ANZ RESEARCH

COMMODITY DAILY

Contacts: Mark Pervan Natalie Robertson

+613 9273 3716 | mark.pervan@anz.com +613 9273 3415 | natalie.robertson@anz.com

Nick Trevethan David Xu

+65 6681 6714 | nicholas.trevethan@anz.com | david.xu@anz.com

MARKET HIGHLIGHTS
! ! ! ! Crude finished flat, geopolitical risk supports prices Gold steady, German ESM ruling mostly priced in Metals down slightly, may rally on positive FOMC Newc down, iron ore slips

COMMODITY WRAP
!

KEY THEMES
! Overnight themes Markets rallied after the German Constitutional Court rejected complaints against the ESM bailout fund and fiscal pact. The Court allowed the ratification of the ESM by the German parliament on 29 June to pass, but with a couple of conditions. Euro zone officials quickly set a start date of 8 October for the ESM. The European Commission also presented proposals for euro-zone banking union. Equities ground higher and core European and US bond yields rose. The key event for offshore markets tonight is the FOMC meeting. We think the majority of voting members will want to initiate a new Large Scale Asset Program (e.g. QE3). Asset buying is likely to be open-ended with sizeable monthly flow (USD50-100bn), based on previous QE experience. The FOMC is restricted to buying agency debt and US Treasuries. We expect the purchases will be tilted towards mortgagebacked securities but there might be some additional longerduration US Treasury purchases as well.

September 13, 2012 Crude benchmarks ended the session flat after early gains. US crude touched its highest since August 23, while Brent rose as high as USD116.67/bbl after the favourable German ruling. Mounting geopolitical risk also supported prices after the US ambassador to Libya and other embassy staff were killed in an attack. However, prices retreated towards the end of the US session, on a mixture of profittaking and in response to an unexpected build in weekly crude oil inventories. EIA data showed weekly crude stocks rose 1.994mbbls, compared to expectations for a 2.9mbbls draw, while refinery operating rates were down 1.4% to 84.7%, the lowest level since April. According to the IEA, global oil demand will remain depressed for the next 18 months, while supply remains at comfortable levels. Gold rose to USD1,732.08/oz early Thursday from USD1,731.14 this time yesterday. Prices surged immediately after Germanys blessing of the ESM to USD1,746.20, a six-month high. The German decision was mostly prices in and the relatively low-key response was to be expected. The more important risk event is the FOMC. Like the German ruling, the market has priced in considerable expectations of policy action, but should our scenario prove correct, we would expect gold to rally back up to Wednesdays highs and probably beyond. We also think that such a rally would have greater longevity than yesterdays, with an upside target of USD1,768. Silver fell 23 cents to USD33.25/oz. Base metals fell by 0.2% on average early on Thursday, after failing to hold onto gains in the wake of the German court ruling. Copper fell USD21 to USD8,075/t this morning after touching our upside target of USD8,170 (highest since May) overnight. We would not rule renewed rallies on a positive FOMC outcome, but our near term strategy remains to sell into strength ahead of a more sustained uptrend we expect to develop in the fourth quarter. Aluminium continued to trade just below USD2,100 having closed on Wednesday at USD2,086. Aluminium has risen 9.4% so far this month, and we are becoming increasingly confident that the downtrend seen since March has broken. We view USD2,120 as the limit on the upside and expect the market to begin a period of consolidation from there down to around USD2,020.

OVERNIGHT RANKED PRICE MOVES (%)

2.6 Platinum 0.6 0.4 0.2 0.1 (0.0 (0.1) (0.2) (0.2) (0.2) (0.2) (0.3) (0.6) (1.0) (2.1) (3.0) (2.0) (1.0) 0.0 1.0 2.0 3.0 Tin Aluminium S&P 500 Copper Gold Lead Baltic Freight WTI Oil USD (DXY) Zinc Coal (NEWC) Silver Nickel Iron ore

Note: Coal (NEWC) refers to front month futures Sources: Bloomberg, ANZ Commodity Strategy

