Commodities Monthly

New Year Rally But Not in Commodities

22 JANUARY 2013

Commodities Monthly

New Year Rally But Not in Commodities

GENERAL

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

UBS Bloomberg CMCI Sector Indices

(price indices, weekly closing, January 2011 = 100)
10 4 15 3 10 3 15 2 10 2 15 1 10 1 15 0 10 0 9 5 9 0 8 5 8 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 n v-1 o 2 d c-1 e 2 ja -1 n 3
YT (% D ) 4 3 2 1 0 -1 C m o itie o md s Ag ltu ricu re In u d stria l m ta e ls Eq itie u s En rg e y Pre u cio s m ta e ls -2 M (% /M )

The World Bank has lowered its 2013 global GDP growth projection from 3.0% to 2.4%, forecasting continued contraction in Europe and only 1.9% expansion in the US. While confirming US economic improvements, the Federal Reserve Beige Book warns momentum is weak. Limited growth this year should ensure quantitative easing and ultra-low interest rates continue throughout, despite wishes expressed by some US Fed members that monetary stimulus measures may be scaled back in 2013.

In u d stria M ta l e ls Precio s M ta u e ls En rg e y Ag lture ricu

ENERGY

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

Saudi Arabia must double production cutbacks made in Q4-12 to ensure market equilibrium in H1-13. Brent crude prices continue to move sideways, despite the New Year rally in global equity markets on increased hopes of recovery fuelling risk-on sentiment. The IEA has raised its oil demand estimates for 2012 and 2013 due to increases in China, US and Brazil, while only slightly upgrading its forecast call on OPEC for this year.

7 5

INDUSTRIAL METALS

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

Sector performance
(MSCI World, UBS Bloomberg CMCI price indices)
5

Industrial metals look most likely to end 2013 higher as global economic conditions stabilize and growth accelerates slightly. Reasonable prices relative to production costs still limit downside risk. However, with the recent (dubious) rally on more positive Chinese sentiment having lost momentum, we see better buying opportunities in H1. Most likely, the exclusive market focus on Chinese economic conditions will end this year as OECD demand appears increasingly likely to improve.

PRECIOUS METALS

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

Gold continues to disappoint even our already downgraded forecasts and new offensives in the global devaluation war. With macroeconomic conditions expected to stabilize and growth to pick up slightly, a return to the gold bull market is now less likely. Still, increasing inflation expectations or a US debt ceiling debacle as in 2011 are upside risks. This year, we recommend exposure to palladium and platinum, both of which are more likely to respond well to improving global economic prospects.

Winners & Losers over the last month

(%)
2 0 1 5 1 0 5 0 -5 -1 0 -1 5 -2 0 -2 5 C 2 (EU O A) P er (C nt.) ow o P er (N rdic) ow o Sgr ua C ocoa (U S) A in m lum iu Zinc Soybe s an W ea h t N icke l L d ea C pp o er Silver C rn o G old H at. oil (U e S) Bre nt Ste b ts el ille C n otto G so a line (U S) N ga (U at. s S) P allad m iu Platinu m Tin W TI C offe (Ar.) -3 0

AGRICULTURE

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

Persistent US Midwest drought conditions are worrying with the new planting season only two months off. We therefore remain tactically cautious though long-term downside risk is decreasing. Otherwise, global crop conditions are largely normal. US soil moisture conditions will most likely be decisive for grain markets in 2013.

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

Chart Sources: Bloomberg, SEB Commodity Research

Commodities Monthly

General
Despite efforts by the World Bank to dampen current positive market sentiment by downgrading its economic outlook for 2013, we expect improvements in H1-13, reflecting stimulus measures announced during H2-12. In the US, for example, the Fed initiated yet another round of quantitative easing in December, while in China infrastructure investments and substantially expanded total financing have boosted local activity. Furthermore, we expect PMIs worldwide to become increasingly positive in H1-13. While the US debt ceiling will remain of concern, we believe it will be raised yet again. The question now is - how far will last years stimulus measures carry growth momentum into 2013? Since our previous monthly Commodity Report on November 20 last year, the CMCI commodity price index has increased by only 0.7%, a poor performance during a period in which markets have become substantially more optimistic concerning the possibility of a global economic recovery, prompting a 14% rally in Chinese equities and a 6% rise in European and US stocks. Even a 1.7% decline in the USD index added little to commodity prices. Currently, OECD Composite Leading Indicators suggest economic activity is finally stabilizing in most major economies, supported by stronger growth in the US and UK and evidence markets have bottomed and are recovering in both India and China. The JPMorgan Global PMI returned to (modest) positive growth in January with indications of even higher readings in coming months. Strong Chinese import and export values in December and further expansion in total local financing provisions also provided further evidence that the countrys economy has bottomed and is recovering. Partial resolution of the US fiscal cliff further encouraged positive market sentiment as the New Year began. Indications from many US Fed members that they want an end to quantitative easing later this year led many investors and markets to speculate whether it is almost time to rotate out of safe-haven into growth assets. Such thoughts have been very apparent in changes in asset class values generally, with prices of government bonds (safe) falling and equities (unsafe) rising. Concurrently, the same pattern was apparent within the commodities sector with industrial metals the strongest performer, adding 8% over the period, while gold and silver lost almost 6% of their value. Currently, markets are more cautious, wondering if present positive sentiment has been exaggerated. The latest US Federal Reserve Bank Beige Book suggests the countrys economy is recovering but that momentum is weak, a view implying no imminent threat of higher interest rates or an end to quantitative easing. Moreover, optimism has receded somewhat thanks to the World Banks decision to downgrade its 2013 global growth outlook from 3% to 2.4%, signalling that while risks have decreased, growth remains weak.

