With Iron Ore prices in freefall that many didn’t see coming, scrap steel prices have plummeted in Asia, with many buyers now on strike due to the cheap price of finished steel billet which is now selling for less than $300/t. Amid the plunging commodity prices which have stripped $7Billion from Australian state budgets and with no light at the end of the tunnel, State Premiers are now discussing a rise in the GST to look at making up the shortfall.
In Non-Ferrous news, July has been a turbulent month so far to date, with copper moving up and down like a Yo Yo! Currently trading around 6% below the start of the month, however Non-Ferrous prices are being supported by a lower Australian Dollar which is currently trading at 0.7372.
**** World Markets ****
• Last Wednesday the Greek parliament approved the Eurogroup’s bailout package with 229 of 300 lawmakers voting in favour.
• Yesterday Greek banks reopened after being closed for three weeks because of the deadlock over the country’s debt.
• On Friday Germany’s parliament approved their end of the Greek bailout.
• The proposed bailout seems to be a case of the EU kicking the can down the road again, as most analysts agree that Greece has little chance of growing its way out of debt under the proposed austerity measures
**** DJ Copper Ends Lower on Firm Dollar, Weak Gold **** By Ira Iosebashvili and Ese Erheriene
Copper prices fell Monday on a firmer dollar and a sharp sell-off in the precious metals group.
Copper for September delivery, the most actively traded contract, ended down 0.6% at $2.4815 a pound on the Comex division of the New York Mercantile Exchange. It was the lowest settlement since July 7.
“The base metals have started the week on the back foot with a stronger dollar and general commodity sell-off dragging much of the complex lower,” analysts at Standard Bank said in a note.
Investors often trade commodities as a group, so a selloff in precious metals can push copper prices lower as well.
At the same time, copper investors remained concerned about demand from China, which accounts for some 40% of the world’s imports of the metal. Though the Chinese government has managed to halt a sharp decline in equity prices that began earlier this month, uncertainty remains about how an economic slowdown will affect demand for copper, which is used in construction and manufacturing. Official programs to boost growth have so far met with mixed success.
“People are still very negative on China,” said Bob Haberkorn, a broker at RJO Futures. “As long as those doubts are there, copper will feel the pressure.”