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SEB Commodities Monthly 15 NOVEMBER 2011 $200/b crude oil back on the radar screen
SEB Commodities Monthly
15 NOVEMBER 2011
$200/b crude oil back on the radar screen

Zinc Tin Copper Heat. oil (US) Gold Palladium Platinum Silver WTI

Coffe (Ar.)

Aluminium

Lead

Sugar Gasoline (US) Cocoa (US) Soybeans Nat. gas (US) Cotton Nickel

Corn

Steel billets

(EUA)

CO2 (Cont.)

Power (Nordic)

Brent

Wheat

Power

Commodities Monthly

Commodities Monthly

$200/b crude oil back on the radar screen

GENERAL

0-3 M 4-6 M 7-12 M

OECD’s Composite Leading Indicators for November points more strongly to a slowdown with below trend growth for Brazil, China, India, Canada and Europe

Key commodities like copper and oil are struggling to match demand even in the current weak demand environment calling for higher prices when macro economic conditions stabilize

We see an increasing risk that Eurozone debt could spiral out of control and add volatility to commodity markets

ENERGY

0-3 M 4-6 M 7-12 M

We revise our average Q4-11 Brent price forecast $5/b higher to $115/b and, our 2012 forecast $4/b higher to $114/b and our 2013 forecast $5/b higher to $120/b

Geopolitical risk in the crude oil market has increased further due to renewed focus on Iranian nuclear ambitions, a full- blown conflict could send oil prices above $200/b

We expect volatility to remain high into 2012 due to the European sovereign debt crisis and the effects of Chinese monetary tightening

The Brent-WTI spread is likely to continue to tighten towards a more fundamentally justifiable $10/b

INDUSTRIAL METALS

0-3 M 4-6 M 7-12 M

Expect continued volatility in the industrial metal sector as the European crisis generates waves of risk aversion and the effects of Chinese monetary tightening peak

In other scenarios than a Chinese hard landing, marginal production costs limit the downside risk in most metals

We believe conditions will improve significantly in the sector during H2-12, after the worst part of the European slowdown behind and with a less strict Chinese monetary policy triggering a restocking wave

PRECIOUS METALS

0-3 M 4-6 M 7-12 M

The gold price has returned to the underlying trend after the strong rally and subsequent correction in Q3-11

The European sovereign debt crisis has now reached the core of the European economy as market confidence in Italy and Spain is faltering

ECB throwing in the towel and cutting interest rates in combination and likely additional OECD quantitative easing is keeping the liquidity outlook supportive for gold

With increasing focus on Iranian nuclear ambitions, geopolitical risk has become a supportive factor for gold again

We forecast an average gold price of $1800/ozt in Q4-11 and $2088/ozt in 2012

AGRICULTURE

0-3 M 4-6 M 7-12 M

We do not expect grain prices to rebound to earlier highs, instead we expect a primarily bearish development over the coming 12 months

However, several supportive factors imply that it is too early to sound the “all clear” signal in the sector

We do not expect prices to start falling back significantly until well into 2012

La Niña induced adverse weather over the winter is the main upside risk in the sector going forward

Arrows indicate the expected price action during the period in question.

UBSUBSUBSUBS BloombergBloombergBloombergBloomberg CMCICMCICMCICMCI SectorSectorSectorSector IndicesIndicesIndicesIndices

(price indices, weekly closing, January 2010 = 100) 180 Industrial Metals 170 Precious Metals Energy
(price indices, weekly closing, January 2010 = 100)
180
Industrial Metals
170
Precious Metals
Energy
160
Agriculture
150
140
130
120
110
100
90
80
jan-10
feb-10
mar-10
apr-10
maj-10
jun-10
jul-10
aug-10
sep-10
okt-10
nov-10
dec-10
jan-11
feb-11
mar-11
apr-11
maj-11
jun-11
jul-11
aug-11
sep-11
okt-11
nov-11

SectorSectorSectorSector performanceperformanceperformanceperformance lastlastlastlast monthmonthmonthmonth

(MSCI World, UBS Bloomberg CMCI price indices) 24 22 20 YTD (%) M/M (%) 18
(MSCI World, UBS Bloomberg CMCI price indices)
24
22
20
YTD (%)
M/M (%)
18
16
14
12
10
8
6
4
2
0
-2
-6 -4
-8
-10 -12
-14 -16
-18
Equities
Commodities
Energy
Industrial
metals
Precious
metals
Agriculture

WinnersWinnersWinnersWinners &&&& LosersLosersLosersLosers lastlastlastlast montmonthmontmonthhh

(%)

14

12

10

8

6

4

2

0

-2

-4

-6

-8

-10

montmonthmontmonthhh (%) 14 12 10 8 6 4 2 0 -2 -4 -6 -8 -10 Chart

Chart Sources: Bloomberg, SEB Commodity Research

Commodities Monthly

Commodities Monthly

General

On the positive side US statistics are stronger than many had feared, supporting investor sentiment. China is probably moving towards the end of its monetary tightening cycle and may well move faster towards stimulation given on-going Eurozone troubles. Developments in Japan are also positive with industry activity increasing for the first time since February. However, OECD’s Composite Leading Indicators (CLI) for November points even stronger to a slowdown with below trend growth for Brazil, China, India, Canada and Europe during the next 6 months. For Europe the future looks increasingly unstable. Either politicians produce a credible solution by establishing an appropriate buyer of last resort (potentially the ECB) or the euro may very well disintegrate. Still, the world can probably live with a stagnant, struggling Eurozone in which case the associated printing of high volumes of euros will drive gold prices even higher. However, if Eurozone politicians fail to get their act together we may well see a major, global credit disruption hitting global growth. The lesson of the Lehman Brothers bankruptcy was that a major credit disruption has an immediate global impact on all countries including China.

The unrelenting Eurozone turmoil is strangling credit availability to European companies due to stressed banks deleveraging balance sheets. At the same time, European governments are implementing austerity measures. Consequently, lack of credit and budget cuts will depress Euro-zone growth going forward. At present, even Germany is edging closer to stagnation, French economic performance is deteriorating sharply while the rest of the Eurozone is experiencing an accelerating slowdown. Standard and Poor’s is probably preparing to downgrade French debt which could damage the EFSF’s triple A rating. The German Christian Democratic party and Angela Merkel are demonstrating their considerable support for the euro suggesting the political willingness to reach a solution remains. However, the big question is whether markets are willing to allow politicians sufficient time to act.

Since our last report the UBS Bloomberg CMCI energy price index (+3.6%) has remained well supported with US data better than some had feared, US and European oil stocks decreasing to an 8-year low and shipments to China increasing in order to alleviate the country’s tight diesel market. The industrial metals index (+1.0%) was very volatile in October showing greatest sensitivity to Asia/China. The agricultural index has also been weak (- 4.2%). Like the metals index it is also still off 13% since the beginning of September. The precious metals index was the best performer (+7.8%), driven higher by Eurozone turmoil.

