Short Overview of main Weekly deals & economic events

United States

Nasdaq and S&P 500 overcame the last week’s losses. They were at the record levels on Friday’s closing, observing the period of two weeks. Strongly supported by the surge in tech stocks, as well as the political unrest which is taking place in U.S. these days.

OPEC & Oil

OPEC and non-OPEC countries have made a deal to extend production cuts for a period of nine months, until March. The deal was made on Thursday. The idea of extending the glut came after the output cuts agreed in November last year failed to rein in the glut in supply. Which has pressured oil prices for nearly three years.

Most of the market participants were expecting deeper cuts. So when the meeting started, prices sharply fell right away, which did not leave the traders impressed. The expectations on Cartel were a bit firmer & OPEC was expected to announce deeper cuts.

However, in order to rebalance the market, OPEC must take wise further steps. Also, observing it relations with with non-member countries, they should become closer.

Base Metals

Firstly, copper prices on LME closed the day on Friday May 26 below their previous closing prices. They have fallen back from three-week highs earlier.

Three-month copper closed the day at $5,657 per tonne. Coming from its previous closing price of $5,724.

Secondly, copper prices rose earlier on news of the escalating 2 month long strike at the Grasberg mine – the world’s second largest for copper. Where strikes are set to roll into a second month over June. But prices fell back again by the close.

Thirdly, aluminium prices traded loosely flat throughout the day. They dipped at the close to $1,951 per tonne after closing the day on Thursday at $1,960. Aluminium stocks saw a 31,975-tonne injection in South Korea on Friday. Such a move could see prices trade lower, despite the spectre of Chinese cuts hanging over the market.

“While questions remain around the efficacy of proposed Chinese capacity cuts, with the bears pointing to high semi exports as signs that production has actually increased, there is no questioning the buy momentum,” (Alastair Munro)

At friday’s close, the three-month prices of base metals were:
Nickel closed the day at $9,080 per tonne, from its previous closing price of $9,040. Zinc closed at $2,640 per tonne, up from $2,633. Lead closed the day higher at $2,122 per tonne, from $2,084. Tin prices closed at $20,425 per tonne, from $20,400 in Thursday.

Brazil’s Vale plans to diversify

Fabio Schvartsman, CEO of Vale SA, said that world’s largest iron ore miner plans to resume growth with diversification. And some acquisitions also.

Reporters and market analysts explained that Friday said Schvartsman means to avoid keeping “all eggs in one basket.” Speaking about the firm’s strong reliance on iron ore.

The company is doing a detailed analysis to decide on which operations to expand. For example, its nickel business is not gaining enough profit returns.

Schvartsman has set up working groups in Company, to find out the risks and returns which every of these units gain. The first assessment is to happen in 60 days.

For advises on cost-cutting efforts, Vale has also found a solution. It hired Brazilian consultancy firm Falconi to advise them and help them deal with cost-reduction.