UBS Bloomberg CMCI

(price index, weekly closing)

10 80 15 70 10 70 15 60 10 60 15 50 10 50 15 40 10 40 15 30 10 30 15 20 10 20 15 10 10 10 15 00 10 00 90 5 90 0 80 5 80 0 70 5 20 07 20 08 20 09 21 00 21 01 21 02 21 03

JPM global manufacturing PMI

(monthly, PMIs >50 expansive)
5 8 5 6 5 4 5 2 5 0 4 8 4 6 4 4 4 2 4 0 3 8 3 6 3 4 20 07 20 08 20 09 21 00 21 01 21 02
C in h a Eu zo e ro n O D EC U SA R fe n e re ce 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 07 20 08 20 09 21 00 21 01

Chart Sources: Bloomberg, SEB Commodity Research

Commodities Monthly

Crude oil
Saudi Arabia cut oil production as necessary in Q412 making further reductions more credible. We therefore slightly raise our Brent crude oil price forecast for Q1-13 from $105/b to $107.5/b. However, given their potential large scale, we remain sceptical whether Saudi Arabia will make all cuts needed in H1-13. In addition, the bullish New Year rally has been unable to drive Brent crude prices significantly higher. Consequently, even modest setbacks to sentiment will see Brent crude once again testing the downside towards $105/b. Between October and December, Saudi Arabia convincingly cut production by 600 kb/d, helping reduce total OPEC production to 30.6 mb/d in December, largely in line with the total call on OPEC output in Q4-12. The countrys determination makes it more likely it will continue to reduce production as necessary. Consequently, we raise our Brent crude oil forecast for Q1-13 from $105/b to $107.5/b while leaving our Q2-13 estimate unchanged at $105/b. We maintain our H2-13 projection at $110/b. Moving into Q1-13, demand for OPEC oil will decrease by 1 mb/d compared with Q4-12 before falling by a further 0.5 mb/d in Q2-13. In other words, Saudi Arabia may need to cut current output by an additional 1.5 mb/d heading into Q2-13 to avoid the risk that global oil stocks may increase, unless of course its production cutbacks are also supported by other OPEC members. With the requisite reductions substantial, it remains unclear whether Saudi Arabia will in fact make them all. This uncertainty, together with the knowledge that US oil production is steadily increasing, is likely to weigh on the oil price during H1-13. Moreover, markets are highly optimistic regarding possible economic recovery with equities having rallied into the New Year. Nevertheless, despite such positive sentiment and generally improving markets, the Brent crude price has been unable to move much out of a fairly tight trading band since October last year. Consequently, if current positive market conditions recede even slightly in H1-13, Brent crude could easily fall back towards $105/b. Middle East tensions will remain a wild card in 2013, as they have for several years. The Iranian nuclear situation is by no means resolved with sanctions expected to intensify in February. Currently, Iran suffers from a liquidity shortage, adversely affecting maintenance and oil production investments. In addition, since last month, problems have escalated in Iraq, the second largest OPEC producer, with increasing tension between the countrys Sunni Muslim minority which sides with rebels in Syria, and the Shia Muslim majority which supports Shia-ruled Iran. A continued deterioration in the situation in Syria will probably also adversely affect the position in Iraq.

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 20 07 20 08 20 09 21 00 21 01 21 02 21 03
n d

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 o 20 -20 a g 08 12 v . 20 12 20 13

Chart Sources: Bloomberg, SEB Commodity Research

Current global crude oil demand estimates

2012 (mb/d) 89.8 89.17 88.80 Revision (kb/d) +170 +130 -10 2013 (mb/d) 90.8 90.11 89.55 Revision (kb/d) +240 +110 -10

IEA EIA OPEC

SEB average Brent crude oil price forecast

($/b) 2013 2014 2015 Q1 107.5 Q2 105 Q3 110 Q4 110 Full Year 108.1 110.0 115.0

Commodities Monthly

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

Brent futures curve

(ICE, $/b)
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 9 1 9 0 1 -1 -1 2 1 6 1 -1 -1 2 2 8 1 -0 -1 3 1 8

Gasoline and heating oil prices

(NYMEX, /gal, front month, weekly closing)
45 2 40 0 35 7 30 5 35 2 30 0 25 7 20 5 25 2 20 0 15 7 10 5 15 2 10 0 7 5 20 07 20 08 20 09 21 00 21 01 21 02 21 03 N M G so e Y EX a lin N M H a go Y EX e tin il

Gasoline and distillate inventories

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

US natural gas prices

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

US natural gas futures curve

(NYMEX, $/MMBtu)
5 0 ,0 4 5 ,7 4 0 ,5 4 5 ,2 4 0 ,0 1 -1 -1 2 1 6 3 5 ,7 3 0 ,5 3 5 ,2 m j-1 a 3 m j-1 a 4 m j-1 a 5 m j-1 a 6 se -1 p 3 se -1 p 4 se -1 p 5 se -1 p 6 ja -1 n 3 ja -1 n 4 ja -1 n 5 ja -1 n 6 1 -1 -1 2 2 8 1 -0 -1 3 1 8

