Commodities Monthly

Soft Chinese growth helps metals supply catch-up

23 OCTOBER 2012

Commodities Monthly

Soft Chinese growth helps metals supply catch-up

GENERAL

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

UBS Bloomberg CMCI Sector Indices

(price indices, weekly closing, January 2010 = 100)
10 8 10 7 10 6 10 5 10 4 10 3 10 2 10 1 10 0 9 0 ja -1 n 0 fe -1 b 0 m r-1 a 0 a r-1 p 0 m j-1 a 0 ju -1 n 0 ju 0 l-1 ag 0 u -1 se -1 p 0 o 0 kt-1 n v-1 o 0 d c-1 e 0 ja -1 n 1 fe -1 b 1 m r-1 a 1 a r-1 p 1 m j-1 a 1 ju -1 n 1 ju 1 l-1 ag 1 u -1 se -1 p 1 o 1 kt-1 n v-1 o 1 d c-1 e 1 ja -1 n 2 fe -1 b 2 m r-1 a 2 a r-1 p 2 m j-1 a 2 ju -1 n 2 ju 2 l-1 ag 2 u -1 se -1 p 2 o 2 kt-1
YT (% D ) M (% /M )

Central bank monetary stimulus pledges are becoming less effective while both the World Bank and IMF have downgraded their global growth estimates and investors are becoming increasingly concerned regarding the impending US fiscal cliff. Signs of US economic improvements are being offset by the persistent grim Eurozone outlook. While the slowing Chinese economy showed tentative signs of stabilization in September, neither a strong rebound nor panic driven investment stimulus measures (such as occurred back in 2008-10) are likely.

In u d stria M ta l e ls Pre u M ta cio s e ls En y erg Ag ltu ricu re

ENERGY

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

Further downward revisions of global growth prospects and the solid supply growth outlook are particularly negative for long-term crude oil price projections. We lower our H2-13 and FY-14 average price forecasts $5/b to $110/b while maintaining our Q4-12 estimate at $110/b and our H1-13 expectation at $105/b. In the short- to medium-term the crude oil market is mainly supported by geopolitical tension and tight middle distillate markets. OPEC policy and producer incentive prices also provide a firm foundation.

8 0

Sector performance
(MSCI World, UBS Bloomberg CMCI price indices)
1 2 1 0 8 6 4 2 0 -2 -4 C m o itie o md s Ag ltu ricu re In u d stria l m ta e ls En rg e y Pre u cio s m ta e ls Eq itie u s -6

INDUSTRIAL METALS

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

Most metals are trading close to or below their marginal production costs as supply catches up with softer demand growth. The super cycle is over for high cost miners was CRUs message to its LME week audience. Small- and medium-sized mining companies may decrease investments as a result of current high capital costs and financing problems.

PRECIOUS METALS

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

Gold has seriously disappointed over the last month. Despite near ideal conditions prices have failed to climb above $1800/ozt during the QE3 driven rally. In the short- to medium-term we retain our main bullish scenario despite increased downside risks. Gold is unlikely to hold ground in a risk-off environment. However, we raise our H2-13 average gold price forecast by $50/ozt to $1700/ozt due to the open ended QE3 support on offer and weaker global growth forecasts.

Winners & Losers over the last month

(%)
3 2 2 8 2 4 2 0 1 6 1 2 8 4 0 -4 -8 Zinc Soybe s an A in m lum iu C offe (Ar.) P allad m iu Silver L d ea G so a line (U S) N icke l C pp o er G old W TI C ocoa (U S) Platinu m W ea h t Tin C rn o P er (C nt.) ow o Bre nt C n otto Ste b ts el ille H at. oil (U e S) C 2 (EU O A) Sgr ua P er (N rdic) ow o N ga (U at. s S) -1 2

AGRICULTURE

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

As expected, grain prices have begun to fall from last months exceptionally high levels with downside risks dominant in the short-, medium- and long term. However, we do not anticipate an imminent price collapse given current low inventories, adverse local weather and risks of hoarding and protectionism. We expect persistent high short- to medium-term supply concerns potentially triggering temporary rallies in individual grain prices.

Chart Sources: Bloomberg, SEB Commodity Research

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

Commodities Monthly

General
The US economic surprise index continues to improve as do housing statistics and car sales. However, the countrys equity rally has stalled since September when it benefited from central bank stimulus pledges made during August. The US fiscal cliff (including possible budget cuts and tax increases) is of major concern for next years growth outlook, potentially depressing market sentiment going forward. While European investors are less pessimistic following announcements of ECB support, the regions macroeconomic situation remains grim with OECD Leading Composite Indices suggesting a continued deterioration. We therefore see little reason to expect improved European demand for imports from China, the worlds biggest commodity consumer. Despite tentative signs suggesting its growth may be bottoming, there is considerable evidence highlighting the countrys current very poor growth environment. While Chinas Q3-12 GDP growth y/y slowed even further to 7.4%, it improved slightly q/q from 2.0% to 2.2%. Commenting on the data release, Premier Wen Jiabao stated that the worst was probably over for the Chinese economy. Still, we do not expect an immediate strong rebound, a view corroborated by the countrys National Bureau of Statistics which forecast only a modest recovery in Q4-12, similar to September. Last months improvement in Chinese retail sales, exports and industrial production also supported the view that the slowing Chinese economy is beginning to bottom. Even if new Yuan bank lending in September was disappointing at CNY 623bn, total social financing was higher than expected at CNY 1.65tn, up from CNY 1.24tn in August. The governments recently announced total social financing measure comprises several initiatives including bond issuance as well as bank, trust and FX loans. Tentative stabilization of the Chinese economy further reduces the likelihood of a sudden, massive investmentled stimulus package from the government. Still, many metrics confirm that Chinas economy is very weak. While PMI manufacturing data published by HSBC Markit improved slightly in September to 47.9, it still clearly suggests lower manufacturing activity. At the same time Chinese power production fell 0.3% y/y while consumption by heavy industry fell 0.1% y/y. Moreover, Chinese railway freight traffic volume also continued to fall in August, decreasing 6.8% y/y to near 2010 levels.

UBS Bloomberg CMCI

(price index, weekly closing)

10 80 10 70 10 60 10 50 10 40 10 30 10 20 10 10 10 00 90 0 80 0 70 0 60 0 50 0 40 0 30 0 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 21 00 21 01
21 01

JPM global manufacturing PMI

(monthly, PMIs >50 expansive)
6 5 6 0 5 5 5 0 4 5 4 0 3 5 3 0 20 05 20 06 20 07 20 08 20 09 21 00 21 01 21 02
21 02

OECD composite leading indicators

(monthly, 100 corresponds to long term trend growth in industrial production)
14 0 13 0 12 0 11 0 10 0 9 9 9 8 9 7 9 6 9 5 9 4 9 3 20 05 20 06 20 07 20 08 20 09 21 00 C in h a Eu zo e ro n O C E D U A S R fe n e re ce