UBSUBSUBSUBS BloombergBloombergBloombergBloomberg CMCICMCICMCICMCI

(price index, weekly closing) 1800 1700 1600 1500 1400 1300 1200 1100 1000 900 800
(price index, weekly closing)
1800
1700
1600
1500
1400
1300
1200
1100
1000
900
800
700
600
500
400
300
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011

JPMJPMJPMJPM globalglobalglobalglobal manufacturingmanufacturingmanufacturingmanufacturing PMIPMIPMIPMI

(monthly, PMIs >50 expansive) 65 60 55 50 45 40 35 30 2005 2006 2007
(monthly, PMIs >50 expansive)
65
60
55
50
45
40
35
30
2005
2006
2007
2008
2009
2010
2011

OECDOECDOECDOECD compositecompositecompositecomposite leadingleadingleadingleading indicatorsindicatorsindicatorsindicators

(monthly, 100 corresponds to long term trend growth in industrial production) 105 104 103 102
(monthly, 100 corresponds to long term trend growth in industrial production)
105
104
103
102
101
100
99
98
China
97
Eurozone
96
OECD
95
USA
94
Reference
93
92
91
90
89
88
2005
2006
2007
2008
2009
2010
2011

Chart Sources: Bloomberg, SEB Commodity Research

Commodities Monthly

Commodities Monthly

Crude oil

We revise our Q4-11 average Brent price forecast $5/b higher to $115/b. We also raise our 2012 estimate by $4/b to $114/b (Q1: $110/b, Q2: $110/b, Q3: $115/b, Q4: $120/b) and our 2013 projection by $5/b to $115/b. We do so due to high geopolitical risk, e.g. with the Iranian nuclear issue resurfacing once again, less likelihood of a US recession, en upcoming heating season with low oil product inventories in e.g. Europe and a tightening long term market balance outlook. In particular, the European diesel market is clearly a potential bull trigger. We expect a highly volatile market over at least the next six months with the European debt crisis continuing and further effects from Chinese monetary tightening. While we still acknowledge an upside risk to our forecasts we maintain a conservative stance due to lacklustre 2012 OECD growth forecasts and uncertainty regarding China’s exit strategy.

Since late 2010 geopolitical supply risk has been high due to low OPEC reserve capacity given potential disruptions due to the “Arab spring”. That risk has escalated following an IAEA report suggesting that Iran is continuing to develop nuclear weapons. If a pre-emptive strike is executed Iran could retaliate by closing off the Strait of Hormuz, an action which could easily send the oil price above $200/b, significantly impeding global growth.

After bottoming out in mid-October the Brent-WTI spread narrowed rapidly as WTI began narrowing its discount to Brent. The spread began contract rapidly after it had reached $28/b, a level difficult to justify fundamentally. Road and rail transport costs from over- supplied Cushing to coastal refineries only merits a spread of approximately $10/b while a tighter European vs. US market warrants an additional $5/b spread. Improving US and deteriorating European growth prospects together with increasing Libyan production has begun eroding the spread, a process accelerated by long position closures. We expect the differential to continue to narrow towards $10/b in coming months.

The European naphtha and diesel markets are particularly significant at present. While naphtha prices are weak due to low demand from the petrochemical industry, both in Europe and elsewhere, the diesel market is relatively tight as a result of continued solid demand. With low inventories and winter approaching we acknowledge the risk of a European low sulphur diesel induced oil market rally, a central issue in the 2008 oil price spike. In general, light and middle distillate stocks are low and are maintained so since backwardation make holding stocks unattractive.

CrudeCrudeCrudeCrude oiloiloiloil pricepricepriceprice

(NYMEX/ICE, $/b, front month, weekly closing) 150 140 NYMEXWTI 130 ICE Brent 120 110 100
(NYMEX/ICE, $/b, front month, weekly closing)
150
140
NYMEXWTI
130
ICE Brent
120
110
100
90
80
70
60
50
40
30
20
10
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011

USUSUSUS crudecrudecrudecrude oiloiloiloil inventorieinventoriesinventorieinventoriesss

(DOE, mb, weekly data) 380 370 360 350 340 2006-2010 avg. 330 2010 2011 320
(DOE, mb, weekly data)
380
370
360
350
340
2006-2010 avg.
330
2010
2011
320
310
j
f
m
a
m
j
j
a
s
o
n
d

Chart Sources: Bloomberg, SEB Commodity Research

CurrentCurrentCurrentCurrent globalglobalglobalglobal crudecrudecrudecrude oiloiloiloil demanddemanddemanddemand estimatesestimatesestimatesestimates

 

2011

Revision

2012

Revision

(mb/d)

(kb/d)

(mb/d)

(kb/d)

IEA

89.2

-70

90.5

-20

EIA

88.23

-170

89.62

-220

OPEC

87.81

+/-0

89.01

+/-0

Commodities Monthly

Commodities Monthly

Energy

WTIWTIWTIWTI futuresfuturesfuturesfutures curvecurvecurvecurve

BrentBrentBrentBrent futuresfuturesfuturesfutures curvecurvecurvecurve

(NYMEX, $/b) (ICE, $/b) 100 115 11-09-09 114 99 113 11-10-11 98 11-09-09 112 111
(NYMEX, $/b)
(ICE, $/b)
100
115
11-09-09
114
99
113
11-10-11
98
11-09-09
112
111
11-11-11
97
11-10-11
110
96
109
11-11-11
108
95
107
106
94
105
93
104
92
103
102
91
101
100
90
99
89
98
97
88
96
87
95
94
86
93
85
92
dec-11
mar-12
jun-12
sep-12
dec-12
mar-13
jun-13
sep-13
dec-13
mar-14
jun-14
sep-14
dec-14
mar-15
jun-15
sep-15
dec-15
dec-11
mar-12
jun-12
sep-12
dec-12
mar-13
jun-13
sep-13
dec-13
mar-14
jun-14
sep-14
dec-14
mar-15
jun-15
sep-15
dec-15

GasolineGasolineGasolineGasoline andandandand heatingheatingheatingheating oiloiloiloil pricespricespricesprices

GasolineGasolineGasolineGasoline andandandand distillatedistillatedistillatedistillate inventoriesinventoriesinventoriesinventories

(NYMEX, ¢/gal, front month, weekly closing) (DOE, mb, weekly data) 450 250 NYMEX Gasoline 240
(NYMEX, ¢/gal, front month, weekly closing)
(DOE, mb, weekly data)
450
250
NYMEX Gasoline
240
400
NYMEX Heating oil
230
220
350
210
Gasoline 2006-2010 avg.
300
200
Gasoline 2011
190
250
Distillate fuel oil 2006-2010 avg.
180
Distillate fuel oil 2011
170
200
160
150
150
140
100
130
120
50
110
j
f
m
a
m
j
j
a
s
o
n
d
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011

USUSUSUS naturalnaturalnaturalnatural gasgasgasgas pricespricespricesprices

USUSUSUS naturalnaturalnaturalnatural gasgasgasgas futuresfuturesfuturesfutures curvecurvecurvecurve

(NYMEX, $/MMBtu, front month, weekly closing) (NYMEX, $/MMBtu) 15 5,75 11-09-09 14 5,50 11-10-11 13
(NYMEX, $/MMBtu, front month, weekly closing)
(NYMEX, $/MMBtu)
15
5,75
11-09-09
14
5,50
11-10-11
13
11-11-11
12
5,25
11
5,00
10
9
4,75
8
4,50
7
6
4,25
5
4,00
4
3
3,75
2
3,50
1
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
nov-11
mar-12
jul-12
nov-12
mar-13
jul-13
nov-13
mar-14
jul-14
nov-14
mar-15
jul-15

Chart Sources: Bloomberg, SEB Commodity Research

Commodities Monthly

Commodities Monthly

Nordic power

Moving in to autumn both actual- and expected rainfall have decreased. Meanwhile temperatures have been well above normal resulting in unusually low consumption and a further increase in reservoir levels. Both Norway and Sweden have seasonally very well filled reservoirs. Still, negatively for hydro the very mild weather has resulted in very little snow. While normally at this time of year snow reservoirs would have begun accumulating, currently almost all precipitation even at higher altitudes has been as rain, instead filling water reservoirs. Meanwhile input from corresponding markets (coal, gas and emissions) has been mainly bearish.