Chart Sources: Bloomberg, SEB Commodity Research

m r-1 a 3 ju -1 n 3 se -1 p 3 d c-1 e 3 m r-1 a 4 ju -1 n 4 se -1 p 4 d c-1 e 4 m r-1 a 5 ju -1 n 5 se -1 p 5 d c-1 e 5 m r-1 a 6 ju -1 n 6 se -1 p 6 d c-1 e 6 m r-1 a 7 ju -1 n 7 se -1 p 7 d c-1 e 7 m r-1 a 8 ju -1 n 8

Commodities Monthly

Nordic power
Nordic power price
Since our last report there has been a fairly dramatic change in overall Nordic power market conditions. For the past two years hydroresources have been readily available. Indeed, supplies have remained high with a hydrologic balance well above normal (at +12 TWh as recently as early December). However, winter began with cold weather and little precipitation. In our last report we stated that prolonged low temperatures were the only thing likely to push prices higher. They are now doing so. In addition, around the turn of the year the hydrological balance had returned to normal and today it stands at -3 TWh. Based on current weather forecasts indicating continued cold, dry weather for the next 10 days, we expect it to increase to -15 TWh over the next month. This is an excellent illustration of just how rapidly the Nordic power system can shift from one extreme to another. Still, nuclear availability is better than in recent winters, with between 90% and 95% capacity available since current cold conditions began, reducing the risk of spot prices spiking when temperatures drop. Continental European power prices have come under severe pressure. The emissions market has traded lower with EUA contracts for delivery in 2013 now well below EUR 6/tonne and coal prices also continuing downward. Further, the German power market is experiencing a seismic shift in favour of more environmentally friendly production, supported by subsidies for the manufacture of solar panels and windmills to replace gas fired production and other traditional sources. The system spot price in December was EUR 42.94/MWh, compared with a EUR 31.20/MWh average for 2012, a post-2007 low, reflecting the current strong hydrological situation and low consumption due to continuing weak macroeconomic conditions. The changed environment has had a serious effect on forward prices. The forward curve has twisted with prompt contracts moving sharply higher due to the cold spell, while contracts further out on the curve trade ever lower, following continental markets. Provided coal prices do not turn we see little upside for contracts far out on the curve. While there may however still be some scope for a further rise, we have a neutral outlook at current levels with prices having already moved substantially higher.
(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 07 20 08 20 09 21 00 21 01 21 02 21 03

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 07 20 08 20 09 21 00 21 01 21 02 21 03

EUA price
(ECX ICE, /t, Dec. 13, weekly closing)
2 0 1 9 1 8 1 7 1 6 1 5 1 4 1 3 1 2 1 1 1 0 9 8 7 6 5 4 20 09 21 00 21 01 21 02 21 03

Chart Sources: Bloomberg, SEB Commodity Research

Commodities Monthly

Industrial metals
The industrial metal rally in late 2012, triggered by relief that the Chinese economy was showing signs of stabilizing, had already lost momentum by late December. Still, we believe the industrial metals sector is most likely of all commodity sectors to end 2013 higher. Prices remain reasonable relative to production costs while demand fundamentals could more broadly stabilize this year. We therefore expect a positive price trend with smaller deviations from the trend compared to 2012. Our opportunistic recommendation in 2012, i.e. to sell rallies and buy dips, is thus gradually turning into a strategic recommendation to buy on dips and hold. There is a good chance that buying opportunities will materialize in Q1-13 as current prices reflect the general New Year optimism that has boosted risk appetite in general and possibly fabricated positive data coming out of China lately. Further, the general uptrend in reported metals inventories should highlight the risk of further short-term setbacks. Absolute inventory levels, high for several metals, are less problematic with substantial volumes locked up in curve plays to create low risk returns in the current low interest rate environment. Current data still support the view that the Chinese economy has re-stabilized with growth consistent with government objectives. However, positive local figures are routinely accused of being largely fabricated, being more bullish than those provided by more independent observers. We recommend caution, pending a longer data series and anecdotal evidence showing economic stabilization and/or recovery before entirely precluding the possibility of a Chinese hard landing as a tail risk scenario. Regarding stimulus measures once Chinas new political leaders take office, we also recommend caution. Current rising inflation, while blamed on cold weather, can also be matched with monetary easing since mid-2012. Although the inflation cycle may very well be turning, massive long-term infrastructure projects will still guarantee healthy underlying domestic demand for industrial metals in all but the most bearish scenarios. Thus a free fall in metal price from current levels appears unlikely in 2013. In the industrial metal market, we have become used to attributing only marginal importance to the non-Chinese world. Demand from both the US and Europe has remained weak following the sub-prime crisis with market action entirely dominated by China. This may however change in 2013 as the European economy appears to be bottoming while its US counterpart is beginning to show very general signs of a recovery. Still the main tail risk in both regions is a lack of political resolve. Overall, in all major areas, this years potential appears significantly better compared to the outcome of 2012. However, current prices to some extent discount this view, leaving a limited room for bullish price action unless growth forecasts are revised higher.

