Last updated: April 12, 2010 10:30 pm

Sugar rebounds on signs of fresh demand

Sugar stood out among commodity futures markets on Monday, bouncing sharply higher on signs of fresh demand.

Liffe white sugar for May delivery rose 5.4 per cent to $527.40 a tonne. ICE May raw sugar rose 3.9 per cent to 17.03 cents a pound.

White sugar prices remain 31 per cent below the record $767 a tonne they reached in January, while raw sugar has dropped even further from a recent 29-year high.

Analysts attributed Monday’s moves to reports that Pakistan is seeking to import 200,000 tonnes of white sugar; Russia is planning to lower sugar import tariffs; and Brazil’s sugar harvest has been slightly disrupted by rains. Some said sugar’s earlier declines were overdone.

“We are not surprised to see some stabilisation in prices after the sharp drop of the past two months,” said Karim Salamon, head of research at Sucden in Paris. “I think this rally today will be short-lived.”

Aluminium pushed on from the 18-month high it set in the previous session, buoyed by bullish comments from Rusal.

The world’s largest producer of the metal said it would increase production and added in an interview with Reuters that it was considering launching an exchange-traded fund backed by at least a million tonnes of physical aluminium.

David Wilson, analyst at Société Générale, said a physically-backed aluminium ETF, if successful, “would be very supportive for a market that is basically oversupplied at the moment”.

But warehousing costs could be a significant drawback. “The storage constraints of the industrial metal markets make it incredibly difficult to provide” an open-ended fund at a low price, said William Rhind of ETF Securities, which sells a financially-backed aluminium ETF.

Mr Wilson pointed out that, since aluminium does not easily corrode, it might be possible to store the aluminium without the need of a warehouse.

Aluminium for delivery in three months rose 0.3 per cent to $2,413 a tonne on Monday.

Copper hit a 20-month high after Chinese import data released over the weekend showed strong demand from the world’s largest consumer of the metal.

Chinese imports of unwrought copper rose to 456,240 tonnes in March, 42 per cent higher than the previous month and 22 per cent higher than the same month a year earlier, according to data from the customs office released on Saturday. Demand for copper is closely linked to economic growth.

The data pushed copper for delivery in three months to an intraday high of $8,043.75 a tonne on the London Metal Exchange, its highest level since August 1 2008 – though it slipped back to close 0.6 per cent lower for the day at $7,869.

Oil fell even as the Chinese data showed a 13.8 per cent jump in crude imports in March from February.

May Brent crude, the European benchmark, fell six cents to $84.77 a barrel but traded higher than West Texas Intermediate. May WTI dropped 58 cents to $84.34 a barrel.

Gold early on notched a new 2010-high of $1,170 a troy ounce. It later pared gains to trade close to unchanged.

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