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Premier eFinance: Commodity giant Glencore says commodities fundamentals still strong.
Glencore International says the recent fall in commodity prices may have taken the sparkle off of the market but the fundamentals remain strong driven by strong demand from emerging markets.
By: Premier eFinance
"Commodities have just come off on the back of the China tightening, the Greek crisis and funds have liquidated part of their commodities portfolio," Chief Executive Ivan Glasenberg shortly after the firms IPO on the Hong Kong stock exchange.
"A lot of it, as I said before, has been funds creating a bit of froth in the market, but the underlying fundamentals of the commodities market is relatively strong because of the tightening of supply."
Glencore’s comments come a day after Goldman Sachs raised its Brent crude price forecast to $120 per barrel for 2011 and to $140 for 2012 on the grounds that increasing fuel demand will deplete global inventories and strain OPEC's spare oil output capacity.
Morgan Stanley also recently increased its 2011 Brent forecast to $120 and its 2012 estimate to $130, saying that strengthening demand together with the loss of production in Libya would be key drivers. After months of anticipation, Glencore went public last week with London's largest-ever listing.
Glencore’s Glasenberg highlighted that Asian commodities demand remained strong, while producers were struggling to boost production.
"Asia's demand is still strong," he told Premier eFinance. "The big question is will mining companies around the world be able to continue increasing production to match the demand which is occurring in Asia?”
"It's getting harder to produce more commodities in various parts of the world," he added.
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