LME index
(weekly closing)
40 60 40 40 40 20 40 00 30 80 30 60 30 40 30 20 30 00 20 80 20 60 20 40 20 20 20 00 10 80 10 60 10 40 20 07 20 08 20 09 21 00 21 01 21 02 Cpe opr N icke l Alu in m m iu Z c in La ed T in
+57.2%

Industrial metal prices

(LME, indexed, weekly closing, January 2011 = 100)
10 3 15 2 10 2 15 1 10 1 15 0 10 0 9 5 9 0 8 5 8 0 7 5 7 0 6 5 6 0

Price and inventory changes over the last month

(LME)
1 7 1 5 1 3 1 1 9 7 5 3 1 -1 -3 -5 -7 -9 -1 1 -1 3

A m iu lu in m

Cpe opr

La ed

Zinc

Tin

Chart Sources: Bloomberg, SEB Commodity Research

N icke l

Ste l e

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 n v-1 o 2 d c-1 e 2 ja -1 n 3
P rice (% ) In e to s (% v n rie )

Commodities Monthly

Industrial metals
Aluminium
Both LME and SHFE aluminium inventories trended higher through 2012, reflecting a substantial market surplus likely to persist in 2013. The market is still quite likely to tighten due to stronger demand, while inventory outflows are limited by warehouse queues and financial transactions, restricting physical availability (cancelled warrants currently exceed 40% of total inventories). Positive for aluminium demand, global vehicle production data remain solid. Absolute price levels are decisive for supply with capacity likely to come back on line as prices edge higher along the marginal production cost curve, reducing upside potential.

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 07 20 08 20 09 21 00 21 01 21 02 21 03
100 10 100 00 90 00 80 00 70 00 60 00 50 00 40 00 30 00 20 00 20 07 20 08 20 09 21 00 21 01 21 02 21 03 500 50 500 00 400 50 400 00 300 50 300 00 200 50 200 00 100 50 100 00 50 00 20 07 20 08 20 09 21 00 21 01 21 02 21 03

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

Copper
In the most optimistic scenarios, copper mine supply growth will be substantial this year, even spurring some forecasters to expect a market surplus for the full year. Historically however, supply has almost always disappointed due to frequent disruptions and project delays. For example, several South American labour contracts are subject to renegotiation in 2013 with a significant risk for labour conflicts. We expect a less tight market in 2013 but still see a substantial risk of a full year deficit. Consequently, the copper market is likely to remain highly sensitive this year. LME inventories ended 2012 trending sharply higher, indicating no current shortages of available metal. However, total inventories outside China are estimated significantly tighter than inside.

LME copper price and inventories

(weekly data)
600 500 600 000 500 500 500 000 400 500 400 000 300 500 300 000 200 500 200 000 100 500 100 000 500 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)

Nickel
The nickel market is likely to post a surplus in 2013 vs. 2012, albeit smaller. Stainless steel industry demand remains lacklustre while very strong production, inventories have continued on a solid uptrend throughout 2012 and into 2013, to currently stand near record highs. The biggest upside risk concerns potential delays in the new supply project pipeline. Highly unpredictable Chinese NPI production will, as so often, prove a decisive factor, determining import demand and therefore market sentiment. Chinese imports of Indonesian nickel ore are back at the same level they reached prior to the, in retrospect, far too premature export restrictions. High marginal production costs still substantially limit nickel downside risk.

LME nickel price and inventories

(weekly data)
200 000 100 800 100 600 100 400 100 200 100 000 800 00 600 00 400 00 200 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)

Chart Sources: Bloomberg, SEB Commodity Research

Commodities Monthly

Industrial metals
Zinc
LME zinc inventories stand just below all-time highs following a consistent five-year uptrend. After suffering near chronic oversupply, the zinc market may see its demand-side deficit decrease this year following refined supply cuts in 2012. However, mine supply increased substantially last year, despite falling refined demand. Significant price improvements will very likely and easily boost and refining activity, depressing them once again. Consequently, zinc rallies should be short lived relative to the rest of the sector. Refined zinc supply exceeded demand by 267 kt between January and November 2012, according to the ILZSG, down from 323 kt during the corresponding period in 2011, with refined supply pegged at 11,560 kt and demand at 11,293 kt.

LME zinc price and inventories

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

Ferrous metals (by Maximilian Brodin, Commodities Sales)

Recent sharply higher iron ore prices ignore fundamentals. A correction was inevitable. Concerns regarding potential weather-related disruption in Australia are receding, while cold weather in China has deferred construction activity, weakening steel demand. Steel mills are offering material in the spot market in expectation of continued weaker prices. Iron ore prices have fallen for four consecutive days at the time of writing. The index stands at 145.40$/t with the February contract bid at 135$/t and Q2 at just under 130$/t.

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

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 20 07 20 08 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 30 00 20 50 20 00 10 50 10 00 50 0 20 09 21 00 21 01 21 02 21 03 40 00

LME tin price and inventories

(weekly data)
350 20 300 00 250 70 200 50 250 20 200 00 150 70 100 50 150 20 100 00 70 50 50 00 20 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)

Chart Sources: Bloomberg, SEB Commodity Research

(LME, $/t)

(LME, $/t)

(LME, $/t)

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

22 15

25 10

27 15

20 20

22 25

25 20

27 25

20 30

22 35

25 30

27 35

10 90

15 90

20 00

25 00

20 10

25 10

20 20

25 20

20 30

25 30

20 40

25 40

20 50

120 70 100 70 180 60 160 60 140 60 120 60 100 60 180 50

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

m j-1 a 3

ag 3 u -1

n v-1 o 3

Commodities Monthly

Lead futures curve

fe -1 b 4

Nickel futures curve

m j-1 a 4

Aluminium futures curve

ag 4 u -1

Industrial metals

Chart Sources: Bloomberg, SEB Commodity Research

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

1 -0 -1 3 1 8

1 -1 -1 2 2 8

1 -1 -1 2 1 6

1 -0 -1 3 1 8

1 -1 -1 2 2 8

1 -1 -1 2 1 6

m j-1 a 6

ag 6 u -1

n v-1 o 6

fe -1 b 7

(LME, $/t)