Newcastle September coal futures slipped 0.3% to USD90.70/t, while coking coal shed 2.5% to USD148.75/t. Q4 coking coal contract negotiations have been completed between BMA and Nippon Steel, with the price settling at AUD170/t. Although this is an AUD55.00 decrease from Q3 contract prices, the USD20 premium to spot prices was in line with our expectations. Looking ahead, we believe coking coal prices may show signs of recovery in the coming weeks. Spot iron ore fell 2.1% to USD98.10/t, while the January Chinese rebar contract was steady at RMB3,537/t. There have been reports that Chinas largest privately owned steelmaker, Jiangsu Shagang Group, has cut its rebar prices for the remainder of September a sign that producers are responding to market oversupply.

COMMODITY DATA
Close 1 Day 1 Wk 1 Mth 3 Mth Close 1 Day 1 Wk 1 Mth 3 Mth

Commodities

% Change
2082 8080 16601 1987 2111 20815 0.4 0.1 (1.0) (0.2) (0.1) 0.6 6.1 4.5 3.5 6.4 4.4 5.7 15.9 9.6 9.0 11.6 17.1 15.5 8.6 9.1 0.1 4.5 10.7 5.9

Inventories

% Change
4,854 216 121 930 298 12 (0.2) 0.5 0.0 (0.3) (0.7) 0.0 (0.4) 0.3 0.6 (1.9) (2.0) 0.0 (0.8) (8.7) 4.7 (5.6) (7.1) 0.2 (0.1) (12.0) 16.2 (1.3) (13.3) (3.7)

LME BASE METALS (US$/t)

Aluminium Copper Nickel Zinc Lead Tin

LME BASE METALS (kt)

Aluminium Copper Nickel Zinc Lead Tin

PRECIOUS METALS (US$/oz)

Gold Gold (A$/oz) Silver Platinum Palladium 1,732 1,656 33 1,647 678 (0.0) (0.1) (0.6) 2.6 1.2 2.3 (0.2) 3.2 4.8 5.1 8.0 8.5 19.6 18.0 17.7 6.6 1.8 16.2 10.2 6.8

Key Indices
S&P 500 VIX Volatility Index CRB Index LME Metals Index

Close
1,437 16 316 3,454

1 Day
0.2 (3.7) 0.3 0.0

1 Wk
2.4 (10.9) 2.4 4.9

1 Mth
2.2 8.0 4.6 11.0

3 Mth
8.1 (27.1) 16.0 7.6

% Change

ENERGY (US$/bbl)
WTI Oil* Brent Oil* Sing Gasoil 0.5% Sing Fuel Oil 180cst (US$/t) 97.01 115.78 132 699 (0.2) 0.3 0.2 (0.2) 1.7 2.4 (0.0) 0.9 2.8 (0.4) 1.5 3.4 15.6 19.3 19.8 14.8

Freight
Baltic Freight Rate Baltic Capesize Baltic Panamax Baltic Handysize

Close
661 1,186 545 471

1 Day
(0.2) (0.1) (3.7) 1.1

1 Wk
(3.4) (0.2) (15.8) 3.5

1 Mth
(9.2) 5.9 (32.0) (6.9)

3 Mth
(27.5) 2.1 (47.9) (26.1)

% Change

OTHER (US$/t)
China HR Coil (RmB/t) Richards Bay Coal API4 Newcastle Coal* Australia Coking Coal** Iron Ore Spot 3,419 86 90.7 153 98.1 (0.1) (0.6) (0.3) (2.1) 3.3 (3.3) (0.7) (5.4) 13.1 (5.8) (4.2) (1.0) (13.5) (13.3) (18.0) 5.8 7.1 (30.5) (27.2)

