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Sluggish China demand weighs on commodities

Major commodity prices remained volatile on Tuesday on sector-specific factors, including sluggish demand outlook in big consumer China, although better-than-expected US manufacturing data capped some of the losses.

Major commodity prices remained volatile on Tuesday on sector-specific factors, including sluggish demand outlook in big consumer China, although better-than-expected US manufacturing data capped some of the losses.

US crude oil and spot gold gained, copper lost after three straight days of rise, soybean hit a three-month low and palm oil dived to a more than two-year low.

The Institute for Supply Management?s US factory index rose to 51.5 for September, showing growth for the first time since May and beating forecast of a contraction.

However, similar data revealed euro-zone factories suffered their worst quarter since early 2009 and China faced the 11th straight month of contraction in September, suggesting the global economy faces stiff challenges as it tries to defy recessionary trends.

Anxiety over the possibility of debt-hit Spain seeking a bailout and a possible German resistance to such a request also weighed on the prices. However, concerns of possible supply disruptions following tighter sanctions against Iran partly offset the impact of gloom economic outlook on crude oil.

US crude oil futures for November delivery gained 20 cents to $92.68 per barrel on improved growth prospects in the world’s top consumer.

However, brent crude shed 5 cents at $112.14 a barrel in the intraday trade, mainly on subdued demand from the world’s second-biggest consumer China. Spot gold built on Monday’s gain to touch $1,777.00 an ounce, up 0.02%, a day after hitting its loftiest level of the year on the back of a firmer euro against the dollar. The precious metal has been tracking the euro for quite some time now.

However, US gold futures edged down 0.03% to $1,782.70 a troy ounce.

Copper slipped after three days of gains, with the three-month copper on the London Metal Exchange easing by 0.40% to $8,266.50 a tonne in the intraday trade on China growth concerns.

China alone accounts for 40% of the world’s refined copper demand.

Malaysian palm oil futures shed more on Tuesday. The benchmark December contract on the Bursa Malaysia Derivatives Exchange lost 2.6% to 2,400 ringgit ($787) per tonne after hitting 2,394 ringgit ? the lowest level since July 2010.

Soyabean on the Chicago Board Of Trade for November delivery dropped 0.2% to $15.57-3/4 a bushel in the intraday trade and the spot contract tumbled to $15.51 a bushel, the lowest since July 3.

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First published on: 03-10-2012 at 01:36 IST
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