AP News, July 20th, 2007
Industrial metals prices extended their gains Friday as lead reached a fresh peak amid concerns that global supplies may struggle to satisfy demand.
Elsewhere, oil prices gave back some of the week's gains, while precious metals prices ticked higher. Agriculture futures fell modestly.
Strong growth in Asia has led to increased demand for the materials basic to industrial development, including copper and the steel-coating metals nickel and zinc.
China's central bank raised benchmark interest rates Friday in an attempt to slow down its speeding economy. The country's gross domestic product grew at a torrid 11.9 percent rate in the second quarter _ the fastest pace since 1995.
Chinese demand for nickel, copper and other base metals has been a key impetus behind the prices surges of the past two years.
The Shanghai Futures Exchange reported its weekly inventory levels on Friday, which showed a small drop in copper stocks. The London Metal Exchange posted lower copper, lead, aluminum and zinc inventories, and prices climbed across the complex.
Strikes at copper mines in Latin America have interrupted production in some cases, and the specter of supply disruptions continues to hover over the market. Copper rose almost 2 percent on the LME and added 4.35 cents to $3.7055 a pound at the close of the New York Mercantile Exchange.
Speculative money has also been chasing the industrial metals, helping to exaggerate price moves in markets plagued by tight supplies and strong demand. UBS analyst Robin Bhar said in a note Friday he believes lead prices are overvalued and a correction is in order. Lead swelled nearly 5 percent on the LME.
In the precious metals market, a weaker U.S. dollar spurred gold prices higher. Gold often serves as a safe-haven asset for investors concerned by currency depreciation. As the euro and British pound rose against the dollar, gold for August delivery gained $6.60 to $684.70 an ounce on the Nymex. The euro fetched a record $1.3843 on Friday.
Nymex September silver rose 2.8 cents to settle at $13.403 an ounce.
Meanwhile, energy futures faltered. The August light, sweet crude contract came under pressure on the day of its expiration, shedding 35 cents to $75.57 a barrel. Crude oil prices, which had piled on almost $2 a barrel since the start of the week, made a brief move over $76 in earlier trading before falling back.
Gas futures, meanwhile, have declined in six of the past seven trading sessions. August gasoline slipped 2.81 cents to settle at $2.1633 a gallon. That contract expires at the end of the month.
A report from the Energy Information Administration on Wednesday showed that the nation's refineries have been ramping up use of refining capacity, which is expected to lead to increased demand for crude oil and more ample supplies of products including gasoline.
In Chicago, agriculture futures rose in early trading then reversed course once midday forecasts hinted that the western Corn Belt might see wetter, slightly cooler weather.
"That's all it took to take the market down a little bit," said Mark Schultz, chief market analyst at Northstar Commodity. Parts of Iowa, Minnesota and the Dakotas missed out on the rains of the past week, and the region has been a chief area of concern, he said.
Weather that is too hot or dry can hurt a corn or soybean crop during its crucial pollinating period. December corn shed 2.75 cents to $3.335 a bushel on the Chicago Board of Trade. November soybeans fell 6.75 cents to close at $8.7525, while wheat for September delivery fell 3.75 cents to settle at $6.1625 a bushel.