Currencies
DXY - USD Index AUD/USD - Aussie NZD/USD - Kiwi

Close
79.7 1.0 0.8

1 Day
(0.2) 0.1 0.1

1 Wk
(1.9) 2.5 3.0

1 Mth
(3.6) (0.5) 1.6

3 Mth
(2.8) 4.7 5.1

% Change

US$/t 2,500 2,300 2,100 1,900 1,700 Sep US$/t

2,300 2,200 2,100 2,000 1,900 1,800 1,700 Sep Nov

ALUMINIUM

US$/t 9,000 8,500 8,000 7,500 7,000 6,500

COPPER

US$/t 22,000 20,000 18,000 16,000 14,000

NICKEL

Nov

Jan

Mar

May

Jul

Sep US$/oz
1,900 1,850 1,800 1,750 1,700 1,650 1,600 1,550 1,500

Nov

Jan

Mar

May

Jul

Sep US$/oz
45.0 40.0 35.0 30.0 25.0

Nov

Jan

Mar

May

Jul

ZINC

GOLD

SILVER

Jan

Mar

May

Jul

Sep

Nov

Jan

Mar

May

Jul

Sep

Nov

Jan

Mar

May

Jul

US$/bbl
110 105 100 95 90 85 80 75 70 Sep Nov

WTI OIL

US$/t
130 120 110 100 90 80

NEWCASTLE COAL

A$
1.09 1.06 1.03 1.00 0.97 0.94 Sep Nov Jan

AUD

Jan

Mar

May

Jul

Sep

Nov

Jan

Mar

May

Jul

Mar

May

Jul

Notes: *Front-month futures **Weekly prices ***US on holidays, 1 day prices unchanged Sources: Bloomberg, McCloskey, ANZ Commodity Strategy

ANZ FORECASTS
ANZ Forecast Table1
COMMODITY
BASE METALS Aluminium Copper Nickel Zinc Lead Tin PRECIOUS METALS Gold Platinum Palladium Silver ENERGY WTI NYMEX Dated Brent Uranium BULKS Iron ore Spot (CIF China, fines) Coking coal - Premium hard Coking coal - Hard Coking coal - Semi-soft Newc Thermal Coal (Spot) Newc Thermal Coal (JPY Contract) OTHER METALS Alumina Molybdenum Cobalt EXCHANGE RATES AUD/USD NZD/USD EUR/USD USD/JPY USD/CAD USD/CNY US$ US$ US$ C$ Yuan 1.01 0.79 1.28 79.31 1.01 6.35 1.00 0.79 1.28 77.26 1.01 6.28 1.00 0.79 1.32 76.00 1.02 6.20 1.02 0.81 1.34 76.00 1.04 6.15 1.06 0.84 1.35 76.00 1.06 6.10 1.07 0.85 1.34 76.00 1.08 6.07 1.07 0.85 1.32 76.00 1.10 6.02 1.07 0.85 1.32 76.00 1.09 6.03 1.06 0.85 1.32 72.67 1.10 6.00 1.07 0.85 1.32 74.22 1.10 6.01 1.05 0.84 1.31 73.33 1.10 6.00 US$/t US$/lb US$/lb 248 13.5 14.0 237 13.5 14.1 245 14.2 15.1 258 14.6 15.8 271 14.9 16.5 281 15.3 17.0 282 15.8 17.3 280 16.3 17.5 277 16.5 17.3 273 16.3 16.8 271 16.0 16.5 US$/t US$/t US$/t US$/t US$/t US$/t 140.8 132.1 210.0 205.0 147.0 96.2 115.0 131.0 125.0 225.0 220.0 150.0 85.6 115.0 131.5 120.0 200.0 190.0 135.0 87.0 115.0 137.5 126.0 210.0 200.0 150.0 92.5 115.0 144.0 133.0 220.0 205.0 165.0 98.5 105.0 149.0 139.0 225.0 210.0 175.0 103.0 105.0 147.5 137.5 220.0 205.0 170.0 105.0 105.0 142.5 132.5 215.0 195.0 175.0 106.5 105.0 140.0 130.0 205.0 185.0 165.0 108.5 110.0 139.0 129.0 205.0 185.0 165.0 110.5 110.0 136.5 126.5 200.0 180.0 160.0 112.0 110.0 US$/bbl US$/bbl US$/lb 93.4 109.0 50.9 89.0 102.0 52.4 95.5 109.0 55.0 101.0 113.0 56.0 107.0 116.5 57.0 110.5 118.0 59.0 110.5 117.0 61.5 110.0 115.5 64.0 109.5 114.5 66.5 108.5 113.0 69.0 107.0 111.0 72.5 US$/oz US$/oz US$/oz US$/oz 1,612 1,501 629 29.5 1,639 1,474 606 28.2 1,700 1,525 665 30.0 1,750 1,585 720 32.0 1,800 1,655 765 33.8 1,810 1,705 810 34.8 1,770 1,720 828 35.2 1,710 1,710 823 35.2 1,670 1,695 817 34.5 1,650 1,685 808 33.3 1,635 1,673 793 31.9 US$/lb US$/lb US$/lb US$/lb US$/lb US$/lb 0.90 3.57 7.78 0.88 0.90 9.34 0.86 3.81 7.76 0.86 0.85 8.26 0.89 3.65 8.18 0.87 0.93 8.25 0.94 3.85 8.63 0.92 1.01 8.80 0.99 4.05 9.13 0.98 1.05 9.30 1.02 4.05 9.58 1.02 1.06 9.55 1.03 3.85 9.70 1.04 1.07 9.55 1.02 3.68 9.63 1.06 1.08 9.45 1.01 3.63 9.55 1.07 1.09 9.38 0.99 3.50 9.40 1.09 1.10 9.33 0.99 3.30 9.23 1.11 1.12 9.25 Unit Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14