(LME, $/t)

(LME, $/t)

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 fe -1 b 7

200 00 fe -1 b 3 1 -0 -1 3 1 8 1 -1 -1 2 2 8 1 -1 -1 2 1 6

250 00

200 10

250 10

200 20

250 20

200 30

250 30

200 40

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 fe -1 b 7

m r-1 a 3

a r-1 p 3

Tin futures curve

Zinc futures curve

m j-1 a 3

Copper futures curve

ju -1 n 3

ju 3 l-1

ag 3 u -1

se -1 p 3

o 3 kt-1

1 -0 -1 3 1 8

1 -1 -1 2 2 8

1 -1 -1 2 1 6

n v-1 o 3

d c-1 e 3

ja -1 n 4

1 -0 -1 3 1 8

1 -1 -1 2 2 8

1 -1 -1 2 1 6

fe -1 b 4

10

m r-1 a 4

a r-1 p 4

Commodities Monthly

Precious metals
Gold trades almost exactly in line with the average price for the past 18 months. We had expected QE3 and corresponding money printing by other central banks to drive the gold above its nominal record high posted in mid-2011 ($1900/ozt) but it stopped short at $1800/ozt before falling backwards to currently the high 1600s. While growth is only expected to recover modestly in 2013 downside risks have decreased substantially with the potential for positive surprises, certainly within the OECD, having increased. Consequently, the market looks set to refocus on growth, at the expense of liquidity, a bearish factor for gold unless inflation expectations increase. So far, there is no suggestion that will happen. In combination with, for example, an expected strong dollar, we adopt a slightly bearish view on gold for this year (Q1: $1700/ozt, Q2: $1650/ozt, Q3: $1600/ozt, Q4: $1600/ozt, Year average: $1638/ozt). Indeed, if global growth were to accelerate more rapidly than expected, without significant inflation pressure, a sell-off in physical investment products as investors seek higher returns could quickly push gold prices significantly lower. For 2013 we prefer exposure to palladium and platinum instead of gold and silver. Central bankers appear convinced that inflation is under control despite the OECDs ultra-dovish monetary policy. However, what they think and what the future will produce are not necessarily the same things. A vast economic experiment is being conducted in which enormous quantities of potentially combustible inflationary money are being printed as central bank balance sheets continue to grow. However, money multipliers remain low while borrowers are deleveraging. If this situation changes and exit policies are not implemented quickly enough, it would spell trouble. S&Ps US credit rating downgrade in 2011 was a contributory factor in driving the gold price to a new nominal high. The downgrade was a direct result of the inability of US politicians to agree on a plan to reduce deficits to sustainable levels over the coming decade. With US politics still highly polarized, there is an appreciable risk we may see similar turbulence this year. This represents an upside event risk for the gold market. However, it should be remembered that, in 2011, Euro-zone stress was also increasing exponentially, sending risk-averse European investors running for cover, in other words into gold. However, from this perspective, we are seeing a diametrically opposed development at the moment with PIIGS yields falling rapidly. Both platinum and palladium are likely to post solid gains in 2013 with supply probably stretched and strengthening demand likely. Palladium may lead the way being more exposed to the Chinese and US economies than platinum whose consumption is skewed towards troubled European markets.

Precious metal prices

(COMEX/NYMEX, indexed, weekly closing, January 2011 = 100)
10 7 10 6 10 5 10 4 10 3 10 2 10 1 10 0 9 0 8 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 n v-1 o 2 d c-1 e 2 ja -13 n
c

Silv r e Pla u tin m G ld o Pa d m lla iu

7 0

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 07 20 08 20 09 21 00 21 01 21 02 21 03

Gold and currencies vs. USD

2 Y D (% T ) 1 0 -1 -2 -3 -4 -5 -6 -7 G L OD EU R JP Y G BP SE K R B U N K O C F H M M (% o )

Chart Sources: Bloomberg, SEB Commodity Research

11

Commodities Monthly

Precious metals
Gold
Net speculative long positions in COMEX gold fell back sharply in Q4-12, largely due to a reduction in long positions, but also increasing shorts. They currently stand near 2012 lows. Physical gold ETF holdings stabilized around a new record high (2,633 tonnes) in December before decreasing slightly in early 2013 to 2,615 tonnes. Last year, US Mint monthly gold coin sales exceeded 2011 only in October and November. Total sales in 2012 (753,000 ozt) were 25% lower than during the previous year. However, gold coin sales appear to have begun 2013 strongly, possibly attributable to greater inflation fears amongst retail investors than in financial markets.

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 20 07 20 08 20 09 21 00 21 01 21 02 21 03
20 30 P lla iu (le a a d m ft xis) P tin m (rig t a la u h xis) 25 00 10 80 80 0 70 0 60 0 50 0 40 0 80 0 30 0 20 0 10 0 20 07 20 08 20 09 21 00 21 01 21 02 21 03 50 5 30 0 15 50 10 30 15 00

Silver
In December, net speculative long positions in COMEX silver fell back from high levels, mainly due to a reduction of long positions. Since decreasing in H1-11, physical silver ETF holdings have trended upwards, hitting new highs last December. Current holdings total 19,700 tonnes. Like gold, US Mint silver coin sales rebounded in late 2012 and appear also to have begun this year relatively strongly. Sales in 2012 totalled 33,742,500 ozt, down 15% compared to 2011. The gold-to-silver ratio is 53.1, stable in the mid 50-60 range, where it has traded for the last 18 months.