Chart Sources: Bloomberg, SEB Commodity Research

21 02

Commodities Monthly

Crude oil
Despite high spot prices, future price expectations are under increasingly bearish pressure. Firstly, global growth expectations continue to deteriorate with considerable uncertainty still affecting particularly Europe and China. Further, supply remains stronger than anticipated, fuelling expectations of even higher increases in supply, and implying a less tight market balance in coming years, especially if growth remains lackluster. High oil prices during times of crisis also boost efforts to improve energy efficiency. However, given major geopolitical supply risks, tight oil product markets, high incentive prices necessary to stimulate sufficient investments, and the need for producer countries to defend prices to balance budgets, the crude oil price appears unlikely to collapse unless growth forecasts are substantially downgraded. As emphasised earlier, our average Brent crude price forecasts regarded downside risk as dominant. While maintaining our Q4-12 $110/b and H1-13 $105/b average price forecasts, we now choose to revise our H2-13 and FY-14 estimates from $115/b to $110/b. While the crude oil market balance remains loose the middle distillate situation is different. Globally, inventories are low. Indeed, the situation could become very tight once winter fuel restocking accelerates in Europe, predictably the tightest market given its large diesel car fleet. An even more difficult situation could arise if northern hemisphere winter temperatures become abnormally low. Even under normal circumstances refineries are unable to produce enough middle distillates during the heating season, making inventories a key factor in balancing the market. The longterm structural balance for the middle distillate market is also worrying as it leads demand growth. Meanwhile, the likelihood of US SPR releases occurring has apparently diminished as politicians realize high product prices are due to correspondingly tight markets, and that releasing crude oil stocks would be an inefficient way of driving them down (unlike their European counterparts, US SPRs comprise almost exclusively crude oil). The border conflict between Turkey and Syria remains supportive for the crude oil market. A substantial escalation, however, is still unlikely given current Turkish public opinion that bad relations with Syria are unfortunate and the fact that Syria has little interest in committing military resources to tasks other than ending its civil war. Primarily, Turkish rhetoric should be regarded as a deterrent, unless NATO considers using Turkey as a pretext to launch air strikes to support Syrian rebels. We also note rising geopolitical tension in Lebanon and Libya. Meanwhile, Iran appears increasingly willing to return to the negotiation table as the deterioration in its domestic living standards continues to accelerate, with potentially bearish price implications if correct. The big question remains: Is there a compromise possible that could satisfy global opinion while enabling the Iranian leadership to avoid a public loss of face.

Crude oil price

(NYMEX/ICE, $/b, front month, weekly closing)
10 5 10 4 10 3 10 2 10 1 10 0 9 0 8 0 7 0 6 0 5 0 4 0 3 0 2 0 1 0 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 21 00 21 01
o n

N EXW I YM T IC Bre t E n

US crude oil inventories

(DOE, mb, weekly data)
3 90 3 85 3 80 3 75 3 70 3 65 3 60 3 55 3 50 3 45 3 40 3 35 3 30 3 25 3 20 3 15 j f m a m j j a s d 2 7-2 1 av . 00 01 g 2 1 01 2 2 01

Chart Sources: Bloomberg, SEB Commodity Research

Current global crude oil demand estimates

2012 (mb/d) 89.7 89.17 88.81 Revision (kb/d) -100 +170 +70 2013 (mb/d) 90.5 90.60 89.60 Revision (kb/d) -100 +80 +40

IEA EIA OPEC

SEB average Brent crude oil price forecast

($/b) 2012 2013 2014 Q1 105 Q2 105 Q3 110 Q4 110 110 Full Year 112 107.5 110

21 02

Commodities Monthly

Energy
WTI futures curve
(NYMEX, $/b)
9 9 9 8 9 7 9 6 9 5 9 4 9 3 9 2 9 1 9 0 8 9 8 8 8 7 8 6 8 5 1 -0 -1 2 8 7 1 -0 -1 2 9 9 1 -1 -1 2 0 9

Brent futures curve

(ICE, $/b)
14 1 13 1 12 1 11 1 10 1 19 0 18 0 17 0 16 0 15 0 14 0 13 0 12 0 11 0 10 0 9 9 9 8 9 7 9 6 9 5 9 4 9 3 9 2 ju -1 n 3 se -1 p 3 ju -1 n 4 se -1 p 4 ju -1 n 5 se -1 p 5 d c-1 e 2 d c-1 e 3 d c-1 e 4 m r-1 a 3 m r-1 a 4 m r-1 a 5 1 -0 -1 2 8 7 1 -0 -1 2 9 9 1 -1 -1 2 0 9

n v-1 o 2

n v-1 o 3

n v-1 o 4

n v-1 o 5

n v-1 o 6

fe -1 b 3

fe -1 b 4

fe -1 b 5

fe -1 b 6

ju -1 n 6

se -1 p 6

d c-1 e 5

Gasoline and heating oil prices

(NYMEX, /gal, front month, weekly closing)
40 5 40 0 30 5 30 0 20 5 20 0 10 5 10 0 5 0 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 21 00 21 01 21 02 N M XG so e Y E a lin N M XH a g o Y E e tin il

Gasoline and distillate inventories

(DOE, mb, weekly data)
20 5 20 4 20 3 20 2 20 1 20 0 10 9 10 8 10 7 10 6 10 5 10 4 10 3 10 2 10 1 j f m a m j j a s o n d G so e 2 0 -2 1 a g a lin 0 7 0 1 v . G so e 2 1 a lin 0 2 D istilla fu l o 2 0 -2 1 a g te e il 0 7 0 1 v . D istilla fu l o 2 1 te e il 0 2

US natural gas prices

(NYMEX, $/MMBtu, front month, weekly closing)
1 5 1 4 1 3 1 2 1 1 1 0 9 8 7 6 5 4 3 2 1 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 21 00 21 01 21 02

US natural gas futures curve

(NYMEX, $/MMBtu)
5 0 ,0 4 5 ,7 4 0 ,5 4 5 ,2 4 0 ,0 3 5 ,7 3 0 ,5 3 5 ,2 3 0 ,0 2 5 ,7 fe -1 b 3 fe -1 b 4 fe -1 b 5 o 2 kt-1 o 3 kt-1 o 4 kt-1 o 5 kt-1 fe -1 b 6 2 0 ,5 ju -1 n 3 ju -1 n 4 ju -1 n 5 ju -1 n 6 1 -0 -1 2 8 7 1 -0 -1 2 9 9 1 -1 -1 2 0 9

Chart Sources: Bloomberg, SEB Commodity Research

m r-1 a 6

m j-1 a 3

m j-1 a 4

m j-1 a 5

m j-1 a 6

ag 3 u -1

ag 4 u -1

ag 5 u -1

ag 6 u -1

d c-1 e 6

Commodities Monthly

Nordic power
Nordic power price
Overall, the Nordic Power situation is largely unchanged since our previous report. Last month weather was generally unsettled. Even though temperatures have decreased and consumption increased, we see no significant relief for stressed hydro producers. With reservoirs very well filled, they need to maximise production irrespective of price. Currently, the hydrological balance comprises a 12 TWh surplus. Also weighing on prices, Swedish nuclear plants are reporting higher availability than for several years with all blocks planned up and running soon. While the Nord Pool System price was EUR 25.38/MWh in September EUR +1.81/MWh vs. previous month, it has subsequently increased, trading for most of October between EUR 32/MWh and EUR 37/MWh. The marginal cost of coal fired power production has continued to decrease with thermal coal prices falling further. Still, forward electricity prices have been mainly stable. The market is currently sensitive to any sign of drier and/or colder weather. Q1-13 currently trades at EUR 42.00/MWh.
(by Mats Forsell and Mats Hedberg, Commodities Trading) (Nord Pool, /MWh, front quarter, weekly closing)
8 0 7 5 7 0 6 5 6 0 5 5 5 0 4 5 4 0 3 5 3 0 2 5 2 0 20 06 20 07 20 08 20 09 21 00 21 01 21 02