On October 1, the new Swedish price areas (Luleå, Sundsvall, Stockholm and Malmö) were introduced to the spot market. We are critical of the new system which we believe will reduce opportunities for participants to

secure a full price area hedge as liquidity and interest in offering them are small. The recent system involving only

a single Swedish price area was problematic enough with

few players willing to trade. Although when temperatures are mild and there are few supply or grid disturbances differences are limited.

Currently, approximately 55% of installed Swedish reactor capacity is running with a further 19 % expected back online this week following annual maintenance. The

last two reactors to return following modifications will be Ringhals 2 and 3, both of which plan to reconnect to the grid in December. Overall therefore, the situation may not be as negative. Swedish nuclear energy production plays a key role, not just in helping determine the power price, but also the transmission system balance. Despite

a fairly normal hydrological balance high prices are again

likely this winter if nuclear availability underperforms when the cold weather begins. The differences between realised spot prices and the nearest monthly forward contracts have gradually disappeared. Since our last report, Q1-12 has remained range bound between EUR 45/MWh and EUR 49/MWh although a serious test of the upside was made when, for two days, the market settled above EUR 50/MWh. Similarly, Cal-12 has traded between EUR 42.50/MWh and EUR 46.50/MWh. Price areas Malmö and Stockholm trades with substantial premiums, EUR 11.25/MWh and EUR 4.85/MWh for Q1- 12, respectively.

Going forward we still recommend Swedish consumers hedge consumption over the winter. Based on the winter months in 2009 and 2010, and uncertainties still surrounding the situation affecting the country’s nuclear power plants such a strategy offers inexpensive insurance at current prices. For the forward curve we hold a short term neutral view, regarding it as reasonable absent new price signals.

NordicNordicNordicNordic powerpowerpowerpower pricepricepriceprice

(Nord Pool, €/MWh, front quarter, weekly closing) 80 75 70 65 60 55 50 45
(Nord Pool, €/MWh, front quarter, weekly closing)
80
75
70
65
60
55
50
45
40
35
30
25
20
2006
2007
2008
2009
2010
2011

ContinentalContinentalContinentalContinental powerpowerpowerpower pricepricepriceprice

(EEX, €/MWh, front quarter, weekly closing) 95 90 85 80 75 70 65 60 55
(EEX, €/MWh, front quarter, weekly closing)
95
90
85
80
75
70
65
60
55
50
45
40
35
30
25
20
2006
2007
2008
2009
2010
2011

EUAEUAEUAEUA pricepricepriceprice

(ECX ICE, €/t, Dec. 12, weekly closing) 35 30 25 20 15 10 5 2006
(ECX ICE, €/t, Dec. 12, weekly closing)
35
30
25
20
15
10
5
2006
2007
2008
2009
2010
2011

Chart Sources: Bloomberg, SEB Commodity Research

Commodities Monthly

Commodities Monthly

Industrial metals

We expect industrial metals prices to remain volatile for the rest of this year and well into 2012 as the European sovereign debt crisis generates waves of risk aversion and Chinese monetary tightening peaks. We still see no reason to believe China’s hard landing scenario will occur as signs now suggest restrictions will be eased soon. Further, economic stability remains a key strategic priority during the country’s change of leadership next year. We also see little price downside for most metals as prices have fallen into line with marginal production costs. With the market apparently discounting some risk of a Chinese hard landing, we anticipate significant upside in industrial metals prices in H2-12 when the worst of the European growth slowdown has passed and a less strict Chinese monetary policy triggers a wave of restocking. While China is likely to remain the decisive factor for metals prices over the next year the extreme risk of a Euro-zone meltdown should not be disregarded, at least until the situation clearly stabilises.

After the Chinese clampdown on the country’s shadow banking system in Q3-11 efforts to tighten monetary conditions appear to have peaked with evidence now suggesting that its stricter policy is proving increasingly effective. Currently, policymakers are even suggesting that monetary policy may soon be eased, mainly for small- and medium sized enterprises, infrastructure projects and public housing. Consequently, we would expect bank lending to increase in Q4. We believe easing will continue going forward, e.g. in the form of reserve requirement ratio reductions for banks, although we recommend careful monitoring of CPI and GDP growth data to determine expectations. However, with measures to tighten monetary policy normally requiring several months to take effect there is therefore still some risk of recurrent bouts of concern over the risk of a hard landing which may in turn exacerbate sector volatility.

The iron ore market slump accelerated in October with no recovery occurring until prices had fallen by around 35%, i.e. to 2010 lows. The slump was driven by several factors. Buyers have been more wary with demand restricted by global slowdown concerns, tight Chinese credit conditions and a softer real estate sector. In addition, as spot prices began to fall vs. contract prices, buyers began refusing delivery of fixed price contracts. As a result, significant volumes needed to be dumped into the spot market exacerbating the existing slump. We regard the current sell-off as excessive and not an indication of further downside in the industrial metal sector. Instead, we expect a rebound as metal buyers return, attracted by low prices followed by restocking demand as Chinese credit conditions ease.

LMELMELMELME indexindexindexindex

(weekly closing) 4700 4500 4300 4100 3900 3700 3500 3300 3100 2900 2700 2500 2300
(weekly closing)
4700
4500
4300
4100
3900
3700
3500
3300
3100
2900
2700
2500
2300
2100
1900
1700
1500
1300
1100
900
2002
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2010
2011

IndustriIndustrialIndustriIndustrialalal metalmetalmetalmetal pricespricespricesprices

(LME, indexed, weekly closing, January 2010 = 100) 200 Copper Nickel 190 Aluminium 180 Zinc
(LME, indexed, weekly closing, January 2010 = 100)
200
Copper
Nickel
190
Aluminium
180
Zinc
170
Lead
160
Tin
150
140
130
120
110
100
90
80
70
60
jan-10
feb-10
mar-10
apr-10
maj-10
jun-10
jul-10
aug-10
sep-10
okt-10
nov-10
dec-10
jan-11
feb-11
mar-11
apr-11
maj-11
jun-11
jul-11
aug-11
sep-11
okt-11
nov-11
LMELMELMELME pricepricepriceprice andandandand inventoryinventoryinventoryinventory changeschangeschangeschanges
LMELMELMELME pricepricepriceprice andandandand inventoryinventoryinventoryinventory changeschangeschangeschanges lastlastlastlast monthmonthmonthmonth
6
4
2
0
-2
-4
-6
-8
-10
-12
-14
-16
Price (%)
Inventories (%)
-18
-20
-22
-24
-26
Aluminium
Copper
Nickel
Zinc
Lead
Tin
Steel

Chart Sources: Bloomberg, SEB Commodity Research

Commodities Monthly

Commodities Monthly

Industrial metals

AluminiumAluminiumAluminiumAluminium

Current aluminium prices are likely to remain well supported due to stable inventories, solid demand and unprofitable Chinese high cost producers.

Chinese marginal production is likely to be cut relatively quickly in response to lower prices, limiting further decreases.

We do not expect aluminium prices to fall below $2000/t unless the risk of a Chinese hard landing increases or the European situation deteriorates significantly.

LME inventories remain high while their Chinese counterparts are stabilizing at low levels.

Estimates suggest 25% of smelters worldwide are unprofitable.

CopperCopperCopperCopper

Copper prices remain well above marginal production costs and are thus sensitive to changes in sentiment.

With marginal production costs becoming material around $6500/t, we regard copper as an obvious medium- to long term buy around the same level.

We forecast average copper prices of $7500/t in Q4-11, increasing to $9500/t in Q4-12.

Copper supply continues to suffer from strikes, bad weather and other production disturbances, resulting in almost no output growth year-on-year.

The third largest mine in the world, Grassberg, is almost at a standstill due to infrastructure disruptions which may last until the end of this year.

We expect the copper market to remain in substantial

deficit in 2012 with a potentially looser market balance in

2013.

