economictimes.indiatimes.com ECONOMIST INTELLIGENCE UNIT ECONOMICTIMES.COM[ TUESDAY, FEBRUARY 04, 2003 03:26:41 PM ]

The Economist Intelligence Unit's price index for hard commodities — industrial raw materials (IRM) — is forecast to continue 2002's slow recovery over the next two years, with gains of 4 per cent in 2003 and 5.4 per cent in 2004. However, crude oil, which is excluded from the IRM index as it would dominate movements in the trade-weighted measure, is forecast to see its price stabilise in 2003 before falling sharply in 2004.

"Having been inflated, initially by fears of a US-led attack on Iraq and then by supply disruptions in Venezuela, crude oil prices will be softening by mid-2003," said Matt Parry, senior commodities editor at the Economist Intelligence Unit. "This reflects a dismantling of the war premium — assuming a resolution of the crisis — and a reassertion of a global oversupply of oil on market sentiment. In this environment, weakly reviving global demand will be outweighed by higher supply as OPEC scrambles to reclaim lost market share. The net effect will be an average price for dated Brent Blend of $24.5/barrel in 2003, falling below $20/barrel in 2004."

Having recovered somewhat from 2001's price crash, when the IRM index fell nearly 10 per cent, some hard commodity prices have firmed in 2002. Higher prices for wool, natural rubber and nickel (the only base metal to rise) offset lower prices for cotton and most base metals (which continued their two year decline). Although the IRM index will recover in 2003 and 2004, EIU has downgraded the price forecasts for natural rubber and fibres.

A closer look at the quarterly pattern for prices across the IRM index highlights some interesting findings. Prices are forecast to stabilise in the first quarter of 2003, before falling in the second and third quarters, as the US-led showdown with Iraq softens demand in many key hard commodity markets. Prices will recover from the fourth quarter of 2003, picking up a strong head of steam as the IRM index rises uninterrupted through to the first quarter of 2005. Indeed, this one-and-a-half-year period is unique in many respects as all three key segments of the IRM index (natural rubber, fibres, and base metals) rise unabated on a quarter-on-quarter basis.

For specific commodities, the Economist Intelligence Unit's current expectations are as follows:

Aluminium: Continued over-investment in production capacity will mean the aluminium industry remains plagued by oversupply over the next two years, driving prices down.

Copper: The modest global economic recovery, producing stronger copper demand and contributing to lower stock levels, will provide steady support to prices throughout 2003 and 2004.

Crude oil: Crude oil prices will remain high while the threat of a US-led attack on Iraq persists, before falling once more, as artificially high prices in 1999-2002 have led to massive over-investment which will severely test OPEC's market power.

Fibres: Higher cotton consumption, in both 2002/03 and 2003/04, in comparison with present production forecasts is certain to reduce cotton stocks, driving prices up. Wool prices will remain high over the next two years as undersupply persists.

Lead: Lead prices will rise, albeit slowly, over the next two years, as the forecast recovery in demand slowly overtakes supply.

Natural rubber: The demand upturn in early 2002 proved short-lived; although prices are forecast to rise in 2003 and 2004, EIU take a more bearish view of prospects than it did in October's report.

Nickel: Prices will fall slightly over the next two years as additional capacity comes on stream in 2004.

Tin: From an excessively low level in mid-2002, prices will rise through 2003 and 2004, under pressure of recovering demand. EIU takes a more bullish view of price prospects than in the October report.

Zinc: Zinc prices will rise from mid-2003 through 2004, as strong demand growth increasingly diminishes the market's recent over-supply.

www.vheadline.com Posted: Tuesday, February 04, 2003 - 3:46:23 AM By: Robert Rudnicki

Executive Vice President Jose Vicente Rangel has restated the government's position on an electoral solution to Venezuela's political crisis, urging the opposition to wait for a revocatory referendum after August 19, the half way point in President Hugo Chavez Frias' term in office and the earliest possible date permitted by the current Constitution.

Government negotiators in the Organization of American States (OAS) led peace talks at the Hotel Melia Caracas have presented this proposal to opposition negotiators, and Confederation of Trade Unions (CTV) secretary general Manuel Cova saying the opposition will respond to the proposal during Wednesday's session, however pointing out that the government has so far failed to respond to the opposition's proposal for a constitutional amendment that would shorten the President's term in office and allow an earlier referendum. 