Continental power price

(EEX, /MWh, front quarter, weekly closing)
9 5 9 0 8 5 8 0 7 5 7 0 6 5 6 0 5 5 5 0 4 5 4 0 3 5 3 0 2 5 2 0 20 06 20 07 20 08 20 09 21 00 21 01 21 02 21 02

EUA price
(ECX ICE, /t, Dec. 12, weekly closing)
3 5

3 0

2 5

2 0

1 5

1 0

5 20 06 20 07 20 08 20 09 21 00 21 01

Chart Sources: Bloomberg, SEB Commodity Research

Commodities Monthly

Industrial metals
Latest Chinese data provide hope that the economy is at last beginning to bottom. Still, we do not expect an immediate strong rebound. We regard a nearterm demand shock involving metals as unlikely given the absence of any indication that Chinese politicians want a repeat of the investment stimulus boom seen in 2009. With the countrys demand for metals remaining soft, supply is beginning to catch up. Most are now priced at or below fair marginal cost except copper which remains high. At the annual LME week in London most participants stated that while they believe the commodities super cycle may have peaked plenty of growth in commodities consumption remains and for many years yet. Nevertheless, protracted investments in new supply are beginning to impact just when demand growth has begun to slow. Therefore, for now, the commodity super cycle is over for high cost producers although their low cost counterparts will continue to enjoy healthy margins. Cost pressures affecting equipment and services are easing while mining companies are increasingly reluctant to accept striking workers wage demands. Although metals markets are currently becoming more balanced, several LME metal concerns were identified. For nickel, high acid pressure leach technology continues to struggle, creating major future supply uncertainties. There were also concerns regarding zinc supplies in coming years with large mines set to close with only less reliable supplies ready to replace it. The copper market is still regarded as having the biggest supply issues in coming years with major additions from unstable regions. However, aluminium was regarded as the future volume growth winner, being cheap, stable and abundant. Also, it is closely aligned with megatrends involving increased use in many economic sectors, and is well positioned as China refocuses its economy on consumption rather than investments. Even if tightness in most metals markets is easing, several more general concerns remain. Medium-sized mining companies are currently facing a capital crunch due to high capital costs. They are working to improve profitability, retaining cash and reducing investments. With larger mining groups also cutting investments most metals markets may be less oversupplied in coming years than consumers may have hoped. Further, as regards future nominal metals prices the keynote speaker on the US economy at the LME week warned that the USD will weaken and future nominal metals prices increase.

LME index
(weekly closing)
40 70 40 50 40 30 40 10 30 90 30 70 30 50 30 30 30 10 20 90 20 70 20 50 20 30 20 10 10 90 10 70 10 50 10 30 10 10 90 0 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 21 00 21 01
Tin

Industrial metal prices

(LME, indexed, weekly closing, January 2010 = 100)
20 0 10 9 10 8 10 7 10 6 10 5 10 4 10 3 10 2 10 1 10 0 9 0 8 0 7 0 6 0 Cpe opr N icke l Alu in m m iu Z c in La ed T in

Price and inventory changes over the last month

(LME)
2 2 2 0 1 8 1 6 1 4 1 2 1 0 8 6 4 2 0 -2 -4 -6 -8 -1 0 -1 2
+134.5%

A m iu lu in m

Cpe opr

N icke l

La ed

Zinc

Chart Sources: Bloomberg, SEB Commodity Research

Ste l e

ja -1 n 0 fe -1 b 0 m r-1 a 0 a r-1 p 0 m j-1 a 0 ju -1 n 0 ju 0 l-1 ag 0 u -1 se -1 p 0 o 0 kt-1 n v-1 o 0 d c-1 e 0 ja -1 n 1 fe -1 b 1 m r-1 a 1 a r-1 p 1 m j-1 a 1 ju -1 n 1 ju 1 l-1 ag 1 u -1 se -1 p 1 o 1 kt-1 n v-1 o 1 d c-1 e 1 ja -1 n 2 fe -1 b 2 m r-1 a 2 a r-1 p 2 m j-1 a 2 ju -1 n 2 ju 2 l-1 ag 2 u -1 se -1 p 2 o 2 kt-1
Price (% ) In e to s (% v n rie )

21 02

Commodities Monthly

Industrial metals
Aluminium
Global overproduction of aluminium continues while recent high prices have postponed capacity reductions already desperately needed to balance the market. Currently, oversupply looks likely to increase further in 2013. While we see no reason why aluminium prices should not fall back to levels seen this summer, should they do so we would expect medium- to long-term downside risk to be fairly limited due to production costs. Ironically, despite near record high inventories physical supply remains tight due to warehouse financing deals. Positively, global vehicle production remains relatively strong but there have been recent indications of weakness in Europe.

LME aluminium price and inventories

(weekly data)
5000 500 5000 000 4000 500 4000 000 3000 500 3000 000 2000 500 2000 000 1000 500 1000 000 500 000 0 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 21 00 21 01 21 02
100 10 100 00 90 00 80 00 70 00 60 00 50 00 40 00 30 00 20 00 10 00 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 21 00 21 01 21 02 600 00 500 50 500 00 100 400 100 200 100 000 800 00 600 00 400 00 200 00 0 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 21 00 21 01 21 02 400 50 400 00 300 50 300 00 200 50 200 00 100 50 100 00 50 00 0

L E in e to (t, le a M v n ris ft xis) L Ep M rice ($ rig t a /t, h xis)

30 50 35 20 30 00 25 70 20 50 25 20 20 00 15 70 10 50 15 20 10 00

Copper
During the recent overdue industrial metal market correction copper was supported by stronger sectorrelative fundamentals. In the short-term, speculators also regard copper as the preferred sector exposure as shown by the continued build-up in speculative longs. ICSG data show copper mine production increased 2.4% to 8007 kt in H1-12 vs. H1-11, refined production 3.8% to 9913 kt and consumption 7.3% to 10386 kt. Seasonally adjusted, the H1-12 refined copper deficit was 292 kt. Given significant uncertainties particularly regarding Chinese demand, risk appears skewed to the downside. In particular, the recent sharp build-up in SHFE inventories is a worrying indicator.

LME copper price and inventories

(weekly data)
1000 000 900 000 800 000 700 000 600 000 500 000 400 000 300 000 200 000 100 000 0 L E in e to (t, le a M v n ris ft xis) L Ep M rice ($ rig t a /t, h xis)

Nickel
From a supply perspective nickel does not appear particularly bullish. Oversupply is likely to continue to increase in 2013 as several new projects begin commercial production while demand is likely to remain lacklustre. In recent years the supply outlook has become relatively opaque due to technical challenges attached to HPAL technology. Still, so far the overall outcome of these projects has been relatively positive despite several disappointments. We see little short- to medium-term upside risk in nickel though marginal production costs are likely to limit further downside as prices approach levels seen this past summer.

LME nickel price and inventories

(weekly data)
100 800 100 600 L E in e to (t, le a M v n ris ft xis) L Ep M rice ($ rig t a /t, h xis)

Chart Sources: Bloomberg, SEB Commodity Research

Commodities Monthly

Industrial metals
Zinc
Predictably, zinc fell back sharply as soon as the postsummer industrial metals rally lost steam. ILZSG data are poor. The market surplus between January and July totalled 135 kt. Despite a concurrent increase in mine supply of 10.5% y/y to 7993 kt, refined supply fell 1.4% to 7389 kt while refined demand increased 0.5% to 7254 kt. The long-term picture remains weak with a 293 kt surplus expected in 2013. Meanwhile, LME zinc inventories continue their five year uptrend to currently less than 15% below their 1994 record high. Due to overproduction concentrate inventories are also rising. Interest in physical zinc remains very weak. We see little reason to hold it other than as the short leg in spread trades.

