SEB Commodities Monthly

Tight oil market heading into heating season

18 OCTOBER 2011

Commodities Monthly

Tight oil market heading into heating season

GENERAL

0-3 M

4-6 M

7-12 M

UBS Bloomberg CMCI Sector Indices

(price indices, weekly closing, January 2010 = 100)
1 80 1 70 1 60 1 50 1 40 1 30 1 20 1 10 1 00 90 jan-10 fe 0 b-1 m ar-10 a pr-10 m aj-10 jun-10 jul-10 a ug-10 sep-10 o kt-10 no 0 v-1 d ec-10 jan-11 fe 1 b-1 m ar-11 a pr-11 m aj-11 jun-11 jul-11 a ug-11 sep-11 o kt-11
YT (% D ) M (% /M ) C m ditie om o s

Increasingly likely resolute action to contain the Eurozone debt crisis will probably sustain the current commodity rebound. However, momentum may soon ease or reverse with even more lacklustre OECD leading indicators signalling weak global growth in 2012. Chinas more than one year old monetary tightening cycle is now showing significant effect, stirring up some hard landing concerns.

In dustria M ls l eta Precio M tals us e Ene rgy Agricu lture

ENERGY

0-3 M

4-6 M

7-12 M

The crude oil market remains strong after rebounding rapidly following Septembers commodity market slump. Held back by global growth concerns we expect Brent crude to trade around $110/b in Q4. European oil inventories near a nine year low, elevated geopolitical risk and little further downside in OECD oil consumption suggest that there is still a risk for an oil price spike that could threaten the global economic recovery. In the event of an abrupt slowdown in global growth we do not expect Brent prices to fall below $80/b for prolonged periods. Upside risk dominates in the Nordic power market on approaching winter and low Swedish nuclear availability.

80

Sector performance last month

(MSCI World, UBS Bloomberg CMCI price indices)
16 14 12 10 8 6 4 2 0 -2 -4 -6 -8 -10 -12 -14 -16 -18

INDUSTRIAL METALS

0-3 M

4-6 M

7-12 M

Industrial metals prices are likely to struggle as long as the global growth outlook remains uncertain and Chinese authorities continue to cool down the local economy. A short term rebound after the September sell-off is however possible. With prices digging into the marginal production cost curves we believe a significant adverse growth outlook development would be necessary to send the sector significantly lower.

PRECIOUS METALS

0-3 M

4-6 M

7-12 M

We regard Septembers gold sell-off as a relatively normal consolidation and expect prices to return to the long term trend going forward. The correction was driven by volatile financial investors rather than more committed longer term physical investors. Gold prices should continue to thrive in a strong liquidity, low real interest rate and high systemic risk environment. A further deterioration in the situation in Europe, particularly a break-up of the Euro-zone, has the potential to drive gold upward to new real term highs (>$2300/ozt) within the next year.

Winners & Losers last month

(%)
6 4 2 0 -2 -4 -6 -8 -10 -12 -14 -16 -18 -20 -22

AGRICULTURE

0-3 M

4-6 M

7-12 M

While agricultural commodity prices have been under pressure from global growth concerns, we expect them to substantially recover in the short term. However, the general price level is unlikely to exceed previous 2011 highs due to the onset of demand destruction. Weather risks remain high with forecasts still indicating increasingly strong La Nia conditions going forward.

Chart Sources: Bloomberg, SEB Commodity Research

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

S r ilve C 2 (E A O U ) P latinum Pa lladium Le ad C pper o N ickel W heat C offe (A r.) Zin c C orn C otton N ga (U ) at. s S S l billets tee G ld o S oybea ns Tin P er (C ow ont.) S ugar Alum ium in C a (U ) oco S W TI B rent G asoline H eat. oil (U ) S P er ow