NickelNickelNickelNickel

Strong Q3-11 production growth, mainly from conventional sources, is probably a significant factor behind recent price weakness.

With Chinese nickel pig iron (NPI) production under pressure at current prices we see little further downside in nickel, particularly with prices having fallen alongside inventories for most of this year.

Lower prices also risk the further postponement of High Pressure Acid Leach (HPAL) projects, negatively impacting the supply growth outlook.

Most likely, nickel will trade around $20000/t next year with HPAL and NPI supply major uncertainties.

LMELMELMELME aluminiumaluminiumaluminiumaluminium pricepricepriceprice andandandand inventoriesinventoriesinventoriesinventories

(weekly data) 5000000 LME inventoris (t, left axis) 4500000 LME price ($/t, right axis) 4000000
(weekly data)
5000000
LME inventoris (t, left axis)
4500000
LME price ($/t, right axis)
4000000
3500000
3000000
2500000
2000000
1500000
1000000
500000
0
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011

3500

3250

3000

2750

2500

2250

2000

1750

1500

1250

1000

LMELMELMELME coppercoppercoppercopper pricepricepriceprice andandandand inventoriesinventoriesinventoriesinventories

(weekly data) 1000000 LME inventoris (t, left axis) 900000 LME price ($/t, right axis) 800000
(weekly data)
1000000
LME inventoris (t, left axis)
900000
LME price ($/t, right axis)
800000
700000
600000
500000
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11000

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9000

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5000

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1000

LMELMELMELME nickelnickelnickelnickel pricepricepriceprice andandandand inventoriesinventoriesinventoriesinventories

(weekly data) 180000 LME inventoris (t, left axis) 160000 LME price ($/t, right axis) 140000
(weekly data)
180000
LME inventoris (t, left axis)
160000
LME price ($/t, right axis)
140000
120000
100000
80000
60000
40000
20000
0
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011

Chart Sources: Bloomberg, SEB Commodity Research

60000

55000

50000

45000

40000

35000

30000

25000

20000

15000

10000

5000

0

Commodities Monthly

Commodities Monthly

Industrial metals

ZinZincZinZinccc

The zinc market shows positive signs though a bullish stance would be premature.

LME zinc inventories have finally begun to decline after increasing since 2007, the first indication that the market balance is beginning to tighten.

Our main scenario is that the zinc market will tighten further during 2012 and be in balance by the end of the year.

We still regard zinc as a weak industrial metal and mainly regard rallies as good selling opportunities.

SteelSteelSteelSteel

After a weak September iron ore fell sharply to $117/t in October before recovering to $138/t.

European HRC has fallen 6.7% in the last 30 days and 21% since peaking in March.

The decline in the SBB World HRC index since September is accelerating.

LME billets have fallen 10% since the beginning of September but have been largely unaffected by the past month’s iron ore sell-off.

Ferrous prices are likely to continue to grind lower due to continued effects over the next six months of China’s monetary tightening in the past year. Also, OECD composite leading indicators signal below trend growth in Brazil, China, India and the Eurozone.

LMELMELMELME zinczinczinczinc pricepricepriceprice andandandand inventoriesinventoriesinventoriesinventories

(weekly data)

900000 LME inventoris (t, left axis) LME price ($/t, right axis) 800000 700000 600000 500000
900000
LME inventoris (t, left axis)
LME price ($/t, right axis)
800000
700000
600000
500000
400000
300000
200000
100000
0
LMELMELMELME steelsteelsteelsteel billetbilletbilletbillet pricepricepriceprice andandandand inventoriesinventoriesinventoriesinventories
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
(weekly data) 90000 LME inventoris (t, left axis) LME price ($/t, right axis) 80000 70000
(weekly data)
90000
LME inventoris (t, left axis)
LME price ($/t, right axis)
80000
70000
60000
50000
40000
30000
20000
10000
0
jul-08
okt-08
jan-09
apr-09
jul-09
okt-09
jan-10
apr-10
jul-10
okt-10
jan-11
apr-11
jul-11
okt-11

5000

4500

4000

3500

3000

2500

2000

1500

1000

500

1300

1200

1100

1000

900

800

700

600

500

400

300

200

LMELMELMELME leadleadleadlead pricepricepriceprice andandandand inventoriesinventoriesinventoriesinventories

LMELMELMELME tintintintin pricepricepriceprice andandandand inventoriesinventoriesinventoriesinventories

(weekly data) (weekly data) 400000 LME inventoris (t, left axis) 4000 40000 LME inventoris (t,
(weekly data)
(weekly data)
400000
LME inventoris (t, left axis)
4000
40000
LME inventoris (t, left axis)
375000
LME price ($/t, right axis)
350000
3500
35000
LME price ($/t, right axis)
325000
300000
3000
30000
275000
250000
2500
25000
225000
200000
2000
20000
175000
150000
1500
15000
125000
100000
1000
10000
75000
50000
500
5000
25000
0
0
0
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011

Chart Sources: Bloomberg, SEB Commodity Research

36000

33000

30000

27000

24000

21000

18000

15000

12000

9000

6000

3000

Commodities Monthly

Commodities Monthly

Industrial metals

AluminiumAluminiumAluminiumAluminium futuresfuturesfuturesfutures curvecurvecurvecurve

(LME, $/t) 2625 2600 2575 2550 2525 2500 2475 2450 2425 2400 2375 2350 2325
(LME, $/t)
2625
2600
2575
2550
2525
2500
2475
2450
2425
2400
2375
2350
2325
2300
11-09-09
2275
11-10-11
2250
2225
11-11-11
2200
2175
2150
2125
nov-11
feb-12
maj-12
aug-12
nov-12
feb-13
maj-13
aug-13
nov-13
feb-14
maj-14
aug-14
nov-14
feb-15
maj-15
aug-15
nov-15

NickelNickelNickelNickel futuresfuturesfuturesfutures curvecurvecurvecurve

(LME, $/t) 21500 21250 21000 20750 20500 11-09-09 20250 20000 11-10-11 19750 11-11-11 19500 19250
(LME, $/t)
21500
21250
21000
20750
20500
11-09-09
20250
20000
11-10-11
19750
11-11-11
19500
19250
19000
18750
18500
18250
18000
17750
17500
17250
nov-11
feb-12
maj-12
aug-12
nov-12
feb-13
maj-13
aug-13
nov-13
feb-14
maj-14
aug-14
nov-14
feb-15
maj-15
aug-15
nov-15

LeadLeadLeadLead futuresfuturesfuturesfutures curvecurvecurvecurve

(LME, $/t) 2550 2525 2500 2475 2450 2425 2400 2375 11-09-09 2350 2325 11-10-11 2300
(LME, $/t)
2550
2525
2500
2475
2450
2425
2400
2375
11-09-09
2350
2325
11-10-11
2300
2275
11-11-11
2250
2225
2200
2175
2150
2125
2100
2075
2050
2025
2000
1975
1950
nov-11
feb-12
maj-12
aug-12
nov-12
feb-13
maj-13
aug-13
nov-13
feb-14
maj-14
aug-14
nov-14
feb-15
maj-15
aug-15
nov-15

Chart Sources: Bloomberg, SEB Commodity Research

CopperCopperCopperCopper futuresfuturesfuturesfutures curvecurvecurvecurve

(LME, $/t) 8900 8800 8700 8600 8500 8400 11-09-09 8300 8200 11-10-11 8100 11-11-11 8000
(LME, $/t)
8900
8800
8700
8600
8500
8400
11-09-09
8300
8200
11-10-11
8100
11-11-11
8000
7900
7800
7700
7600
7500
7400
7300
7200
7100
nov-11
feb-12
maj-12
aug-12
nov-12
feb-13
maj-13
aug-13
nov-13
feb-14
maj-14
aug-14
nov-14
feb-15
maj-15
aug-15
nov-15

