MELBOURNE, July 5 Australia and New Zealand
Banking Group has launched an index for clients to
track Chinese commodities demand, which it said was a better
gauge of global commodity markets than other indices that were
too focused on Western markets.
The ANZ index tracks Chinese domestic prices of 22
commodities, including iron ore, coal and rice, which are not
included in other international commodities indices, and is
weighted on consumption rather than production.
ANZ's head of global head of commodity research, Mark
Pervan, said other indices failed to reflect the fact that China
now makes up about half of global consumption of key products
and left out key commodities such as iron ore, which now have
"The commodities market has changed so much in the last 10
years, but traditional indices haven't, so we wanted to get
ahead of that," Pervan said on Thursday.
ANZ said its index so far appeared to be a good predictor of
China's Producer Price Index and industrial production, leading
those by one to two months, and was the only global commodity
index to correctly track a fall in China's Purchasing Manager's
Index in the fourth quarter of 2011.
"We're finding that the index, not surprisingly, tracks
nicely the inflation-based indicators in China, particularly the
Producer Price Index," Pervan told reporters on a conference
The widely followed Thomson Reuters-Jefferies CRB index
is skewed towards U.S. markets, driven by energy and soft
commodities with no iron ore and coal. In contrast, ANZ's China
Commodity Index gives thermal coal a 16.6 percent weighting,
iron ore 11.2 percent and coking coal a 9.8 percent weighting.
The index was possible now that iron ore and coal were
traded more on market-based pricing, rather than annual pricing,
Pervan said, adding it was unlikely that iron ore producers
would revert to annual pricing, as urged by some steel mills.
"They're not prepared to move back," Pervan said.
He said he expected iron ore prices to remain around $135 to
$140 a tonne in the short term, then move into the $140 to $150
range in the fourth quarter, based on a pick-up in Chinese
demand, assuming lower interest rates and cuts in bank reserve
requirements started to boost the economy.
(Reporting by Sonali Paul;Editing by Clarence Fernandez)