LME zinc price and inventories

(weekly data)
1000 000 900 000 800 000 700 000 600 000 500 000 400 000 300 000 200 000 100 000 0 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 21 00 21 01 21 02 10 30 10 20 10 10 10 00 90 0 80 0 70 0 60 0 50 0 40 0 30 0 n v-0 o 8 n v-0 o 9 n v-1 o 0 m r-0 a 9 m r-1 a 0 m r-1 a 1 n v-1 o 1 20 0 m r-1 a 2 ju 2 l-1 300 60 300 30 300 00 30 00 20 50 20 00 10 50 10 00 50 0 0 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 21 00 21 01 21 02 300 00 200 50 200 00 100 50 100 00 50 00 0 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 21 00 21 01 21 02 200 70 200 40 200 10 100 80 100 50 100 20 90 00 60 00 30 00 ju 8 l-0 ju 9 l-0 ju 0 l-1 ju 1 l-1 20 50 20 00 10 50 10 00 50 0 L E in e to (t, le a M v n ris ft xis) L Ep M rice ($ rig t a /t, h xis) 50 00 40 50 40 00 30 50 30 00

Ferrous metals (by Maximilian Brodin, Commodities Sales)

Ferrous metal markets still focus on the Chinese situation. The iron ore Fe 62% index has jumped over 30% since the start of September due to recent increases in most Chinese steel prices of between 10% and 20%. Conversely, coking coal prices continue to decrease (down 14% in September) while those of other steel input factors such as energy, alloys and steel scrap have moved sideways. Rising iron ore prices are probably a sign of restocking rather than an increase in steel production, a view supported by the fact that Chinese power consumption from heavy industry declined 0.1% y/y in September. Macroeconomic indicators for September showed only a modest upturn. We believe additional improvements are required for iron ore and steel prices to continue upwards.

LME steel billet price and inventories

(weekly data)
100 300 100 200 100 100 100 000 900 00 800 00 700 00 600 00 500 00 400 00 300 00 200 00 100 00 0 L E in e to (t, le a M v n ris ft xis) L Ep M rice ($ rig t a /t, h xis)

LME lead price and inventories

(weekly data)
400 000 350 700 300 500 350 200 300 000 250 700 200 500 250 200 200 000 150 700 100 500 150 200 100 000 700 50 500 00 200 50 0 L E in e to (t, le a M v n ris ft xis) L Ep M rice ($ rig t a /t, h xis) 40 00 30 50

LME tin price and inventories

(weekly data)
400 00 300 50 L E in e to (t, le a M v n ris ft xis) L Ep M rice ($ rig t a /t, h xis)

Chart Sources: Bloomberg, SEB Commodity Research

(LME, $/t)

(LME, $/t)

(LME, $/t)

n v-1 o 2 n v-1 o 2 fe -1 b 3 m j-1 a 3 ag 3 u -1 n v-1 o 3 fe -1 b 4 m j-1 a 4 ag 4 u -1 n v-1 o 4 fe -1 b 5 m j-1 a 5 ag 5 u -1 n v-1 o 5 fe -1 b 6 m j-1 a 6 ag 6 u -1 n v-1 o 6 15 70 10 80 15 80 10 90 15 90 20 00 25 00 20 10 25 10 20 20 25 20 20 30 200 10 250 10 fe -1 b 6 m j-1 a 6 ag 6 u -1 n v-1 o 6 70 40 70 50 70 60 70 70 70 80 70 90 80 00 80 10 80 20 80 30 80 40 n v-1 o 5 ag 5 u -1 m j-1 a 5 fe -1 b 5 1 -1 -1 2 0 9 1 -0 -1 2 9 9 1 -0 -1 2 8 7 n v-1 o 4 ag 4 u -1 m j-1 a 4 fe -1 b 4 n v-1 o 3 ag 3 u -1 m j-1 a 3 fe -1 b 3 n v-1 o 2

fe -1 b 3

15 80

10 90

15 90

20 00

25 00

20 10

25 10

20 20

25 20

20 30

25 30

25 50 20 50 25 40 20 40 25 30 20 30 25 20 20 20 25 10 20 10 25 00 20 00 15 90 10 90 15 80 10 80

180 60 160 60 140 60 120 60 100 60 180 50 160 50 140 50

120 80 100 80 180 70 160 70 140 70 120 70 100 70

m j-1 a 3

ag 3 u -1

Commodities Monthly

Lead futures curve

n v-1 o 3

Nickel futures curve

fe -1 b 4

Aluminium futures curve

m j-1 a 4

Industrial metals

1 -1 -1 2 0 9

1 -0 -1 2 9 9

1 -0 -1 2 8 7

Chart Sources: Bloomberg, SEB Commodity Research

ag 4 u -1

n v-1 o 4

fe -1 b 5

m j-1 a 5

ag 5 u -1

n v-1 o 5

1 -1 -1 2 0 9

1 -0 -1 2 9 9

1 -0 -1 2 8 7

fe -1 b 6

m j-1 a 6

ag 6 u -1

n v-1 o 6

(LME, $/t)

(LME, $/t)

(LME, $/t)

n v-1 o 2 fe -1 b 3 m j-1 a 3 ag 3 u -1 n v-1 o 3 fe -1 b 4 m j-1 a 4 ag 4 u -1 n v-1 o 4 fe -1 b 5 m j-1 a 5 ag 5 u -1 n v-1 o 5 fe -1 b 6 m j-1 a 6 ag 6 u -1 n v-1 o 6

100 80 n v-1 o 2 1 -1 -1 2 0 9 1 -0 -1 2 9 9 1 -0 -1 2 8 7

150 80

100 90

150 90

200 00

250 00

n v-1 o 2 fe -1 b 3 m j-1 a 3 ag 3 u -1 n v-1 o 3 fe -1 b 4 m j-1 a 4 ag 4 u -1 n v-1 o 4 fe -1 b 5 m j-1 a 5 ag 5 u -1 n v-1 o 5 fe -1 b 6 m j-1 a 6 ag 6 u -1 n v-1 o 6