The government's and the opposition's proposals are the two possible solutions that were put forward by former US President Jimmy Carter, but its seems unlikely at this stage that either side will agree to the other's choice. The government has previously indicated that should the opposition want an amendment then it would have to jump through the constitutionally required hoops to get one, without counting on the government's assistance.

www.abs-cbnnews.com

CARACAS, Venezuela - Venezuela's government on Monday rejected a proposal to cut short the rule of President Hugo Chavez and delivered a fresh blow to the opposition campaign for early elections in the world's No. 5 oil exporter.

Opposition leaders, who said they collected about four million signatures petitioning for a constitutional amendment to shorten Chavez's term, accused the government of stalling talks to end the bitter dispute over his rule.

Vice President Jose Vicente Rangel said the government dismissed the opposition initiative and proposed instead a binding referendum after August on the president's rule.

"We're proposing what we always have: referendum after Aug. 19 as laid down in the constitution," Rangel told reporters.

The amendment campaign marked a shift in strategy for opponents of Chavez after they scaled back a two-month strike that battered Venezuela's economy but failed to unseat him. State oil workers at the heart of the strike have vowed to keep up their stoppage to press for a vote.

The fresh row signaled more political wrangling between the government and opposition, who have been locked in a standoff since April when Chavez survived a short-lived military coup.

Both the constitutional amendment and a binding Aug. 19 referendum were put forward as options by former U.S. president and Nobel Peace prize winner Jimmy Carter, who is part of international efforts to broker an electoral deal.

In a statement Rangel said the government could not set a date for a referendum and also rejected Carter's proposal urging no reprisals for striking oil workers. Chavez has fired more than 5,000 oil employees, accusing them of sabotage, and refused an amnesty.

"This response takes us further away from the Carter proposal, especially about any election date. The government just isn't interested," anti-Chavez union boss and opposition negotiator Manuel Cova told Reuters.

A six-nation initiative led by the United States and Brazil has also lent its weight to the talks led by the Organization of American States to hammer out an agreement on elections.

The opposition strike, started on Dec. 2, triggered a fiscal crisis, forcing the Chavez government to slash its budget and prepare exchange rate controls to shore up its oil-reliant economy.

Faced with bankruptcy, many businesses buckled and reopened even before the strikers decided to ease off the shutdown. Private banks resumed normal operating hours on Monday and shopping centers, universities and franchises are due to reopen later this week.

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Tuesday, Febuary 4, 2003 03:16 AM ET  Printer-friendly version   DOHA, Qatar -- Organization of Petroleum Exporting Countries President Adbullah bin Hamad al-Attiyah said Tuesday that Venezuela's increasing oil production is a sign that may prompt OPEC to consider a production cut when it meets March 11.

Asked about the possibility of a reduction in the group's overall ceiling in the coming months, given Venezuela's higher production, he said "why not?"

Mr. Al-Attiyah noted that world oil demand is expected to slow by around two million barrels a day in the second quarter, and this will combine with increasing Venezuelan output, so OPEC will try to strike a balance between supply and demand.

Venezuela's crude output rose to 1.22 million barrels a day as of Monday, from around 1.1 million barrels a day over the weekend, dissident staff of Venezuela's state-owned oil monopoly Petroleos de Venezuela said in a daily report.

Mr. Al-Attiyah was speaking to reporters ahead of a natural-gas conference.

-Abdulla Fardan; Dow Jones Newswires; 00973-965-865-6; Abdulla.Fardan@ Dowjones.com

 http://www.quicken.com/investments/news_center/story/?story=NewsStory/dowJones/20030204/ON200302040316000262.var&column=P0DFP

Tuesday, Febuary 4, 2003 03:16 AM ET  Printer-friendly version   DOHA, Qatar -- Organization of Petroleum Exporting Countries President Adbullah bin Hamad al-Attiyah said Tuesday that Venezuela's increasing oil production is a sign that may prompt OPEC to consider a production cut when it meets March 11.

Asked about the possibility of a reduction in the group's overall ceiling in the coming months, given Venezuela's higher production, he said "why not?"

Mr. Al-Attiyah noted that world oil demand is expected to slow by around two million barrels a day in the second quarter, and this will combine with increasing Venezuelan output, so OPEC will try to strike a balance between supply and demand.

Venezuela's crude output rose to 1.22 million barrels a day as of Monday, from around 1.1 million barrels a day over the weekend, dissident staff of Venezuela's state-owned oil monopoly Petroleos de Venezuela said in a daily report.

Mr. Al-Attiyah was speaking to reporters ahead of a natural-gas conference.

-Abdulla Fardan; Dow Jones Newswires; 00973-965-865-6; Abdulla.Fardan@ Dowjones.com