Iron ore Contract (FOB Aust, fines) US$/t

Note 1: Average prices Note 2: Thermal coal prices are for JPY year starting April 1 Note 3: Historical data are actuals Sources: Bloomberg, ANZ Commodity Strategy, ANZ FX Strategy

IMPORTANT NOTICE: The distribution of this document or streaming of this video broadcast (as applicable, publication) may be restricted by law in certain jurisdictions. Persons who receive this publication must inform themselves about and observe all relevant restrictions. COUNTRY/REGION SPECIFIC INFORMATION: Australia. This publication is distributed in Australia by Australia and New Zealand Banking Group Limited (ABN 11 005 357 522) (ANZ). ANZ holds an Australian Financial Services licence no. 234527. A copy of ANZ's Financial Services Guide is available at http://www.anz.com/documents/AU/aboutANZ/FinancialServicesGuide.pdf and is available upon request from your ANZ point of contact. If trading strategies or recommendations are included in this publication, they are solely for the information of wholesale clients (as defined in section 761G of the Corporations Act 2001 Cth). Persons who receive this publication must inform themselves about and observe all relevant restrictions. BRAZIL. This publication is distributed in Brazil by ANZ only for the information of the Central Bank of Brazil. No securities are being offered or sold in Brazil under this publication, and no securities have been and will not be registered with the Securities Commission CVM. BRUNEI. JAPAN. KUWAIT. MALAYSIA. SWITZERLAND. TAIPEI. This publication is distributed in each of Brunei, Japan, Kuwait, Malaysia, Switzerland and Taipei by ANZ on a cross-border basis. EUROPEAN ECONOMIC AREA (EEA): UNITED KINGDOM. ANZ is authorised and regulated in the United Kingdom by the Financial Services Authority (FSA). This publication is distributed in the United Kingdom by ANZ solely for the information of persons who would come within the FSA definition of eligible counterparty or professional client. It is not intended for and must not be distributed to any person who would come within the FSA definition of retail client. Nothing here excludes or restricts any duty or liability to a customer which ANZ may have under the UK Financial Services and Markets Act 2000 or under the regulatory system as defined in the Rules of the FSA. GERMANY. This publication is distributed in Germany by the Frankfurt Branch of ANZ solely for the information of its clients. Other EEA countries. This publication is distributed in the EEA by ANZ Bank (Europe) Limited (ANZBEL) which is authorised and regulated by the FSA in the United Kingdom, to persons who would come within the FSA definition of eligible counterparty or professional client in other countries in the EEA. This publication is distributed in those countries solely for the information of such persons upon their request. It is not intended for, and must not be distributed to, any person in those countries who would come within the FSA definition of retail client. FIJI. For Fiji regulatory purposes, this publication and any views and recommendations are not to be deemed as investment advice. Fiji investors must seek licensed professional advice should they wish to make any investment in relation to this publication. HONG KONG. This publication is distributed in Hong Kong by the Hong Kong branch of ANZ, which is registered by the Hong Kong Securities and Futures Commission to conduct Type 1 (dealing in securities), Type 4 (advising on securities) and Type 6 (advising on corporate finance) regulated activities. The contents of this publication have not been reviewed by any regulatory authority in Hong Kong. If in doubt about the contents of this publication, you should obtain independent professional advice. INDIA. This publication is distributed in India by ANZ on a cross-border basis. If this publication is received in India, only you (the specified recipient) may print it provided that before doing so, you specify on it your name and place of printing. Further copying or duplication of this publication is strictly prohibited. NEW ZEALAND. This document is intended to be of a general nature, does not take into account your financial