d c-1 e 2

ja -1 n 3

Tin futures curve

Zinc futures curve

fe -1 b 3

Copper futures curve

m r-1 a 3

a r-1 p 3

m j-1 a 3

ju -1 n 3

1 -1 -1 2 0 9

1 -0 -1 2 9 9

1 -0 -1 2 8 7

ju 3 l-1

1 -1 -1 2 0 9

1 -0 -1 2 9 9

1 -0 -1 2 8 7

ag 3 u -1

se -1 p 3

o 3 kt-1

n v-1 o 3

10

d c-1 e 3

ja -1 n 4

Commodities Monthly

Precious metals
Gold has proved a major disappointment over the last month. The late summer rally, triggered by the most recent round of quantitative easing and central bank promises of both liquidity injections and low interest rates ahead did not result in gold hitting even a new 12 month high. Moreover, buying interest could not have been much stronger with physical ETF holdings and net speculative long positions still increasing to record and near record highs, respectively. Several other factors also remain strongly supportive including, for example, US real interest rate expectations and the thirst of central banks worldwide for gold. Overall, these circumstances emphasise that it will take a major development to push back gold to the long term bullish trend. Before any additional catalyst comes into play, gold will also be very sensitive to risk aversion. However, with market sentiment relatively positive and liquidity rather than growth expectations, we retain our bullish short- to medium-term view (Q4-12 and Q1-13 $1800/ozt, Q2-13 $1750/ozt) but risk is skewed to the downside. We also raise our H2-13 average price forecast $50/ozt to $1700/ozt due to the open-ended nature of QE3 and downgraded growth prospects for next year. While QE3 reduces the downside risk for gold prices next year current conditions appear unable to decisively return gold to its bullish long term trend. If they are to do so, they will probably require liquidity to work its way downward through the system. With central banks pumping out money on the one hand and borrowers deleveraging on the other it is probably only a matter of time before central banks win. By that time, they may well have unleashed an uncontrollable inflation monster, particularly given the experimental nature of current monetary policy and their (at best) sketchy exit plans. However, given Japans experience in recent decades it is almost impossible to say when this will happen and it is not our main scenario. If rising inflation expectations are necessary to drive the gold price higher, then it may well remain soft, possibly for several years. So far, worries are focused more on the risk of deflation rather than inflation. US gold and silver coin sales, a popular indicator of grass root inflation expectations, have trended lower for several years to currently near multi-year lows. The labour dispute affecting the South African mining sector remains supportive for precious metals markets. The escalating conflict currently affects one third of the industry, substantially impacting precious metal production. From a global supply perspective, rhodium, platinum and to some extent palladium markets have been worst affected, while the impact on gold and silver supply is more limited. Higher wages could potentially squeeze margins for South African mining companies potentially resulting in mine closures.

Precious metal prices

(COMEX/NYMEX, indexed, weekly closing, January 2010 = 100)
20 9 20 8 20 7 20 6 20 5 20 4 20 3 20 2 20 1 20 0 10 9 10 8 10 7 10 6 10 5 10 4 10 3 10 2 10 1 10 0 9 0 8 0 Silv r e Pla u tin m G ld o Pa d m lla iu

Gold to silver ratio

(front month, weekly closing)
8 6 8 2 7 8 7 4 7 0 6 6 6 2 5 8 5 4 5 0 4 6 4 2 3 8 3 4 3 0 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 21 00 21 01 21 02

Gold and currencies vs. USD

1 0 9 8 7 6 5 4 3 2 1 0 -1 -2 -3 G L OD E R U J PY G BP SE K R B U N K O C F H YT (% D ) M M (% o )

Chart Sources: Bloomberg, SEB Commodity Research

ja -10 n fe -1 b 0 m r-1 a 0 a r-1 p 0 m j-1 a 0 ju -10 n ju l-10 ag 0 u -1 se -1 p 0 o 0 kt-1 n v-1 o 0 d c-1 e 0 ja -11 n fe -1 b 1 m r-1 a 1 a r-1 p 1 m j-1 a 1 ju -11 n ju l-11 ag 1 u -1 se -1 p 1 o 1 kt-1 n v-1 o 1 d c-1 e 1 ja -12 n fe -1 b 2 m r-1 a 2 a r-1 p 2 m j-1 a 2 ju -12 n ju l-12 ag 2 u -1 se -1 p 2 o 2 kt-1

11

Commodities Monthly

Precious metals
Gold
Over the last two months, net speculative long positions in COMEX gold have increased more sharply than at any time since 2009, driven both by a sharp reduction in short positions and substantial build-up in long. During the same period physical ETF holdings have risen by almost 200 tonnes to 2582 tonnes after stabilising around 2400 tonnes for nearly a year. However, US mint gold coin sales have been unaffected by the buying frenzy, falling 25% y/y to 68500 ozt in September. Gold ore production resumed positive growth y/y in July (+2%) after having been surprisingly weak over the past year in spite of extremely strong incentives for many miners to boost production.

Gold price
(COMEX, $/ozt, front month, weekly closing)
20 00 10 90 10 80 10 70 10 60 10 50 10 40 10 30 10 20 10 10 10 00 90 0 80 0 70 0 60 0 50 0 40 0 30 0 20 0 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 21 00 21 01 21 01 21 02 21 02
20 30 25 00 10 80 80 0 70 0 60 0 50 0 40 0 80 0 30 0 20 0 10 0 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 21 00 21 01 21 02 50 5 30 0 15 50 10 30 15 00

Silver
Following a sharp rise in September, net speculative long positions in COMEX silver have now stabilized at their highest level since 2010. Short positions have also largely normalised after increasing to unusual highs this summer. Having printed a new record high of 18635 tonnes in late September, physical silver ETF holdings have declined to 18420 this month. US Mint silver coin sales remain weak with those in September down 27% y/y to 3.23 mozt. Currently, the gold-to-silver ratio is 53.5, near its post one year average after almost hitting 60 over the summer.

Silver price
(COMEX, $/ozt, front month, weekly closing)
5 0 4 8 4 6 4 4 4 2 4 0 3 8 3 6 3 4 3 2 3 0 2 8 2 6 2 4 2 2 2 0 1 8 1 6 1 4 1 2 1 0 8 6 4 2 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 21 00

Platinum & Palladium

With bullish news concerning the South African labour conflict and easier monetary policy, both platinum and palladium net speculative longs at NYMEX have skyrocketed, returning to very near record highs due, like gold and silver, to decreased short and increased long positions. Recently, physical platinum ETF holdings printed a new record high of 47.4 tonnes after remaining stable for almost two years. On the other hand, palladium holdings have continued on their now five month long slow downtrend to stand currently at 58.4 tonnes. Global vehicle sales remain strong despite signs of European weakness.

Platinum and palladium prices

(NYMEX, $/ozt, front month, weekly closing)
10 10 10 00 90 0 Pa d m (le a lla iu ft xis) Pla u (rig t a tin m h xis)

Chart Sources: Bloomberg, SEB Commodity Research

12

60 0

60 1

60 2

60 3

60 4

60 5

60 6

60 7

60 8

(NYMEX, $/ozt)

(COMEX, $/ozt)

(weekly data, tonnes)

Commodities Monthly

Gold futures curve

Palladium futures curve

Precious metals

10 40 d c-1 e 2 1 -1 -1 2 0 9 1 -0 -1 2 9 9 1 -0 -1 2 8 7 G ld h ld g o o in s m r-1 a 3

10 50

10 60

10 70

10 80

10 90

20 00

20 10

20 20

20 30

20 40

20 50

20 60

17 55

10 60

12 65

15 60

17 65

10 70

12 75

15 70

17 75

10 80

12 85

15 80

17 85

10 90

Chart Sources: Bloomberg, SEB Commodity Research

Physical silver and gold ETP holdings

1 -1 -1 2 0 9 1 -0 -1 2 9 9 1 -0 -1 2 8 7 ju -13 n se -1 p 3 d c-1 e 3 o 2 kt-1 ja -1 n 3 a r-1 p 3 ju 3 l-1 o 3 kt-1 ja -1 n 4 a r-1 p 4 ju 4 l-1 o 4 kt-1 ja -1 n 5 a r-1 p 5 ju 5 l-1 o 5 kt-1 ja -1 n 6 a r-1 p 6 ju 6 l-1 o 6 kt-1 ja -1 n 7 a r-1 p 7 ju 7 l-1 o 7 kt-1 3 ,0 5 3 ,5 4 3 ,0 4 3 ,5 3 3 ,0 3 3 ,5 2 3 ,0 2 3 ,5 1 3 ,0 1 3 ,5 0 3 ,0 0 2 ,5 9 2 ,0 9 2 ,5 8 2 ,0 8 2 ,5 7 2 ,0 7

