Metals open firmer after latest Greece bailout

In the Lead: “Greek Drama & Icelandic Saga”

Most commodities gained this morning however, as lingering optimism related to future demand was still manifest in the wake of China’s easing of bank reserve requirements and following perceptions that the European deal with Greece will be good for the sector in the near-term. As regards China, consider this little statistical fact when trying to divine why authorities may have decided to scale back on the country’s banks’ reserve requirements over the weekend: No (as in: zero) new homes were sold in Beijing during the recent week of the Lunar New Year and recent home price data shows prices slumping in 48 out of 70 tracked cities in the country.

Marketwatch reports that “still, other analysts saw the central bank’s move as evidence of a more serious slowdown in China. The economy appeared to be decelerating following a winding down of the government-directed stimulus that helped shield the country from recession after the global collapse of 2008. Capital Economics analysts said Monday that January credit growth was “very weak,” even allowing for distortions created by the Chinese New Year holiday.”

Continuing tensions with Iran also added to higher bids, especially in crude oil, which rose to near $105 per barrel this morning. Iran has reportedly threatened to broaden its oil embargo beyond just the UK and France after it cautioned other European nations on what it calls ‘hostile acts’ against its interests. Black gold’s near nine-month high is prompting something else, aside from jubilation among the speculative longs; namely the rising concern that too-high a price for the commodity could derail the fragile economic recoveries in certain parts of the world while increasing the duration and/or severity of contractions present in other regions (say, Europe).

Precious metals opened firmer across the board after a day of respite in New York on Monday. Gold traded around $1,745 showing a gain of about $12 while silver climbed a quarter dollar to near $33.90 per ounce. The big mover on the day thus far was platinum, which added $32 to touch $1,680 on the offered side of spot quotes. The loss of more than 80,000 ounces of platinum production at Impala’s Rustenburg mine is not going unnoticed in the relatively small PGM niche.

A second striking miner has lost his life in the labor action over the past week. Meanwhile, you can read a quite in-depth study on the broader and potentially watershed topic of the nationalization of South Africa’s mines as published by the ANC at this link. The eventual handing over of such mineral assets and their production facilities remains a potentially market-shaking issue in this sector.

The Standard Bank commodities’ team however does note that “China’s platinum imports for 2012 were off to a weak start. The country imported only 149,000 ounces during the month. This is 94,660 ounces less than the import number in December and 87,800 ounces less than the amount imported in January 2011,” and adds that “we believe that the Chinese customs data is consistent with our view that weak industrial demand will make it difficult for platinum and palladium to rally sustainably beyond $1,650 and $700 respectively. We also continue to look at platinum and palladium from a cost-push perspective, and believe that platinum and palladium below $1,500 and $600 respectively are too low.”

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