Commodities: Steel futures extend rally into fourth session

Steel futures extended a rally into a fourth day, reaching their highest levels since September 2014 after jumping by almost 8% on Thursday, on signs of strong demand and forecasts for more restrained supply growth.

Gains for steel had the collateral effect of sending iron ore futures traded on the Dalian Commodity Exchange bounding higher by 6% to 472 yuan.

Inventories of steel products held by Chinese traders stood at 9.8m tonnes as of 15 April, down from 11m tonnes at the end of March, leading analysts at Argonaut Securities to predict steel prices would advance further in the second quarter, Reuters reported.

In a report issued on Thursday, following BHP Billiton’s latest production update, analysts at JP Morgan said they had lowered their 2017 estimate for iron ore supply growth by approximately 15Mt from 108Mt.

Three-month copper futures ended the session ahead by 0.5% to $4,970.50 per metric tonne on the LME, albeit alongside dips for similarly-dated nickel and zinc, which retreated by 1.9% and 1.3% to $9,112.5 per metric tonne and $1,907 per metric tonne, respectively.

Oil futures fall on profit-taking

Front month Brent crude futures were down by 1.597% to $45.12 per barrel on the ICE as of 16:30 BST, despite a warning from the rich-world’s oil watchdog’s chief of a looming sharp drop in non-OPEC output next year.

Speaking in Japan, Fatih Barol, the head of the International Energy Agency, warned that oil supplies from outside of OPEC would fall by 700,000 barrels per day in 2016 – the largest fall since 1992.

Possibly taking the sting out of any such forecast, on 20 April the EIA, the US department of Energy’s statistical arm, predicted total US oil output would shrink from 9.43m b/d in 2016 to 8.04m b/d in 2017.

To take note of, a senior Iranian oil official was cited by the Associated Press as reiterating his country’s stance that it would not agree to an output freeze until it has recovered its pre-sanctions level of output.

Trading in the agricultural space was mixed, with the July 2016 corn and wheat contracts retreating by 0.81% and 1.17% to $396.5 per bushel and $506.25 per bushel, respectively, on the Chicago Board of Trade.