-month copper futures on the LME gained 0.86% to the $7,150/Mt mark last Friday.

China is also a factor behind recent increased demand for gold, which together with ‘short covering’ has led to a good bounce, but ‘we still think the rally will flounder’, the same broker concluded.

Gold futures advanced by $16.4 to the $1,318.6/oz. level out on COMEX.

Corn futures rose by $4.6 to $445.2/bushel on the Chicago Board of Trade (CBoT).

AB

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