Commodities: Base metals, oil benchmarks register sharp declines in Europe

Base metals and oil benchmarks traded sharply lower in Europe on Monday, thereby extending short calls in Asian trading, on concerns about Chinese economic growth and the Greek debt situation spiraling out of control.

Past the midway point in trading on the London Metal Exchange, the three-month futures contracts of primary aluminium (down 2.5%), copper (down 3.3%), lead (down 2.8%), nickel (down 3.5%) and zinc (down 1.1%) were firmly in the red. Only tin, up 0.8%, bucked the trend having taken a hammering from short callers for much of the previous week.

However, most metals market analysts touted lack of metals importation by China and oversupply scenarios, rather than a fear of the Greek debt malaise spreading as their primary concern. Sharecast also received similar feedback from oil futures traders as both major benchmarks nosedived in the face of emerging market demand concerns and ample oil supplies in the market.

Overwhelmingly bearish sentiment saw Brent slip below $60 per barrel for the first time since April, shedding 2.52% or $1.52 to $58.80 at 1503 BST. Concurrently, WTI was down 4.57% or $2.60 at $54.33 with short-sellers factoring in the possibility of additional Iranian crude flowing in to the global supply pool in the immediate to near future.

Meanwhile, precious metals struggled to attract safe haven buyers despite Greece being in dire straits and the possibility of the economic malaise spreading across the wider Eurozone. COMEX gold for August delivery was broadly flat at $1,165.40 an ounce, while spot gold was lower by 0.13% or $1.56 at $1,167.14.

Kevin Norrish, senior analyst at Barclays, said: “The lack of influence that the euro crisis is having on gold is particularly note-worthy as the yellow metal continued its recent price decline, underlining again how gold’s main role in financial markets at present is as a proxy for the timing and likelihood of a fed rate hike.”

Meanwhile, COMEX silver for September was delivery broadly flat at $15.59 an ounce, but spot platinum was sharply lower by 2.85% or $30.88 at $1052.32 with the precious metal heading towards a six-year low as South African supplies surge and the dollar strengthens.

Finally, major agricultural commodities were also firmly in the red in sync with much of the commodities sphere. CBOT corn (down 1.34%), wheat (down 1.02%), ICE cocoa (down 0.15%), cotton (down 0.88%) and CME live cattle (down 0.10%) were all trading lower.