Silv r h ld gs / 1 e o in 0

ja -1 n 0 fe -1 b 0 m r-1 a 0 a r-1 p 0 m j-1 a 0 ju -1 n 0 ju 0 l-1 ag 0 u -1 se -1 p 0 o 0 kt-1 n v-1 o 0 d c-1 e 0 ja -1 n 1 fe -1 b 1 m r-1 a 1 a r-1 p 1 m j-1 a 1 ju -1 n 1 ju 1 l-1 ag 1 u -1 se -1 p 1 o 1 kt-1 n v-1 o 1 d c-1 e 1 ja -1 n 2 fe -1 b 2 m r-1 a 2 a r-1 p 2 m j-1 a 2 ju -1 n 2 ju 2 l-1 ag 2 u -1 se -1 p 2 o 2 kt-1

(NYMEX, $/ozt)

(COMEX, $/ozt)

(weekly data, tonnes)

Silver futures curve

Platinum futures curve

20
o 2 kt-1 ja -1 n 3 a r-1 p 3 1 -1 -1 2 0 9 1 -0 -1 2 9 9 1 -0 -1 2 8 7 ju 3 l-1

25

30

35

40

45

50

55

60

65

70

75

16 40

18 40

10 50

12 50

14 50

16 50

18 50

10 60

12 60

14 60

16 60

d c-1 e 2 m r-1 a 3 ju -13 n se -1 p 3 d c-1 e 3 m r-1 a 4 ju -14 n se -1 p 4 d c-1 e 4 m r-1 a 5 ju -15 n se -1 p 5 d c-1 e 5 m r-1 a 6 ju -16 n se -1 p 6 d c-1 e 6 m r-1 a 7 1 -1 -1 2 0 9 1 -0 -1 2 9 9 1 -0 -1 2 8 7

Pla m h tinu olding s

Pa dium ho in lla ld gs

Physical palladium and platinum ETP holdings

13

ja -1 n 0 fe -1 b 0 m r-10 a ap 0 r-1 m 0 aj-1 ju -1 n 0 jul-1 0 au -1 g 0 se -1 p 0 okt-1 0 no 0 v-1 de 0 c-1 ja -1 n 1 fe -1 b 1 m r-11 a ap 1 r-1 m 1 aj-1 ju -1 n 1 jul-1 1 au -1 g 1 se -1 p 1 okt-1 1 no 1 v-1 de 1 c-1 ja -1 n 2 fe -1 b 2 m r-12 a ap 2 r-1 m 2 aj-1 ju -1 n 2 jul-1 2 au -1 g 2 se -1 p 2 okt-1 2
o 3 kt-1

ju -17 n

Commodities Monthly

Agriculture
As discussed last month exceptionally high grain prices during the late summer months minimised further upside risks. In fact, to keep prices so high conditions probably need to deteriorate continuously to counter gradually increasing demand destructive forces. In addition, with bearish headwinds still dominating the macroeconomic outlook, exogenous factors are unlikely to boost grain prices. Predictably, they have therefore trended lower once again over the past month. Current strained conditions and potential additional pitfalls are well understood, closely monitored and largely discounted. In addition, as the northern hemisphere harvest progresses uncertainties diminish reassuring markets. On the one hand, we still see supportive factors at work including, for example, the tight overall inventory situation, continued abnormal weather conditions in many regions, and the risk of hoarding and protectionism. Examples of the later have already been seen in the FSU. However, from a strategic perspective we remain emphatically bearish. The long term equation governing agricultural markets is a fairly easy one to understand, i.e. prices trend lower in real terms as production becomes increasingly efficient due to developments in infrastructure, technology, breeding, and fertilizing. Generally, only adverse weather conditions can cause dramatic and substantial deviations from the longterm trend. When prices rise, incentives to increase production also increase. The longer they remain high the stronger these incentives become. Consequently, long periods of high prices due to adverse weather are likely to cause sharp and substantial price falls once conditions normalize. Of course, adverse weather could continue but that would hardly be a rational main scenario. Concerning the three main grains, we note that wheat remains comparatively resilient, partly due to moderate problems connected with planting, crop development and harvesting in both the northern and southern hemispheres. While the market is mainly focused on dry pre-harvest conditions in Australia, uncertainties regarding FSU exports also provide support. With the northern hemisphere soybean and corn harvest almost over, the existence of exceptionally strong incentives to plant and relatively favourable planting conditions in South America, not surprisingly both markets have softened. Regarding soybeans, the USDAs recent and substantial supply upgrade has dampened sentiment considerably even though Chinese demand apparently remains strong despite local macroeconomic headwinds. Meanwhile, US corn ethanol production has both clearly and inevitably rolled over. However, producers remain profitable, albeit barely and only when by-products are included. Absent recent strong gasoline prices corn demand from this source would probably have already weakened further.

Grains prices
(CBOT, indexed, weekly closing, January 2010 = 100)
20 0 10 9 10 8 10 7 10 6 10 5 10 4 10 3 10 2 10 1 10 0 9 0 8 0 ja -10 n fe -1 b 0 m r-1 a 0 a r-1 p 0 m j-1 a 0 ju -10 n ju l-10 ag 0 u -1 se -1 p 0 o 0 kt-1 n v-1 o 0 d c-1 e 0 ja -11 n fe -1 b 1 m r-1 a 1 a r-1 p 1 m j-1 a 1 ju -11 n ju l-11 ag 1 u -1 se -1 p 1 o 1 kt-1 n v-1 o 1 d c-1 e 1 ja -12 n fe -1 b 2 m r-1 a 2 a r-1 p 2 m j-1 a 2 ju -12 n ju l-12 ag 2 u -1 se -1 p 2 o 2 kt-1 Wet ha S yb a s o en C rn o 0 /0 0 1 0 /0 1 2 0 /0 2 3 0 /0 3 4 0 /0 4 5 0 /0 5 6 0 /0 6 7 0 /0 7 8 0 /0 8 9 0 /1 9 0 1 /1 0 1 1 /1 1 2 7 0 Wet ha So e n yb a s C rn o

Year end grain inventories (days of supply)

(WASDE, yearly data updated monthly)
15 3 15 2 15 1 15 0 9 5 8 5 7 5 6 5 5 5 4 5 1 /1 2 3

Production and inventory estimate revisions

(WASDE, monthly data, %, 2012/2013)
9 8 7 6 5 4 3 2 1 0 -1 -2 -3 -4 -5 -6 -7 -8 -9 -1 0 -1 1 -1 2 -1 3 -1 4 C rn p d ctio o ro u n C rn sto o cks W e t p d ctio h a ro u n W e t sto ha cks So e n p d yb a ro uctio n So e n sto yb a cks

ju -1 n 2

ag 2 u -1

se -1 p 2

Chart Sources: Bloomberg, USDA, SEB Commodity Research

o 2 kt-1

jul-1 2

14

Commodities Monthly

Agriculture
Corn
Net speculative long positions in CBOT corn have been slowly falling backward after peaking well below 2010 highs in late August. Short positions remain near multiyear lows. The USDA revised end-of-year stocks even lower in October due to decreased carry-over, further consolidating corns reputation for enjoying the strongest fundamentals. So far, high US gasoline prices have ensured corn ethanol producers have remained profitable, though only just. Without by-products their businesses would have been loss making. Although the northern hemisphere harvest is nearing completion under primarily dry conditions, South American planting is progressing in the rain, a situation so far largely favourable.