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 20 07 20 08 20 09 21 00 21 01 21 02 21 03

Platinum & Palladium

Net long speculative positions in NYMEX platinum and palladium are high, reflecting relatively bullish market expectations for both. While physical platinum ETF holdings have printed a new record of 54 tonnes palladium positions are relatively stable, around 13 tonnes below their previous 2011 all-time peak (73 tonnes). Gold-to-platinum and gold-to-palladium ratios remain close to 1.05 and 2.5, respectively, as they have for the past 18 months, but seem keen to break out lower. Both markets, palladium in particular, will probably be tightly balanced this year if global growth remains on track. Mine closures due to poor profitability could tighten balances further while unpredictable recycling is mainly a downside risk.

Platinum and palladium prices

(NYMEX, $/ozt, front month, weekly closing)
10 10 10 00 90 0

Chart Sources: Bloomberg, SEB Commodity Research

12

Commodities Monthly

Precious metals
Gold futures curve
(COMEX, $/ozt)
12 85 1 -1 -1 2 1 6 10 80 17 75 15 70 12 75 10 70 17 65 15 60 1 -1 -1 2 2 8 1 -0 -1 3 1 8 3 ,4 2 3 ,2 2 3 ,0 2 3 ,8 1 3 ,6 1 3 ,4 1 ja -13 n ja -14 n ja -15 n ja -16 n ja -17 n ju l-13 ju l-14 ju l-15 ju l-16 o 3 kt-1 o 4 kt-1 o 5 kt-1 o 6 kt-1 a r-1 p 3 a r-1 p 4 a r-1 p 5 a r-1 p 6 a r-1 p 7 ju l-17 3 ,6 2

Silver futures curve

(COMEX, $/ozt)
3 ,8 2 1 -1 -1 2 1 6 1 -1 -1 2 2 8 1 -0 -1 3 1 8

Palladium futures curve

(NYMEX, $/ozt)
70 3 70 2 70 1 70 0 60 9 60 8 60 7 60 6 60 5 60 4 60 3 60 2 m r-1 a 3 ju -13 n m r-1 a 4 se -1 p 3 d c-1 e 3

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 fe -1 b 7 m j-1 a 7 ag 7 u -1 n v-1 o 7 fe -1 b 8 m j-1 a 8

Platinum futures curve

(NYMEX, $/ozt)
10 70 18 60 16 60 1 -1 -1 2 1 6 14 60 12 60 1 -1 -1 2 1 6 1 -1 -1 2 2 8 1 -0 -1 3 1 8 10 60 18 50 16 50 14 50 o 3 kt-1 a r-1 p 3 ja -1 n 3 ja -1 n 4 ju 3 l-1 1 -1 -1 2 2 8 1 -0 -1 3 1 8

Physical silver and gold ETP holdings

(weekly data, tonnes)
25 60 20 60 25 50 20 50 25 40 20 40 25 30 20 30 25 20 20 20 25 10 20 10 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 n v-1 o 2 d c-1 e 2 ja -1 n 3 25 00 150 70 100 80 150 80 G h ld g old o in s Silv r h ld g e o in s

Physical palladium and platinum ETP holdings

(weekly data, tonnes)
2 0 0 75 00 1 5 0 70 90 100 90

Palla m h ld s diu o ing Pla u h in s tin m old g

65 60 55 50 45

1 0 0 40 70

Chart Sources: Bloomberg, SEB Commodity Research

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 no 2 v-1 de 2 c-1 ja -1 n 3

1 5 0 35 60

13

Commodities Monthly

Agriculture
During Q4-12 persistent US drought conditions made us increasingly cautious concerning short-term outlook for the grain market, ensuring a three month neutral outlook in our last Commodities Monthly. With no signs of anything other than marginal improvements, we remain tactically cautious while the long term downside risk has also started to moderate slowly. If soil moisture conditions do not improve in coming months, we will probably further upgrade our price expectations. With the rest of the world enjoying fairly normal weather conditions, at least from an agricultural production perspective, markets are focused on the US. Winter wheat conditions are already terrible, a fact well known and fully discounted. Thus the most important issue is whether soil moisture levels in the Midwest can improve sufficiently to encourage farmers to plant acreage as large as price incentives suggest. It is highly probable that developments in this area will be the decisive factor for grain markets in 2013. In the current nervous grain market environment we should not forget circumstances which brought us to this point. Weather conditions differed substantially from the norm almost constantly between mid-2009 and mid-2012. What is worse is that these deviations have had a significant impact on several important agricultural regions during critical stages of crop development, i.e. worst case scenarios. As a result, in recent years, grain prices have been deflected from their long term bearish real price trend. Considering the still far from optimized global agricultural production system, an uptrend in real grain prices is unlikely to be maintained for a prolonged period. It should also be remembered that current tight grain stocks mainly concern corn. From a global perspective, soybean inventories trended slightly higher between 2000 and 2010 in terms of days of supply. During the same period, wheat inventories have been both significantly higher and lower than currently. US corn inventories are trending lower due to the countrys ethanol production. However, with booming tight oil production, the role played by highly questioned ethanol in the countrys efforts to establish energy independence is no longer that obvious. Outside the US, global weather conditions are fairly satisfactory, certainly from an agricultural perspective. Australian bush fires and exceptionally low Asian winter temperatures have had only a marginal impact. ENSO conditions are neutral and expected to remain so this spring. ENSO models forecast only modest deviations from normal meteorological conditions, with no bias towards either la Nia or el Nio conditions. Few and fairly limited disturbances are reported from Europe, the FSU, South America and Asia.

