The last few days has seen a range of positive economic news that might suggest that the global economy is in a much healthier and optimistic state than it was at the end of 2011.
Yesterday for example, both Spain and Italy had hugely successful Government debt sales. Bond yields for Spanish debt fell sharply as the country managed to see €10 billion short dated debt, which was twice what it expected. Italy managed to get its deal away at half the interest rate it was paying last year. While the eurozone crisis isn’t over yet, markets are certainly feeling more optimistic that the worst of the crisis might be behind us.
The milder winter so far compared to the last couple of years experienced across Europe has also provided a boost in allowing areas such as construction to keep operating when some disruption would normally be expected at this time of year.
Brent crude oil is currently rising and is now above $112 per barrel with news that there is a disruption to supply in Nigeria due to political instability pushing the price up. Oil in New York was at $99.97 this morning. However, on both exchanges, the price of oil is set to be a little lower at the end of today compared to the start of the week. This is because a report proposed that the European Union would phase in oil sanctions against Iran over a six month period, mitigating some of the potential disruption to supply. However, the longer-term trend continues to be upward for the price of oil
This morning, copper broke the $8,000 level in early trading. The official price yesterday was $7,960 (£5,186) and if the official price for today stays above $8,000, it will be the first time this has happened since 27 October 2011.
The impact of the dollar will also be watched closely by secondary commodity market traders. The dollar is now trading against the pound at around the 1.534 level, compared to the 1.57 it almost reached in December. As a result, those selling material in dollars into the export market are getting more value for their money. For example, selling a tonne of material yesterday for $100 would get you £65.18 compared to £63.69 on 21 December.
However, prices are not yet creeping up too much on the scrap-ex price report as the positive sentiment has yet to filter through to increased prices. Plus, Chinese New Year happens at the end of this month, which will put a brake on trade.
Despite this, natural PET bottles have increased a little at the bottom end to £360 to £405 compared to £355 to £405 at the end of December.
OCC has also moved up to £105 to £120 from £100 to £115 at the end of December. News and pams is slightly higher at the upper end at £115 to £130 compared to £115 to £125 in the final report of last year.
Copper has increased to £4600 to £4,850 from £4,450 to £4,750 in December. Aluminium cans are also up a little at the bottom end at £985 to £1,075 compared to £975 to £1,075 at the end of December.
See below for the full price report.