Corn price
(CBOT, /bu, front month, weekly closing)
80 5 80 0 70 5 70 0 60 5 60 0 50 5 50 0 40 5 40 0 30 5 30 0 20 5 20 0 10 5 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 21 00 21 01
2 1 01

Wheat
CBOT wheat speculators have recently reduced long positions while remaining net long since the summer. The USDA continued to downgrade its global wheat production and ending stock forecasts in its October WASDE, largely due to the Australian drought. So far 12/13 supply forecasts have been lowered every month since initial estimates were first published in June. To date, US winter wheat planting has progressed normally although conditions remain uncomfortably dry in the US interior resulting in slow crop development. Further less serious weather-related issues are also adversely affecting the global wheat production outlook, the Australian drought being the most important. However, the crop is now almost fully grown, reducing the risk of additional downgrades. Meanwhile, dry conditions are harvest positive.

Wheat price
(CBOT, /bu, front month, weekly closing)
1 0 20 1 0 10 1 0 00 90 0 80 0 70 0 60 0 50 0 40 0 30 0 20 0 2 2 00 2 3 00 2 4 00 2 5 00 2 6 00 2 7 00 2 8 00 2 9 00 2 0 01 2 2 01

Soybeans
Recently, long CBOT soybean positions have been substantially reduced although given net long positioning is decreasing from extremely high levels they remain well above normal. Surprisingly, short positions have also been lowered slightly lately. Soybean global production estimates were revised substantially higher in the October WASDE, almost entirely due to raised US production estimates. Currently, soybean demand is supported nearly exclusively by the feed (soybean meal) market while its soybean oil counterpart is under pressure from present plentiful supplies of palm oil. In fact, meal has outperformed beans so far this year while oil has traded sideways.

Soybean price
(CBOT, /bu, front month, weekly closing)
1 0 80 1 0 60 1 0 40 1 0 20 1 0 00 80 0 60 0 40 0

2 2 00

2 3 00

2 4 00

2 5 00

2 6 00

2 7 00

2 8 00

2 9 00

2 0 01

2 1 01

Chart Sources: Bloomberg, SEB Commodity Research

15

2 2 01

21 02

Commodities Monthly

Agriculture
Corn futures curve
(CBOT, /bu)
8 20 8 00 7 80 7 60 7 40 7 20 7 00 6 80 6 60 6 40 6 20 6 00 5 80 5 60 m ar-13 m ar-14 m ar-15 de c-12 ju n-13 se p-13 de c-13 ju n-14 se p-14 de c-14 ju n-15 se p-15 de c-15 1 8-17 2-0 1 9-19 2-0 1 0-19 2-1

Wheat futures curve

(CBOT, /bu)
91 0 90 0 89 0 88 0 87 0 86 0 85 0 84 0 83 0 82 0 81 0 80 0 79 0 d ec-12 d ec-13 jun-13 sep-13 jun-14 m ar-13 m ar-14 sep-14 12-08 7 -1 12-09 9 -1 12-10 9 -1

Soybean futures curve

(CBOT, /bu)
10 70 15 60 1 -0 -1 2 8 7 10 60 15 50 10 50 15 40 10 40 15 30 10 30 15 20 n v-1 o 2 n v-1 o 3 n v-1 o 4 fe -1 b 3 fe -1 b 4 m j-1 a 3 m j-1 a 4 fe -1 b 5 10 20 m j-1 a 5 ag 3 u -1 ag 4 u -1 1 -0 -1 2 9 9 1 -1 -1 2 0 9

Sugar
(NYBOT, /lb)
36 34 32 30 28 26 24 22 20 18 16 14 12 10 8 6 4 20 2 0 20 3 0 20 4 0 20 5 0 20 6 0 20 7 0 20 8 0 20 9 0 20 0 1 20 1 1 20 2 1

Cotton
(NYBOT, /lb)
22 0 20 0 18 0 16 0 14 0 12 0 10 0 8 0 6 0 4 0 2 0 20 2 0 20 3 0 20 4 0 20 5 0 20 6 0 20 7 0 20 8 0 20 9 0 20 0 1 20 1 1 20 2 1

Cocoa
(NYBOT, $/t)
38 00 36 00 34 00 32 00 30 00 28 00 26 00 24 00 22 00 20 00 18 00 16 00 14 00 12 00 20 2 0 20 3 0 20 4 0 20 5 0 20 6 0 20 7 0 20 8 0 20 9 0 20 0 1 20 1 1 20 2 1

Chart Sources: Bloomberg, SEB Commodity Research

16

Commodities Monthly

Commodity related economic indicators

EUROZONE Industrial production (%, YoY) Industrial production (%, MoM) Capacity utilization (%, sa) Manufacturing PMI Real GDP (%, YoY) Real GDP (%, QoQ, sa) CPI (%, YoY) CPI (%, MoM) Consumer confidence USA Industrial production (%, YoY) Industrial production (%, MoM) Capacity utilization (%) Manufacturing PMI Real GDP (%, YoY) Real GDP (%, QoQ, saar) CPI (%, MoM) CPI (%, MoM, sa) OECD Composite Leading Indicator Consumer confidence (Michigan) Nonfarm payrolls (net change, sa, 000) JAPAN Industrial production (%, YoY, nsa) Industrial production (%, MoM, sa) Capacity utilization (%, sa) Manufacturing PMI Real GDP (%, YoY) Real GDP (%, QoQ, sa) CPI (%, YoY) CPI (%, MoM) OECD Composite Leading Indicator Consumer confidence CHINA Industrial production (%, YoY) Manufacturing PMI Real GDP (%, YoY) CPI (%, YoY) OECD Composite Leading Indicator Consumer confidence Bank lending (%, YoY) Fixed asset investment (%, YoY) OTHER OECD Area Comp. Leading Indicator Global manufacturing PMI
Sources: Bloomberg, SEB Commodity Research

Current
-2,9 0,6 77,8 46,1 -0,4 -0,2 2,6 0,7 -25,9 2,8 0,4 78,3 51,5 2,1 1,3 2,0 0,6 103,4 83,1 114 -4,6 -1,6 85,8 48,0 3,2 0,2 -0,7 0,1 104,9 40,4 9,2 49,8 7,4 1,9 102,3 99,4 16,3 20,4 103,2 48,9

Date
2012-08-31 2012-08-31 2012-09-30 2012-09-30 2012-06-30 2012-06-30 2012-09-30 2012-09-30 2012-09-30 2012-09-30 2012-09-30 2012-09-30 2012-09-30 2012-06-30 2012-06-30 2012-09-30 2012-09-30 2011-03-31 2012-10-31 2012-09-30 2012-08-31 2012-08-31 2012-08-31 2012-09-30 2012-06-30 2012-06-30 2012-09-30 2012-08-31 2011-02-28 2012-09-30 2012-09-30 2012-09-30 2012-09-30 2012-09-30 2011-03-31 2012-08-31 2012-09-30 2012-06-30 2011-03-31 2012-09-30

