• A few days after the government allowed trading in wheat futures again, the Forward Markets Commission (FMC) has banned trading in sugar futures till December 31 fearing that it could create inflationary pressures on the commodity. The FMC blow comes even before a new government has come to power and taken charge. In fact, after the ban on wheat was lifted, the market was expecting that the ban on tur and urad too would be lifted.
• According to the International Energy Agency, an energy advisor to 28 industrialized countries, more than 50 major oil and gas projects have been deferred or cancelled because of the global economic crisis since October. The IEA estimated that spending on oil and gas exploration and production will total around $375 billion this year, down about $100 billion, or 21%, from a year ago.
• World crude steel production for the 66 countries reporting to the World Steel Association was 89 million metric tons (mmt) in April. This is 23.6% lower than in April 2008. Production for the first four months of 2009 was 354 mmt, a 22.7% decrease over the same period of 2008.
China has rejected the 33% cut in iron ore prices agreed to by Japanese steelmakers like Nippon Steel and one of the biggest ore supplier Rio Tinto; however, the world’s fourth largest mill, Posco of Korea is prepared to accept the deal. For over 40 years, the iron ore market has maintained an annual pricing system, which the Chinese mills are not willing to go with anymore. China is insisting on a cut of as much as 40% that would reverse last year’s surge after six years of gains. The market is now waiting to see whether China -- whose iron ore imports have more than quadrupled since 2002, when prices rose by almost the same rate - is forced to buy from the spot market or fall in line with the annual benchmark system. Meanwhile, the demand-supply situation in the iron ore market may exert greater pressure on price. The chief executive of BHP said that “in the medium term we don’t expect a sharp rebound in overall economic activity; in fact, we believe that economic recovery will be both slow and protracted.”