Grains prices
(CBOT, indexed, weekly closing, January 2011 = 100)
15 3 10 3 15 2 10 2 15 1 10 1 15 0 10 0 9 5 9 0 8 5 8 0 7 5 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 n v-1 o 2 d c-1 e 2 ja -13 n 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 S yb n o ea 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

se -1 p 2

n v-1 o 2

o 2 kt-1

d c-1 e 2

ju -1 n 2

jul-1 2

ag 2 u -1

Chart Sources: Bloomberg, USDA, SEB Commodity Research

14

ja -1 n 3

Commodities Monthly

Agriculture
Corn
Net long speculative positions in CBOT corn fell sharply in late 2012, driven by reduced long and increasing short positions. Considering the US drought situation, net positions at H1-12 levels signal rebound risk. USDA US quarterly corn stocks of 8.03 bn bu were below average consensus expectations of 8.21, and were well down from 9.65 bn at the end of 2011, further confirming corn as the tightest grain market. Global 2012/2013 corn ending stocks were revised down marginally in the December WASDE but by 1.4% in January. So far South American crop conditions suggest a plentiful crop this year, while dry US conditions are cause for concern going forward. US corn ethanol production continues to decline as profitability deteriorates.

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 07 20 08 20 09 21 00 21 01 21 02 21 03

Wheat
Net long speculative positions in CBOT wheat became negative in December as long positions continued to trend lower and short positions increased sharply. Consequently, if fundamentals deteriorate speculators may fuel a rebound when rebuilding long positions. Concerning wheat, US quarterly grain stocks of 1.66 bn bu were largely in line with expectations (average: 1.67 bn) and unchanged since the end of 2011 (1.66 bn). Global 2012/2013 wheat ending stocks were revised 1.6% higher in the December WASDE and marginally lower in the January report. Northern hemisphere wheat will remain dormant for another month while the southern hemisphere harvest is largely finished.

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

Soybeans
Net long speculative positions in CBOT soybeans trended lower through Q4-12 due to reduced long and increasing short positions. US quarterly soybean stocks at 1.97 bn bu were largely in line with consensus (average: 1.98 bn) but down from 2.37 bn at the end of 2011. Global 2012/2013 soybean ending stocks were revised slightly lower in the December WASDE and by 0.8% in January. So far, South American crop conditions indicate an excellent harvest this year while dry US conditions create major planting concerns. Meal prices have fallen slightly vs. soybeans following a strong H2-12 while oil prices are recovering slowly after the palm oil market stabilized.

Soybean price
(CBOT, /bu, front month, weekly closing)
10 80

10 60

10 40

10 20

10 00

80 0

60 0
2 7 00 2 8 00 2 9 00 2 0 01 2 1 01 2 2 01 2 3 01

Chart Sources: Bloomberg, SEB Commodity Research

15

Commodities Monthly

Agriculture
Corn futures curve
(CBOT, /bu)
7 40 7 20 7 00 6 80 84 0 6 60 83 0 6 40 6 20 6 00 5 80 5 60 m ar-13 m ar-14 m ar-15 se p-13 de c-13 se p-14 de c-14 ju n-13 ju n-14 82 0 1 2-11-16 81 0 80 0 79 0 m ar-13 m ar-14 sep-13 sep-14 d ec-13 d ec-14 jun-13 jun-14 1 2-12-18 1 3-01-18 12 1-1 -1 6 12 2-1 -1 8 13 1-1 -0 8 85 0

Wheat futures curve

(CBOT, /bu)
87 0 86 0

Soybean futures curve

(CBOT, /bu)
10 50 17 45 15 40 12 45 10 40 17 35 15 30 12 35 10 30 17 25 15 20 12 25 10 20 m r-1 a 3 m r-1 a 4 m r-1 a 5 se -1 p 3 d c-1 e 3 se -1 p 4 d c-1 e 4 ju -1 n 3 ju -1 n 4 1 -1 -1 2 1 6 1 -1 -1 2 2 8 1 -0 -1 3 1 8

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

Cotton
(NYBOT, /lb)
22 0 21 0 20 0 19 0 18 0 17 0 16 0 15 0 14 0 13 0 12 0 11 0 10 0 9 0 8 0 7 0 6 0 5 0 4 0 3 0 20 7 0 20 8 0 20 9 0 20 0 1 20 1 1 20 2 1 20 3 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 20 7 0 20 8 0 20 9 0 20 0 1 20 1 1 20 2 1 20 3 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
-3,7 -0,3 76,8 46,1 -0,6 -0,1 2,2 0,4 -26,5 2,3 0,3 78,8 50,7 2,6 3,1 1,7 0,0 103,4 71,3 155 -5,5 -1,4 82,2 45,0 0,5 -0,9 -0,6 -0,4 104,9 39,1 10,3 50,6 7,9 2,5 102,3 105,1 15,0 20,5 103,2 50,2