Agricu re ltu

Ind ustria l m ls eta

Eq uitie s

En y erg

Pre ciou s m ls eta

Commodities Monthly

General
Following a heavy sell-off in September commodities have recovered so far this month and are likely to move higher still, at least in the short term if European policymakers are successful in containing the Euro-zone debt crisis as now seem increasingly likely. On the other hand, the present upturn may not last long. The Euro-zone debt turmoil in Q3 is likely to have growth reducing effects for Q4-11 and Q1-12 while OECD leading indicators suggest that most regions are facing below trend growth within the next six months. D-day in Europe will be on October 23 when European governments will be required to seriously address and take effective decisions to resolve the present crisis, the most important components of which are guarantees for systemically important banks and increased powers for the 440bn EFSF bail-out fund to issue guarantees for distressed government bonds. If next weeks meeting produces a successful and satisfying resolution to the European situation it will probably extend the present risk-on rebound and also enable the USD to depreciate, both positive factors for commodities generally. The rebound could however be of limited duration. During Q3, risk aversion and banking sector stress within the Eurozone will have seriously restricted credit supply to companies due to the ongoing financial turmoil. The effect will be to reduce growth in Q4-11 and Q1-12, a conclusion supported by recent OECD leading economic indicators which fell for a fifth consecutive month in August (released October 10) showing slower growth in all regions except Japan which remained unchanged. All areas except Japan, Russia, Germany and the US are currently showing below trend growth within the next six months. Consequently, the present rebound may well dissipate fairly quickly. A key uncertainty involves further developments in China. Its tighter monetary conditions over the past year are now starting to show its full effect. However, with inflation still showing no significant reduction, eased monetary conditions may still be some way off. Indeed, there is a small but definite risk that China could face a hard landing with the delayed effects of monetary tightening increasingly strangling credit supply to smalland medium sized companies. Anecdotally, showrooms for apartments under construction are now empty, house prices have begun to fall and buying land for construction is clearly weakening. While the Chinese government could easily counter these developments by easing monetary conditions there is some concern it will do so too late given its current preference for fighting inflation.

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

OECD composite leading indicators

(monthly, 100 corresponds to long term trend growth in industrial production)
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 8 9 8 8 20 05

C in h a E ro n u zo e O D EC U SA R fe n e re ce

20 06

20 07

20 08

20 09

21 00

Chart Sources: Bloomberg, SEB Commodity Research

21 01

Commodities Monthly

Crude oil
Despite strong fundamentals the crude oil market has been under pressure from macroeconomic uncertainty primarily related to increased US recession risk and European sovereign debt concerns. These factors are likely to continue to limit short term upside risk with crude oil prices falling during periods of risk aversion. However, such sell-offs are likely to be relatively short-lived unless the US actually moves into recession or worries regarding a Chinese hard landing increase. Still, even under such circumstances we think it unlikely that Brent crude will trade below $80/b for long periods as OPEC states have much stronger incentives to defend high crude oil prices compared to 2008. On the other hand, mere stabilization of global growth expectations at the current level would motivate stronger crude oil prices. For example, resolute action by European leaders to resolve the regions sovereign debt crisis could turn sentiment more bullish. Moving into the winter heating season, a very tight European fuel market is clearly also a bullish element in the short- to medium term. Meanwhile geopolitical risk remains extremely high given present reserve capacity with several problem areas within MENA. Unrest in yet another major oil producing state could cause oil prices to spike. We see no reason to revise our current average Brent price forecast (Q4-11: $110/b, 2012: $110/b, 2013: $115/b). OPEC has begun signalling its willingness to take a defensive stand. It regards the oil market as well balanced and signals that output reductions should be expected if lower demand looks likely. The organization has indicated that prices of below $90/b will be hard to accept, especially due to the need to finance enormous expenditure aimed at preventing social unrest. The risk of an increasingly tight sweet crude oil market has decreased slightly with Libya the key issue even though North Sea and Nigerian shipment rates are also important. Libya accounted for around 10% of global sweet crude oil supply before its recent conflict. A faster than expected market return of its oil would be bearish. Indeed, it could well depress the price of high quality crude oils including Brent by several US dollars. Market estimates suggest Libyan production is approaching 200 kb/d, with around 50% intended for exports. According to the latest IEA estimate, production could rise to 300 kb/d in Q4, 1.1 mb/d at end-2012 and 1.6 mb/d over the next 2-3 years. In coming decades production may well increase to 3 mb/d if foreign investments can be attracted. So far looting and the destruction of export terminals appear the main problems, with oil well damage limited. However, underground deterioration due to prolonged outages will take much longer to assess.

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
o n

N EXW I YM T IC Bre t E n

US crude oil inventories

(DOE, mb, weekly data)
38 0 37 0 36 0 35 0 34 0 33 0 32 0 31 0 j f m a m j j a s d 200 010 av 6-2 g. 201 0 201 1

Chart Sources: Bloomberg, SEB Commodity Research

Current global crude oil demand estimates

2010 (mb/d) 89.2 88.40 87.81 Revision (kb/d) -50 +200 -180 2011 (mb/d) 90.5 89.84 89.01 Revision (kb/d) -210 +250 -250

IEA EIA OPEC

21 01

Commodities Monthly

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

Brent futures curve

(ICE, $/b)
16 1 15 1 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 m r-1 a 2 m r-1 a 3 m r-1 a 4 d c-1 e 1 se -1 p 2 d c-1 e 2 se -1 p 3 d c-1 e 3 se -1 p 4 ju -1 n 2 ju -1 n 3 ju -1 n 4 1 -0 -1 1 8 2 1 -0 -1 1 9 4 1 -1 -1 1 0 4