situation or goals, and is not a personalised adviser service under the Financial Advisers Act 2008. PEOPLES REPUBLIC OF CHINA. If and when the material accompanying this publication does not only relate to the products and/or services of Australia and New Zealand Bank (China) Company Limited (ANZ China), it is noted that: This publication is distributed by ANZ or an affiliate. No action has been taken by ANZ or any affiliate which would permit a public offering of any products or services of such an entity or distribution or re-distribution of this publication in the Peoples Republic of China (PRC). Accordingly, the products and services of such entities are not being offered or sold within the PRC by means of this publication or any other method. This publication may not be distributed, re-distributed or published in the PRC, except under circumstances that will result in compliance with any applicable laws and regulations. If and when the material accompanying this publication relates to the products and/or services of ANZ China only, it is noted that: This publication is distributed by ANZ China in the Mainland of the PRC. SINGAPORE. This publication is distributed in Singapore by the Singapore branch of ANZ solely for the information of accredited investors, expert investors or (as the case may be) institutional investors (each term as defined in the Securities and Futures Act Cap. 289 of Singapore). ANZ is licensed in Singapore under the Banking Act Cap. 19 of Singapore and is exempted from holding a financial advisers licence under Section 23(1)(a) of the Financial Advisers Act Cap. 100 of Singapore. In respect of any matters arising from, or in connection with the distribution of this publication in Singapore, contact your ANZ point of contact. UNITED ARAB EMIRATES. This publication is distributed in the United Arab Emirates (UAE) or the Dubai International Financial Centre (as applicable) by ANZ. This publication: does not, and is not intended to constitute an offer of securities anywhere in the UAE; does not constitute, and is not intended to constitute the carrying on or engagement in banking, financial and/or investment consultation business in the UAE under the rules and regulations made by the Central Bank of the United Arab Emirates, the Emirates Securities and Commodities Authority or the United Arab Emirates Ministry of Economy; does not, and is not intended to constitute an offer of securities within the meaning of the Dubai International Financial Centre Markets Law No. 12 of 2004; and, does not constitute, and is not intended to constitute, a financial promotion, as defined under the Dubai International Financial Centre Regulatory Law No. 1 of 200. ANZ DIFC Branch is regulated by the Dubai Financial Services Authority (DFSA). The financial products or services described in this publication are only available to persons who qualify as Professional Clients or Market Counterparty in accordance with the provisions of the DFSA rules. In addition, ANZ has a representative office (ANZ Representative Office) in Abu Dhabi regulated by the Central Bank of the United Arab Emirates. ANZ Representative Office is not permitted by the Central Bank of the United Arab Emirates to provide any banking services to clients in the UAE. UNITED STATES. If and when this publication is received by any person in the United States or a "U.S. person" (as defined in Regulation S under the US Securities Act of 1933, as amended) (US Person) or any person acting for the account or benefit of a US Person, it is noted that: ANZ Securities, Inc. (ANZ S) is a member of FINRA (www.finra.org) and registered with the SEC. Also, ANZ Ss address is 277 Park Avenue, 31st Floor, New York, NY 10172, United States of America (Tel: +1 212 801 9160 Fax: +1 212 801 9163). This publication is distributed in the United States by ANZ S (a wholly owned subsidiary of ANZ, which accepts responsibility for its content. Information on any securities referred to in this publication may be obtained from ANZ S upon request. Any US Person receiving this publication and wishing to effect transactions in any securities referred to in this publication must contact ANZ S, not its affiliates.