ZincZincZincZinc futuresfuturesfuturesfutures curvecurvecurvecurve

(LME, $/t) 2325 2300 2275 2250 2225 2200 11-09-09 2175 2150 11-10-11 2125 11-11-11 2100
(LME, $/t)
2325
2300
2275
2250
2225
2200
11-09-09
2175
2150
11-10-11
2125
11-11-11
2100
2075
2050
2025
2000
1975
1950
1925
1900
1875
nov-11
feb-12
maj-12
aug-12
nov-12
feb-13
maj-13
aug-13
nov-13
feb-14
maj-14
aug-14
nov-14
feb-15
maj-15
aug-15
nov-15

TinTinTinTin futuresfuturesfuturesfutures curvecurvecurvecurve

(LME, $/t) 23800 23600 23400 23200 11-09-09 23000 11-10-11 22800 11-11-11 22600 22400 22200 22000
(LME, $/t)
23800
23600
23400
23200
11-09-09
23000
11-10-11
22800
11-11-11
22600
22400
22200
22000
21800
21600
nov-11
dec-11
jan-12
feb-12
mar-12
apr-12
maj-12
jun-12
jul-12
aug-12
sep-12
okt-12
nov-12
dec-12
jan-13

Commodities Monthly

Commodities Monthly

Precious metals

The gold market has continued to develop in line with our expectations, returning to its long term price trend following a September correction, driven mainly by the continuing European sovereign debt crisis. We remain bullish concerning prospects for the next 12 months (average price forecasts: Q4-11 $1800/ozt, 2012 $2088/ozt). We still regard the break-up of the Euro-zone as a real possibility, even though the probability is low. In addition, we see further stimulus measures and easier monetary policies ahead, with liquidity injections to avoid a deep OECD recession. Geopolitical risk has also become gold supportive due to the Iranian nuclear issue and possible military action. If strong risk aversion were to impact the gold market, e.g. in a race for liquidity, we would expect it to find solid support around $1550-1600/ozt before quickly rebounding.

The European sovereign debt crisis has entered a new stage with authorities refocusing away from the problematic but relatively manageable Greek crisis to Italy, the Euro-zone’s third largest economy. With Italy too big to bail out the risk that the Euro-zone may break- up completely has increased substantially. It was the slow and disorderly reaction to the Greek crisis that paved the way for the rapid loss of confidence in the ability of Italy’s leaders to handle the situation. While Italian problems are manageable the market is sceptical that politicians will be able to do what is needed, i.e. negotiate and implement a credible austerity package. Meanwhile the ECB is buying Italian bonds in order to hold the situation together and give politicians time to devise the necessary response. However, the central bank has repeatedly stated it will not finance government debt by printing money. So far they have had little choice but to do so and it is difficult to see any attractive alternatives going forward. European money printing and fears the Euro-zone may break-up are both strongly supportive factors for gold. We note also that a disorderly sell-off of Italian gold reserves to raise cash is unlikely. Such transactions are improbable and even if they were necessary would be carried out off market.

With the ECB somewhat unexpectedly cutting interest rates in early November, from 1.50% to 1.25%, and with further potential cuts likely as the economic outlook deteriorates and inflation concerns recede the liquidity conditions best for gold continue to improve. We expect further monetary and fiscal support efforts within the OECD which also help gold. While actual US and Euro- zone inflation data remain on an uptrend, inflation itself decreased in China during October, paving the way for a relaxation of monetary policy. At the same time, we see little likelihood that the country’s appetite for gold will ease anytime soon.

PreciousPreciousPreciousPrecious metalmetalmetalmetal pricespricespricesprices

(COMEX/NYMEX, indexed, weekly closing, January 2010 = 100) 290 Silver 280 Platinum 270 Gold 260
(COMEX/NYMEX, indexed, weekly closing, January 2010 = 100)
290
Silver
280
Platinum
270
Gold
260
Palladium
250
240
230
220
210
200
190
180
170
160
150
140
130
120
110
100
90
80
jan-10
feb-10
mar-10
apr-10
maj-10
jun-10
jul-10
aug-10
sep-10
okt-10
nov-10
dec-10
jan-11
feb-11
mar-11
apr-11
maj-11
jun-11
jul-11
aug-11
sep-11
okt-11
nov-11

GoldGoldGoldGold totototo silversilversilversilver ratioratioratioratio

(front month, weekly closing) 86 82 78 74 70 66 62 58 54 50 46
(front month, weekly closing)
86
82
78
74
70
66
62
58
54
50
46
42
38
34
30
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011

GoldGoldGoldGold andandandand currenciescurrenciescurrenciescurrencies vs.vs.vs.vs. USDUSDUSDUSD

26 24 YTD (%) MoM (%) 22 20 18 16 14 12 10 8 6
26
24
YTD (%)
MoM (%)
22
20
18
16
14
12
10
8
6
4
2
0
-2
GOLD
EUR
JPY
GBP
SEK
RUB
NOK
CHF

Chart Sources: Bloomberg, SEB Commodity Research

Commodities Monthly

Commodities Monthly

Precious metals

GoldGoldGoldGold

Physical gold ETF holdings survived the market consolidation almost unscathed and currently stand at 2313 tonnes, 17 tonnes below the all-time high.

Net speculative long positions at COMEX however remain around two year lows, signalling significant risk of a bullish accumulation in speculative positions going forward.

According to local sources Chinese gold demand is expected to increase by approximately 50% in 2011, supporting our view that rising Asian demand is one of several major fundamental gold market drivers.

Recently, mine supply of gold has come under pressure with the Grassberg copper mine in Indonesia, also accounting for around 5% of global gold mine supply, at a standstill due to an equipment failure which may last until the year-end.

SilverSilverSilverSilver

After falling sharply earlier this year physical silver ETF holdings have recover to 17451 tonnes, 1236 tonnes below their all-time high.

Net long speculative positions in COMEX silver are at their lowest level since early 2009 with, like gold, bullish implications in current market conditions.

Once again, the gold/silver ratio has edged above 50, supporting our interest in silver. Still, we prefer exposure to gold which possesses those properties likely to be most bullish going forward.

US mint silver coin production in October decreased to a relatively normal level for the current year (3,064,000 coins).

PlatinumPlatinumPlatinumPlatinum &&&& PalladiumPalladiumPalladiumPalladium

Palladium holdings are now showing signs of bottoming out after having fallen back since the beginning of the year while platinum holdings remain stable.

While net long speculative positions in platinum are still relatively high, those for palladium remain depressed.

While Thai flooding hurt auto production the general demand situation from this key source is positive despite the adverse effect of Chinese tightening.

Platinum remains firm vs. palladium on supportive long term supply fundamentals.

Russian state inventories remain the decisive factor for the palladium market. Sharply lower supply from this source is a risk in 2012 and 2013.

The fact that the palladium market has managed to absorb EFT outflows suggests demand is sound.