Previous
-2,8 0,6 79,7 45,1

Date
2012-07-31 2012-07-31 2012-06-30 2012-08-31 2012-03-31 2012-03-31 2012-08-31 2012-08-31 2012-08-31 2012-08-31 2012-08-31 2012-08-31 2012-08-31 2012-03-31 2012-03-31 2012-08-31 2012-08-31 2011-02-28 2012-09-30 2012-08-31 2012-07-31 2012-07-31 2012-07-31 2012-08-31 2012-03-31 2012-03-31 2012-08-31 2012-07-31 2011-01-31 2012-08-31 2012-08-31 2012-08-31 2012-06-30 2012-08-31 2011-02-28 2012-07-31 2012-08-31 2012-03-31 2011-02-28 2012-08-31

Next
2012-11-14 2012-11-14 2012-10-24 2012-11-15 2012-11-15 2012-11-15 2012-11-15 2012-10-23

2,6 0,4 -24,6 2,6 -1,4 78,0 49,6 2,4 2,0 1,7 0,6 103,1 78,3 142 -0,8 -1,0 88,1 47,7 2,9 1,3 -0,7 -0,3 104,2 40,6 8,9 49,2 7,6 2,0 102,1 98,2 16,1 20,9 103,0 48,1

2012-11-16 2012-11-16 2012-11-01 2012-10-26 2012-11-15 2012-11-15 2012-10-26 2012-11-02 2012-10-30 2012-10-30 2012-10-31 2012-11-12 2012-10-26

2012-11-09 2012-11-01 2012-11-09

17

Commodities Monthly

Performance
Closing last week
UBS Bloomberg CMCI Index (TR) UBS Bloomberg CMCI Index (ER) UBS Bloomberg CMCI Index (PI) UBS B. CMCI Energy Index (PI) UBS B. CMCI Industrial Metals Index (PI) UBS B. CMCI Precious Metals Index (PI) UBS B. CMCI Agriculture Index (PI) Baltic Dry Index Crude Oil (NYMEX, WTI, $/b) Crude Oil (ICE, Brent, $/b) Aluminum (LME, $/t) Copper (LME, $/t) Nickel (LME, $/t) Zinc (LME, $/t) Steel (LME, Mediterranean, $/t) Gold (COMEX, $/ozt) Corn (CBOT, /bu) Wheat (CBOT, /bu) Soybeans (CBOT, /bu)
Sources: Bloomberg, SEB Commodity Research

YTD (%)
4,6 4,6 5,1 2,3 2,0 10,7 8,0 -43,7 -8,9 2,6 -2,5 5,5 -9,4 2,2 -34,0 10,0 17,8 33,7 28,0

1m (%)
-1,3 -1,3 -1,3 2,8 -5,8 -3,6 -2,6 39,9 -2,1 1,8 -7,9 -4,0 -4,5 -11,2 2,9 -2,6 0,7 -1,0 -8,1

1q (%)
1,1 1,1 1,2 3,7 3,0 10,8 -6,5 -4,1 -2,8 2,2 1,3 3,7 5,6 -0,1 -15,7 9,0 -5,7 -6,7 -11,5

1y (%)
3,6 3,5 4,5 4,4 2,9 4,4 3,4 -52,8 4,6 1,6 -9,7 11,2 -9,8 2,6 -34,6 4,7 19,3 40,8 25,2

5y (%)
7,0 4,2 30,6 13,8 -9,7 121,4 60,5 -90,6 1,6 31,4 -23,0 1,8 -47,4 -36,2 N/A 125,5 105,7 2,0 56,0

1326,80 1247,08 1598,48 1527,40 1066,53 2560,22 1886,67 1010,00 90,05 110,14 1970,00 8015,00 16950,00 1885,00 350,00 1722,80 761,50 872,50 1534,25

Major upcoming commodity events

Date
Department of Energy, US inventory data American Petroleum Institute, US inventory data CFTC, Commitment of Traders US Department of Agriculture, Crop Progress International Energy Agency, Oil Market Report OPEC, Oil Market Report Department of Energy, Short Term Energy Outlook US Department of Agriculture, WASDE International Grains Council, Grain Market Report OPEC ordinary meeting, Vienna, Austria
Sources: Bloomberg, SEB Commodity Research

Source
www.eia.doe.gov www.api.org www.cftc.gov www.usda.gov www.oilmarketreport.com www.opec.org www.eia.doe.gov www.usda.gov www.igc.org.uk www.opec.org

Wednesdays, 16:30 CET Tuesdays, 22:30 CET Fridays, ~21:30 CET Mondays, ~22.30 CET (season) November 13 November 9 November 6 November 9 November 29 December 12

Contact list
COMMODITIES
Torbjrn Iwarson RESEARCH Bjarne Schieldrop Filip Petersson SALES SWEDEN Pr Melander Karin Almgren SALES NORWAY Maximilian Brodin SALES FINLAND Jussi Lepist SALES DENMARK Peter Lauridsen TRADING Niclas Egmar

Position
Head of Commodities Chief analyst Strategist Corporate Institutional Corporate/Institutional Corporate/Institutional Corporate/Institutional Corporate/Institutional

E-mail
torbjorn.iwarson@seb.se bjarne.schieldrop@seb.no filip.petersson@seb.se par.melander@seb.se karin.almgren@seb.se maximilian.brodin@seb.no Jussi.lepisto@seb.fi peter.lauridsen@seb.dk niclas.egmar@seb.se

Phone
+46 8 506 234 01 +47 22 82 72 53 +46 8 506 230 47 +46 8 506 234 75 +46 8 506 230 51 +47 22 82 72 73 +358 9 616 285 21 +45 331 777 34 +46 8 506 234 55

Mobile
+47 92 48 92 30 +46 70 996 08 84 +46 70 714 90 79 +46 73 642 31 76 +47 92 45 67 27 +358 40 844 187 7 +45 616 211 59 +46 70-618 560 4

18

Commodities Monthly

COMMODITY RESEARCH DISCLAIMER

This statement affects your rights
This report has been compiled by SEBs Commodity Research, a division within Skandinaviska Enskilda Banken AB (publ) (SEB), to provide background information only. It is confidential to the recipient, any dissemination, distribution, copying, or other use of this communication is strictly prohibited.

Good faith & limitations

Opinions, projections and estimates contained in this report represent the authors present opinion and are subject to change without notice. Although information contained in this report has been compiled in good faith from sources believed to be reliable, no representation or warranty, expressed or implied, is made with respect to its correctness, completeness or accuracy of the contents, and the information is not to be relied upon as authoritative. To the extent permitted by law, SEB accepts no liability whatsoever for any direct or consequential loss arising from use of this document or its contents.

Disclosures
The analysis and valuations, projections and forecasts contained in this report are based on a number of assumptions and estimates and are subject to contingencies and uncertainties; different assumptions could result in materially different results. The inclusion of any such valuations, projections and forecasts in this report should not be regarded as a representation or warranty by or on behalf of the SEB Group or any person or entity within the SEB Group that such valuations, projections and forecasts or their underlying assumptions and estimates will be met or realized. Past performance is not a reliable indicator of future performance. Foreign currency rates of exchange may adversely affect the value, price or income of any security or related investment mentioned in this report. This document does not constitute investment advice and is being provided to you without regard to your investment objectives or circumstances. Anyone considering taking actions based upon the content of this document is urged to base investment decisions upon such investigations as they deem necessary. This document does not constitute an offer or an invitation to make an offer, or solicitation of, any offer to subscribe for any securities or other financial instruments.

Conflicts of Interest
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Recipients
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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