Date
2012-11-30 2012-11-30 2012-12-31 2012-12-31 2012-09-30 2012-09-30 2012-12-31 2012-12-31 2012-12-31 2012-12-31 2012-12-31 2012-12-31 2012-12-31 2012-09-30 2012-09-30 2012-12-31 2012-12-31 2011-03-31 2013-01-31 2012-12-31 2012-11-30 2012-11-30 2012-11-30 2012-12-31 2012-09-30 2012-09-30 2012-12-31 2012-11-30 2011-02-28 2012-12-31 2012-12-31 2012-12-31 2012-12-31 2012-12-31 2011-03-31 2012-11-30 2012-12-31 2012-09-30 2011-03-31 2012-12-31

Previous
-3,3 -1,0 77,9 46,2 -0,5 -0,2 2,2 -0,2 -26,9 2,9 1,0 78,7 49,5 2,1 1,3 1,8 -0,3 103,1 72,9 161 -4,5 1,6 82,4 46,5 3,9 -0,5 0,0 104,2 39,0 10,1 50,6 7,4 2,0 102,1 106,1 15,7 20,4 103,0 49,6

Date
2012-10-31 2012-10-31 2012-09-30 2012-11-30 2012-06-30 2012-06-30 2012-11-30 2012-11-30 2012-11-30 2012-11-30 2012-11-30 2012-11-30 2012-11-30 2012-06-30 2012-06-30 2012-11-30 2012-11-30 2011-02-28 2012-12-31 2012-11-30 2012-10-31 2012-10-31 2012-10-31 2012-11-30 2012-06-30 2012-06-30 2012-11-30 2012-10-31 2011-01-31 2012-11-30 2012-11-30 2012-11-30 2012-09-30 2012-11-30 2011-02-28 2012-10-31 2012-11-30 2012-06-30 2011-02-28 2012-11-30

Next
2013-02-13 2013-02-13 2013-01-24 2013-02-14 2013-02-14 2013-02-22 2013-02-22 2013-01-23

2013-02-15 2013-02-15 2013-02-01 2013-01-30 2013-02-21 2013-02-21 2013-02-01 2013-02-01 2013-01-31 2013-01-31

2013-02-14 2013-01-25

2013-03-09 2013-02-01 2013-04-15 2013-02-08

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 (%)
1,0 1,0 0,9 2,3 0,0 1,7 0,3 19,7 4,1 0,7 -1,5 1,6 2,9 -2,2 6,6 0,7 4,2 1,7 0,7

1m (%)
0,6 0,6 0,6 4,1 -1,1 1,1 -1,7 12,7 8,7 2,8 -2,8 0,5 -1,4 -2,7 3,2 1,0 1,0 -2,5 -2,5

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

1y (%)
1,3 1,2 2,0 2,3 -3,5 2,2 4,1 -9,6 -5,0 1,1 -7,4 -2,2 -10,0 1,6 -39,3 1,6 22,6 33,6 20,8

5y (%)
-0,3 -2,1 22,0 8,4 0,9 89,4 25,1 -87,0 5,5 25,4 -16,7 12,9 -39,0 -13,6 N/A 91,3 46,0 -17,8 13,1

1316,08 1236,72 1591,43 1547,44 1095,56 2518,05 1783,78 837,00 95,56 111,89 2042,00 8061,00 17550,00 2034,00 325,00 1687,00 727,50 791,25 1429,25

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) February 13 February 12 February 12 February 8 February 21 May 31

Contact list
COMMODITIES
Torbjrn Iwarson Peter Lvaas 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 Head of Commodities Norway Chief analyst Strategist Corporate Institutional Corporate/Institutional Corporate/Institutional Corporate/Institutional Corporate/Institutional

E-mail
torbjorn.iwarson@seb.se peter.lovaas@seb.no

Phone
+46 8 506 234 01 +47 22 82 72 70

Mobile

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

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

+47 92 48 92 30 +46 70 996 08 84 +46 70 714 90 79 leave +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.

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Recipients
In the UK, this report is directed at and is for distribution only to (I) persons who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (The Order) or (II) high net worth entities falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as relevant persons. This report must not be acted on or relied upon by persons in the UK who are not relevant persons. In the US, this report is distributed solely to persons who qualify as major U.S. institutional investors as defined in Rule 15a-6 under the Securities and Exchange Act of 1934. U.S. persons wishing to effect transactions in any security discussed herein should do so by contacting Skandinaviska Enskilda Banken AB (publ) (SEBAB). SEBAB accepts responsibility for the content of this report in connection with its distribution in the US. The distribution of this document may be restricted in certain jurisdictions by law, and persons into whose possession this documents comes should inform themselves about, and observe, any such restrictions.

The SEB Group: members, memberships and regulators Skandinaviska Enskilda Banken AB (publ) is incorporated in Sweden, as a Limited Liability Company. It is regulated by Finansinspektionen, and by the local financial regulators in each of the jurisdictions in which it has branches or subsidiaries, including in the UK, by the Financial Services Authority; Denmark by Finanstilsynet; Finland by Finanssivalvonta; Germany by Bundesanstalt fr Finanzdienstleistungsaufsicht and Norway by Finanstilsynet. In the US, SEBAB is a U.S. broker-dealer, registered with the Financial Industry Regulatory Authority (FINRA). SEBAB is a direct subsidiary of SEB. SEB is active on major Nordic and other European Regulated Markets and Multilateral Trading Facilities, in as well as other non-European equivalent markets, for trading in financial instruments. For a list of execution venues of which SEB is a member or participant, visit http://www.seb.se.

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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