GoldGoldGoldGold pricepricepriceprice

(COMEX, $/ozt, front month, weekly closing) 2000 1900 1800 1700 1600 1500 1400 1300 1200
(COMEX, $/ozt, front month, weekly closing)
2000
1900
1800
1700
1600
1500
1400
1300
1200
1100
1000
900
800
700
600
500
400
300
200
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011

SilverSilverSilverSilver pricepricepriceprice

(COMEX, $/ozt, front month, weekly closing) 50 48 46 44 42 40 38 36 34
(COMEX, $/ozt, front month, weekly closing)
50
48
46
44
42
40
38
36
34
32
30
28
26
24
22
20
18
16
14
12
10
8
6
4
2
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011

PlatinumPlatinumPlatinumPlatinum andandandand palladiumpalladiumpalladiumpalladium pricespricespricesprices

(NYMEX, $/ozt, front month, weekly closing) 1100 Palladium (left axis) 1000 Platinum (right axis) 900
(NYMEX, $/ozt, front month, weekly closing)
1100
Palladium (left axis)
1000
Platinum (right axis)
900
800
700
600
500
400
300
200
100
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011

Chart Sources: Bloomberg, SEB Commodity Research

2300

2050

1800

1550

1300

1050

800

550

300

Commodities Monthly

Commodities Monthly

Precious metals

GoldGoldGoldGold futuresfuturesfuturesfutures curvecurvecurvecurve

(COMEX, $/ozt) 2025 11-09-09 2000 11-10-11 1975 11-11-11 1950 1925 1900 1875 1850 1825 1800
(COMEX, $/ozt)
2025
11-09-09
2000
11-10-11
1975
11-11-11
1950
1925
1900
1875
1850
1825
1800
1775
1750
1725
1700
1675
1650
dec-11
mar-12
jun-12
sep-12
dec-12
mar-13
jun-13
sep-13
dec-13
mar-14
jun-14
sep-14
dec-14
mar-15
jun-15
sep-15
dec-15
mar-16
jun-16
sep-16
dec-16
mar-17
jun-17

PalladiumPalladiumPalladiumPalladium futuresfuturesfuturesfutures curvecurvecurvecurve

SilvSilverSilvSilvererer futuresfuturesfuturesfutures curvecurvecurvecurve

(COMEX, $/ozt) 42 41 40 39 11-09-09 38 11-10-11 37 11-11-11 36 35 34 33
(COMEX, $/ozt)
42
41
40
39
11-09-09
38
11-10-11
37
11-11-11
36
35
34
33
32
31
30
dec-11
mar-12
jun-12
sep-12
dec-12
mar-13
jun-13
sep-13
dec-13
mar-14
jun-14
sep-14
dec-14
mar-15
jun-15
sep-15
dec-15

PlatinumPlatinumPlatinumPlatinum futuresfuturesfuturesfutures curvecurvecurvecurve

(NYMEX, $/ozt) (NYMEX, $/ozt) 750 1860 740 1840 1820 730 1800 720 11-09-09 11-09-09 1780
(NYMEX, $/ozt)
(NYMEX, $/ozt)
750
1860
740
1840
1820
730
1800
720
11-09-09
11-09-09
1780
710
1760
11-10-11
700
11-10-11
1740
690
11-11-11
11-11-11
1720
680
1700
670
1680
660
1660
650
1640
1620
640
1600
630
1580
620
1560
610
1540
600
1520
590
1500
dec-11
mar-12
jun-12
sep-12
dec-12
jan-12
apr-12
jul-12
okt-12
jan-13

PhysicalPhysicalPhysicalPhysical ssilverssilverilverilver andandandand goldgoldgoldgold ETPETPETPETP holdingsholdingsholdingsholdings

(weekly data, tonnes) 2400 2300 2200 2100 Silver holdings / 10 2000 Gold holdings 1900
(weekly data, tonnes)
2400
2300
2200
2100
Silver holdings / 10
2000
Gold holdings
1900
1800
1700
1600
1500
1400
jan-10
feb-10
mar-10
apr-10
maj-10
jun-10
jul-10
aug-10
sep-10
okt-10
nov-10
dec-10
jan-11
feb-11
mar-11
apr-11
maj-11
jun-11
jul-11
aug-11
sep-11
okt-11
nov-11

Chart Sources: Bloomberg, SEB Commodity Research

PhysicalPhysicalPhysicalPhysical ppalladiumppalladiumalladiumalladium andandandand platinumplatinumplatinumplatinum ETPETPETPETP holdingsholdingsholdingsholdings

(weekly data, tonnes) 75 70 65 60 55 50 Palladium 45 Platinum 40 35 30
(weekly data, tonnes)
75
70
65
60
55
50
Palladium
45
Platinum
40
35
30
25
20
jan-10
feb-10
mar-10
apr-10
maj-10
jun-10
jul-10
aug-10
sep-10
okt-10
nov-10
dec-10
jan-11
feb-11
mar-11
apr-11
maj-11
jun-11
jul-11
aug-11
sep-11
okt-11
nov-11

Commodities Monthly

Commodities Monthly

Agriculture

The grain market rebound following the general commodity market slump in September has been mitigated by pressure from the northern hemisphere harvest. We do not expect grain prices or agricultural commodity prices in general, to rebound to highs hit earlier this year. Instead we forecast a mainly bearish development over the next 12 months. However, during the next six months we see several factors which could drive grain prices higher once again or at least support them at an elevated level. It is therefore premature to sound the “all clear” signal in the agricultural sector. The combination of low inventories and high weather- related risks are of primary concern. As in most other commodity markets, high volatility should also be expected in the agricultural sector due to the potential impact of both the European sovereign debt crisis and the impact of tight Chinese credit conditions.

Current factors supporting the agricultural commodity market include high energy prices, US ethanol producers moving quickly to take advantage of the blending subsidy before it ends by new year, elevated US cattle prices, strong Chinese feed demand and Thai flooding sharply reducing rice production estimates. Adverse weather due to a stronger La Nina effect is the most obvious upside risk for the rest of this year and early next. An oil price rally, possibly induced by the Iranian nuclear issue or European product market tightness, would also send agricultural prices higher.

For obvious reasons meteorological conditions are generally the main driver of agricultural commodity prices. Particularly in recent years the weather has been in focus due to the El Niño and La Niña weather anomalies, both of which have inflicted heavy losses. Forecasts still suggest another La Niña which could peak between November and January. Both computer models and historical precedent suggest a weaker recurrence than in 2010-2011. If La Niña weakens in H1-12 as forecast, growing conditions will probably begin to normalize, inventory level expectations will be revised higher and agricultural prices could begin moving sharply lower. However, going forward we should expect above average rainfall in Southeast Asia and Australia, which could be beneficial unless it causes flooding or interferes with harvests, such as the Australian. In addition, there is a risk that drought conditions in the southern US states could continue with a potential adverse effect on wheat planting. Another possible risk is drought in South America, which could impact corn and soybean production.

GrainsGrainsGrainsGrains pricespricespricesprices

(CBOT, indexed, weekly closing, January 2010 = 100) 190 Wheat 180 Soybeans Corn 170 160
(CBOT, indexed, weekly closing, January 2010 = 100)
190
Wheat
180
Soybeans
Corn
170
160
150
140
130
120
110
100
90
80
70
jan-10
feb-10
mar-10
apr-10
maj-10
jun-10
jul-10
aug-10
sep-10
okt-10
nov-10
dec-10
jan-11
feb-11
mar-11
apr-11
maj-11
jun-11
jul-11
aug-11
sep-11
okt-11
nov-11

YearYearYearYear endendendend graingraingraingrain inventoriesinventoriesinventoriesinventories (days(days(days(days ofofofof supply)supply)supply)supply)

(USDA, yearly data updated monthly) 135 Wheat 125 Soybeans Corn 115 105 95 85 75
(USDA, yearly data updated monthly)
135
Wheat
125
Soybeans
Corn
115
105
95
85
75
65
55
45
00/01
01/02
02/03
03/04
04/05
05/06
06/07
07/08
08/09
09/10
10/11
11/12

Chart Sources: Bloomberg, USDA, SEB Commodity Research

Commodities Monthly

Commodities Monthly

Agriculture

CornCornCornCorn

The November World Agricultural Supply and Demand Estimates (WASDE) published by the USDA revealed a 1.10 mt downward revision of global 2011/2012 production to 858.99 mt and a 1.62 mt downgrade in ending stocks to 121.57 mt.