DISCLAIMER Except if otherwise specified above, this publication is issued and distributed in your country/region by ANZ, on the basis that it is only for the information of the specified recipient or permitted user of the relevant website (collectively, recipient). This publication may not be reproduced, distributed or published by any recipient for any purpose. It is general information and has been prepared without taking into account the objectives, financial situation or needs of any person. Nothing in this publication is intended to be an offer to sell, or a solicitation of an offer to buy, any product, instrument or investment, to effect any transaction or to conclude any legal act of any kind. If, despite the foregoing, any services or products referred to in this publication are deemed to be offered in the jurisdiction in which this publication is received or accessed, no such service or product is intended for nor available to persons resident in that jurisdiction if it would be contradictory to local law or regulation. Such local laws, regulations and other limitations always apply with non-exclusive jurisdiction of local courts. Before making an investment decision, recipients should seek independent financial, legal, tax and other relevant advice having regard to their particular circumstances. The views and recommendations expressed in this publication are the authors. They are based on information known by the author and on sources which the author believes to be reliable, but may involve material elements of subjective judgement and analysis. Unless specifically stated otherwise: they are current on the date of this publication and are subject to change without notice; and, all price information is indicative only. Any of the views and recommendations which comprise estimates, forecasts or other projections, are subject to significant uncertainties and contingencies that cannot reasonably be anticipated. On this basis, such views and recommendations may not always be achieved or prove to be correct. Indications of past performance in this publication will not necessarily be repeated in the future. No representation is being made that any investment will or is likely to achieve profits or losses similar to those achieved in the past, or that significant losses will be avoided. Additionally, this publication may contain forward looking statements. Actual events or results or actual performance may differ materially from those reflected or contemplated in such forward looking statements. All investments entail a risk and may result in both profits and losses. Foreign currency rates of exchange may adversely affect the value, price or income of any products or services described in this publication. The products and services described in this publication are not suitable for all investors, and transacting in these products or services may be considered risky. ANZ and its related bodies corporate and affiliates, and the officers, employees, contractors and agents of each of them (including the author) (Affiliates), do not make any representation as to the accuracy, completeness or currency of the views or recommendations expressed in this publication. Neither ANZ nor its Affiliates accept any responsibility to inform you of any matter that subsequently comes to their notice, which may affect the accuracy, completeness or currency of the information in this publication. Except as required by law, and only to the extent so required: neither ANZ nor its Affiliates warrant or guarantee the performance of any of the products or services described in this publication or any return on any associated investment; and, ANZ and its Affiliates expressly disclaim any responsibility and shall not be liable for any loss, damage, claim, liability, proceedings, cost or expense (Liability) arising directly or indirectly and whether in tort (including negligence), contract, equity or otherwise out of or in connection with this publication. If this publication has been distributed by electronic transmission, such as e-mail, then such transmission cannot be guaranteed to be secure or error-free as information could be intercepted, corrupted, lost, destroyed, arrive late or incomplete, or contain viruses. ANZ and its Affiliates do not accept any Liability as a result of electronic transmission of this publication. ANZ and its Affiliates may have an interest in the products and services described in this publication as follows: ! They may receive fees from customers for dealing in the products or services described in this publication, and their staff and introducers of business may share in such fees or receive a bonus that may be influenced by total sales. They or their customers may have or have had interests or long or short positions in the products or services described in this ! publication, and may at any time make purchases and/or sales in them as principal or agent. ! They may act or have acted as market-maker in products described in this publication. ANZ and its Affiliates may rely on information barriers and other arrangements to control the flow of information contained in one or more business areas within ANZ or within its Affiliates into other business areas of ANZ or of its Affiliates. Please contact your ANZ point of contact with any questions about this publication including for further information on the above disclosures of interest.