-->Aus"Global Commodity Connections", 17.11.04

Grüsse

Per




In October, the US$ resumed its weakening trend against commodity currencies and the euro..... However, in contrast to the early cycle of the commodity price cycle, US$ metal prices have not increased. In fact, the index of metal prices (MGMI) declined by 5,6 % in October. The US$ gain in gold is the only exception, with an early increase of 3,8% since early November, reflecting a translation gain rather than any real price gain. We believe that speculators drive US$ commodity prices at the early stage of recovery on the assumption, that a weakening US$ will eventually restrict supply and increase demand. However, at the end of the cycle we believe speculators are more concerned about a reduction in demand growth and exit timing than any residual benefit from further US$ weakening.

Metal price momentum (the year-on-year percentage change in the MGMI) peaked in February 2004, with a secondary high in October followed by a further decline in November. On this basis, it appears that the absolute peak in metal prices occured in October 2004. Momentum charts suggest that in the current cycle, metal prices are the first to peak, followed by steel prices and finally oil. Steel prices showed that momentum peaked in July 2004, although in absolute terms prices may not have peaked yet. In the case of oil, price momentum is still rising, suggesting that we may see higher absolute prices before a peak is reached some time in the first half of 2005. The negative impact of higher oil prices on economic growth should underwrite lower metal and steel prices during 2005.....
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