While weather conditions have been mixed the US harvest is well ahead of its five year average and almost completed.

Although China appears likely to post record crop demand growth continues to outstrip increases in supply due to strong demand for feed caused by rapidly rising meat consumption. Naturally this has bullish implications for import demand in coming years.

Corn is likely to be supported by strong ethanol demand for the rest of this year while substitution with low quality wheat could limit upside potential.

WheatWheatWheatWheat

Global 2011/2012 wheat production estimates increased 2.1 mt to 683.30 mt according to the WASDE while ending stocks only rose 0.23 mt to 202.60 mt due to higher consumption estimates.

US winter wheat planting is nearing completion despite dry conditions in southern growing regions and consequent poor crop development.

The market is currently refocusing on the Australian harvest which is expected to be highly satisfactory. The strengthening La Niña could however interfere with the harvest.

Plentiful lower quality wheat supplies, particularly from the Black Sea region, are easing pressure in grains while the tight corn supply is having the opposite effect.

CornCornCornCorn pricepricepriceprice

(CBOT, ¢/bu, front month, weekly closing) 800 700 600 500 400 300 200 100 2002
(CBOT, ¢/bu, front month, weekly closing)
800
700
600
500
400
300
200
100
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011

WheatWheatWheatWheat pricepricepriceprice

(CBOT, ¢/bu, front month, weekly closing) 1200 1100 1000 900 800 700 600 500 400
(CBOT, ¢/bu, front month, weekly closing)
1200
1100
1000
900
800
700
600
500
400
300
200
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011

SoybeansSoybeansSoybeansSoybeans

Global 2011/2012 soybean production estimates increased slightly, by 0.31 mt to 258.91 mt according to the WASDE while ending stocks only rose 0.55 mt to 63.56 mt.

While weather conditions have been mixed the US harvest is ahead of its five year average and close to completion.

As the northern hemisphere harvest comes to an end the market is refocusing on South American growing conditions and potential La Niña-related drought. The harvest begins in Q2-12.

The entire soybean complex has moved lower in recent months, with relatively stable ratios between beans, meal and oil.

SoybeanSoybeanSoybeanSoybean prpricprpriciceiceee

(CBOT, ¢/bu, front month, weekly closing) 1800 1600 1400 1200 1000 800 600 400 2002
(CBOT, ¢/bu, front month, weekly closing)
1800
1600
1400
1200
1000
800
600
400
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011

Chart Sources: Bloomberg, SEB Commodity Research

Commodities Monthly

Commodities Monthly

Agriculture

CornCornCornCorn futuresfuturesfuturesfutures curvecurvecurvecurve

(CBOT, ¢/bu) 775 750 11-09-09 11-10-11 725 11-11-11 700 675 650 625 600 575 550
(CBOT, ¢/bu)
775
750
11-09-09
11-10-11
725
11-11-11
700
675
650
625
600
575
550
dec-11
mar-12
jun-12
sep-12
dec-12
mar-13
jun-13
sep-13
dec-13
mar-14
jun-14
sep-14
dec-14

SoybeanSoybeanSoybeanSoybean futuresfuturesfuturesfutures curvecurvecurvecurve

WheatWheatWheatWheat futuresfuturesfuturesfutures curvecurvecurvecurve

(CBOT, ¢/bu) 850 825 800 775 750 725 700 11-09-09 675 11-10-11 650 11-11-11 625
(CBOT, ¢/bu)
850
825
800
775
750
725
700
11-09-09
675
11-10-11
650
11-11-11
625
600
dec-11
mar-12
jun-12
sep-12
dec-12
mar-13
jun-13
sep-13

SugarSugarSugarSugar

(CBOT, ¢/bu) (NYBOT, ¢/lb) 1450 40 1425 35 1400 1375 30 11-09-09 1350 11-10-11 25
(CBOT, ¢/bu)
(NYBOT, ¢/lb)
1450
40
1425
35
1400
1375
30
11-09-09
1350
11-10-11
25
1325
11-11-11
1300
20
1275
15
1250
1225
10
1200
1175
5
1150
0
CottonCottonCottonCotton
CocoaCocoaCocoaCocoa
(NYBOT, ¢/lb)
(NYBOT, $/t)
220
3800
3600
200
3400
180
3200
160
3000
2800
140
2600
120
2400
100
2200
80
2000
1800
60
1600
40
1400
20
1200
2002
nov-11
2003
2004
feb-12
maj-12
aug-12
2005
nov-12
2006
2007
feb-13
maj-13
aug-13
2008
nov-13
2009
2010
feb-14
maj-14
aug-14
2011
2002
nov-14
2002
2003
2003
2004
2004
2005
2005
2006
2006
2007
2007
2008
2008
2009
2009
2010
2010
2011
2011

Chart Sources: Bloomberg, SEB Commodity Research

Commodities Monthly

Commodities Monthly

Commodity related economic indicators

EUROZONE

Current

Date

Previous

Date

Next

Industrial production (%, YoY)

2,2

2011-09-30

6,0

2011-08-31

2011-11-14

Industrial production (%, MoM)

-2,0

2011-09-30

1,4

2011-08-31

2011-11-14

Capacity utilization (%, sa)

79,7

2011-12-31

80,8

2011-09-30

 

Manufacturing PMI

47,1

2011-10-31

48,5

2011-09-30

2011-11-23

Real GDP (%, YoY)

1,6

2011-06-30

2,4

2011-03-31

2011-11-15

Real GDP (%, QoQ, sa)

0,2

2011-06-30

0,8

2011-03-31

2011-11-15

CPI (%, YoY)

3,0

2011-09-30

2,5

2011-08-31

2011-11-16

CPI (%, MoM)

0,8

2011-09-30

0,2

2011-08-31

2011-11-16

Consumer confidence

-19,9

2011-10-31

-19,1

2011-09-30

2011-11-22

USA

         

Industrial production (%, YoY)

3,2

2011-09-30

3,3

2011-08-31

 

Industrial production (%, MoM)

0,2

2011-09-30

0,1

2011-08-31

2011-11-16

Capacity utilization (%)

77,4

2011-09-30

77,3

2011-08-31

2011-11-16

Manufacturing PMI

50,8

2011-10-31

51,6

2011-09-30

2011-12-01

Real GDP (%, YoY)

1,6

2011-09-30

1,6

2011-06-30

 

Real GDP (%, QoQ, saar)

2,5

2011-09-30

1,3

2011-06-30

2011-11-22

CPI (%, MoM)

3,9

2011-09-30

3,8

2011-08-31

2011-11-16

CPI (%, MoM, sa)

0,3

2011-09-30

0,4

2011-08-31

2011-11-16

OECD Composite Leading Indicator

103,4

2011-03-31

103,1

2011-02-28

 

Consumer confidence (Michigan)

64,2

2011-11-30

60,9

2011-10-31

2011-11-23

Nonfarm payrolls (net change, sa, ‘000)

80

2011-10-31

158

2011-09-30

2011-12-02

JAPAN

         

Industrial production (%, YoY, nsa)

-3,3

2011-09-30

0,4

2011-08-31

2011-11-14

Industrial production (%, MoM, sa)

-3,3

2011-09-30

0,6

2011-08-31

2011-11-14

Capacity utilization (%, sa)

85,8

2011-09-30

89,0

2011-08-31

 

Manufacturing PMI

50,6

2011-10-31

49,3

2011-09-30

2011-11-30

Real GDP (%, YoY)

0,0

2011-09-30

-1,1

2011-06-30

 

Real GDP (%, QoQ, sa)

1,5

2011-09-30

-0,3

2011-06-30

2011-11-14

CPI (%, YoY)

-0,5

2011-10-31

-0,3

2011-09-30

2011-11-25

CPI (%, MoM)

0,0

2011-09-30

0,2

2011-08-31

 

OECD Composite Leading Indicator

104,9

2011-02-28

104,2

2011-01-31

 

Consumer confidence

38,5

2011-10-31

38,5

2011-09-30

 

CHINA

         

Industrial production (%, YoY)

13,2

2011-10-31

13,8

2011-09-30

2011-12-09

Manufacturing PMI

50,4

2011-10-31

51,2

2011-09-30

2011-12-01

Real GDP (%, YoY)

9,1

2011-09-30

9,5

2011-06-30

 

CPI (%, YoY)

5,5

2011-10-31

6,1

2011-09-30

2011-12-09

OECD Composite Leading Indicator

102,3

2011-03-31

102,1

2011-02-28

 

Consumer confidence

103,4

2011-09-30

110,4

2011-08-31

 

Bank lending (%, YoY)

15,8

2011-10-31

15,9

2011-09-30

 

Fixed asset investment (%, YoY)

25,6

2011-06-30

25,0

2011-03-31

 

OTHER

         

OECD Area Comp. Leading Indicator

103,2

2011-03-31

103,0

2011-02-28

 

Global manufacturing PMI

50,0

2011-10-31

49,8

2011-09-30

 

Sources: Bloomberg, SEB Commodity Research

Commodities Monthly

Commodities Monthly

Performance

 

Closing

YTD

1 m

1 q

1 y

5 y

last week

(%)

(%)

(%)

(%)

(%)

UBS Bloomberg CMCI Index (TR)

1309,54

-3,9

2,0

-4,9

0,7

24,7

UBS Bloomberg CMCI Index (ER)

1231,73

-3,9

1,9

-5,0

0,6

16,0

UBS Bloomberg CMCI Index (PI)

1567,25

-3,3

2,2

-4,5

1,4

49,1

UBS B. CMCI Energy Index (PI)

1544,77

7,2

6,3

3,6

12,8

40,1

UBS B. CMCI Industrial Metals Index (PI)

1070,94

-17,0

1,7

-12,4

-14,2

-2,2

UBS B. CMCI Precious Metals Index (PI)

2672,76

23,6

7,9

0,4

26,9

172,8

UBS B. CMCI Agriculture Index (PI)

1771,28

-9,9

-3,1

-9,1

-5,2

80,1

Baltic Dry Index

1835,00

2,2

-12,9

43,7

-22,4

-56,4

Crude Oil (NYMEX, WTI, $/b)

98,99

8,3

15,4

15,5

12,7

66,1

Crude Oil (ICE, Brent, $/b)

114,16

20,5

3,1

5,7

28,5

91,2

Aluminum (LME, $/t)

2162,00

-12,5

-3,1

-10,4

-12,0

-19,8

Copper (LME, $/t)

7639,00

-20,4

4,8

-14,0

-13,5

10,4

Nickel (LME, $/t)

18075,00

-27,0

-4,2

-16,3

-24,7

-38,5

Zinc (LME, $/t)

1920,00

-21,8

0,5

-12,2

-24,5

-55,3

Steel (LME, Mediterranean, $/t)

530,00

-7,0

-3,6

-7,0

2,4

N/A

Gold (COMEX, $/ozt)

1788,10

25,8

7,7

2,2

27,4

183,8

Corn (CBOT, ¢/bu)

638,50

1,5

-1,0

-9,1

13,2

86,0

Wheat (CBOT, ¢/bu)

616,75

-22,3

-6,7

-12,0

-12,4

28,4

Soybeans (CBOT, ¢/bu)

1166,00

-16,3

-5,6

-12,6

-12,3

79,0

Sources: Bloomberg, SEB Commodity Research

Major upcoming commodity events

 

Date

Source

Department of Energy, US inventory data

Wednesdays, 16:30 CET

www.eia.doe.gov

American Petroleum Institute, US inventory data

Tuesdays, 22:30 CET

www.api.org

CFTC, Commitment of Traders

Fridays, 21:30 CET

www.cftc.gov

US Department of Agriculture, Crop Progress

Mondays, 22.00 CET

www.usda.gov

International Energy Agency, Oil Market Report

December 13

www.oilmarketreport.com

OPEC, Oil Market Report

December 13

www.opec.org

Department of Energy, Short Term Energy Outlook

December 6

www.eia.doe.gov

US Department of Agriculture, WASDE

December 9

www.usda.gov

International Grains Council, Grain Market Report

November 24

www.igc.org.uk

OPEC ordinary meeting, Vienna, Austria

December 14

www.opec.org

Sources: Bloomberg, SEB Commodity Research

Contact list

COMMODITIES

Position

E-mail

Phone

Mobile

Torbjörn Iwarson

Global Head of Commodities

torbjorn.iwarson@seb.se

+46 8 506 234 01

 

RESEARCH

Bjarne Schieldrop

Chief analyst

bjarne.schieldrop@seb.no

+47 22 82 72 53

+47 92 48 92 30

Filip Petersson

Strategist

filip.petersson@seb.se

+46 8 506 230 47

+46 70 996 08 84

SALES SWEDEN

Pär Melander

Corporate

par.melander@seb.se

+46 8 506 234 75

+46 70 714 90 79

Karin Almgren

Institutional

karin.almgren@seb.se

+46 8 506 230 51

+46 73 642 31 76

SALES NORWAY

Maximilian Brodin

Corporate/Institutional

maximilian.brodin@seb.no

+47 22 82 71 62

+47 92 45 67 27

SALES FINLAND

Jussi Lepistö

Corporate/Institutional

Jussi.lepisto@seb.fi

+358 9 616 285 21

+358 40 844 187 7

SALES DENMARK

Peter Lauridsen

Corporate/Institutional

peter.lauridsen@seb.dk

+45 331 777 34

+45 616 211 59

TRADING

Niclas Egmar

Corporate/Institutional

niclas.egmar@seb.se

+46 8 506 234 55

+46 70-618 560 4

Commodities Monthly

Commodities Monthly

DISCLAIMER & CONFIDENTIALITY NOTICE

The information in this document has been compiled by SEB Merchant Banking, a division within Skandinaviska Enskilda Banken AB (publ) (“SEB”).

Opinions contained in this report represent the bank’s present opinion only and are subject to change without notice. All information contained in this report has been compiled in good faith from sources believed to be reliable. However, no representation or warranty, expressed or implied, is made with respect to the completeness or accuracy of its contents and the information is not to be relied upon as authoritative. Anyone considering taking actions based upon the content of this document is urged to base his or her investment decisions upon such investigations as he or she deems necessary. This document is being provided as information only, and no specific actions are being solicited as a result of it; to the extent permitted by law, no liability whatsoever is accepted for any direct or consequential loss arising from use of this document or its contents.

SEB is a public company incorporated in Stockholm, Sweden, with limited liability. It is a participant at major Nordic and other European Regulated Markets and Multilateral Trading Facilities (as well as some non-European equivalent markets) for trading in financial instruments, such as markets operated by NASDAQ OMX, NYSE Euronext, London Stock Exchange, Deutsche Börse, Swiss Exchanges, Turquoise and Chi-X. SEB is authorized and regulated by Finansinspektionen in Sweden; it is authorized and subject to limited regulation by the Financial Services Authority for the conduct of designated investment business in the UK, and is subject to the provisions of relevant regulators in all other jurisdictions where SEB conducts operations.

SEB Merchant Banking. All rights reserved.

SEB Commodity Research

Bjarne Schieldrop, Chief Commodity Analyst bjarne.schieldrop@seb.no +47 9248 9230

Filip Petersson, Commodity Strategist filip.petersson@seb.se +46 8 506 230 47

www.seb.se/mb