1 -0 -1 1 8 2 1 -0 -1 1 9 4 1 -1 -1 1 0 4

fe -1 b 2

fe -1 b 3

fe -1 b 4

fe -1 b 5

m r-1 a 5

d c-1 e 4

se -1 p 5 d

m j-1 a 2

m j-1 a 3

m j-1 a 4

m j-1 a 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 N EXG so e YM a lin N EXH a g o YM e tin il

ag 2 u -1

ag 3 u -1

ag 4 u -1

ag 5 u -1

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 G so e 2 0 -2 1 a g a lin 0 6 0 0 v . G so e 2 1 a lin 0 1 D istilla fu l o 2 0 -2 1 a g te e il 0 6 0 0 v . D istilla fu l o 2 1 te e il 0 1

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

US natural gas futures curve

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

Chart Sources: Bloomberg, SEB Commodity Research

d c-1 e 5

ju -1 n 5

Commodities Monthly

Nordic power
Nordic power price
Recently, the situation in the Nordic power market has been both fascinating and volatile. The continuation of long-running wet, mild weather over Scandinavia into the first week of October before the resumption of more normal colder conditions resulted in a very sharp upturn in spot prices from EUR 8/MWh to EUR 35/MWh. Spot prices averaged EUR 28.94/MWh in September, down 28% m/m, compared with EUR 9.99/MWh during the first week of October. Swedish nuclear production still suffers from major disturbances. Since the end of September all four reactors at the Ringhals nuclear plant have been offline simultaneously, the first time this has occurred since they were commissioned. At the time of writing four out of ten Swedish reactors are running, representing around 40% of maximum capacity (with an additional two reactors coming online shortly). Swedish nuclear energy production plays a key role, not just in helping determine the power price, but also the transmission system balance. Despite a significantly improved hydrological balance (now: +10 TWh) high prices are again likely this winter if nuclear availability remains poor once the cold weather begins. Forward markets also eased back last month although by less than spot prices. Currently, a huge spread exists between spot prices and prompt forwards. Poor Swedish nuclear availability is also reflected in the steep prompt price curve and even more so in forward prices for Swedish price areas. Huge amounts of water, severely limited nuclear energy and new Swedish price areas (from November 1) have made the prompt market increasingly nervous and unpredictable. During September, Q1-12 fell from EUR 51.85/MWh to EUR 46.95/MWh, trading at EUR 47.70/MWh currently. Cal-12 fell from EUR 47.60/MWh to EUR 44.10/MWh. It now trades at EUR 44.45/MWh. However, these price developments have not benefited Swedish consumers as the countrys price areas traded up during September, mainly on nuclear problems. Malm and Stockholm both trade at respective premiums to the system price, at EUR 13.50/MWh and EUR 6.90/MWh (Q1-12), respectively. Going forward we recommend Swedish consumers to hedge consumption over the winter. Based on the last two winters and uncertainties surrounding nuclear power plants we think it represents inexpensive insurance at current prices. For the forward curve we hold a short- to medium term neutral to bullish view.
(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 01 21 01

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 00

EUA price
(ECX ICE, /t, Dec. 11, weekly closing)
3 5

3 0

2 5

2 0

1 5

1 0

5 20 06 20 07 20 08 20 09

Chart Sources: Bloomberg, SEB Commodity Research

Commodities Monthly

Industrial metals
Industrial metals markets have refocused away from tight supply, concentrating instead on demand weakness caused by growth concerns connected with the European sovereign debt crisis. Consequently, some metals consumers have begun cancelling or postponing orders, preferring instead to run down inventories. In addition tight Chinese credit conditions continue to restrict activities by the worlds largest metals consumer. High market volatility is likely to continue until policymakers take decisive action to curb the European sovereign debt crisis. Hopes are high that this will occur at the end of October. Certainly, we see no reason for a major sector rebound until a credible solution has been found. Still, the sell-off is unlikely to continue pending presentation of fresh proposals and their assessment by markets. However, with time running out policymakers will take special care not to disappoint this time. Consequently we consider short term risk skewed to the upside. In the medium term industrial metals are likely to struggle in lacklustre OECD growth and Chinese hard landing worries before moving higher again. In China monetary breaks remain in place. Both inflation and growth continue strongly. We still consider the risk of a Chinese hard landing as low although if it were to increase it could well trigger a further downward leg to the present slump. Potential catalysts are sticky inflation, a deep OECD recession and a domestic slowdown. At present, market dynamics are focused mainly on the high risk of an OECD recession. However, downside risk in OECD demand for industrial metals is limited. Consequently the industrial metals market discounts a significant risk of a Chinese hard landing. A soft landing would imply ~9% growth in 2011 and ~8% in 2012 while a hard one would indicate a decrease towards 7% over the next 18 months. So far, however, overall Chinese industrial metal demand remains strong. Current prices are also likely to stimulate Chinese buying further and could trigger a restocking wave, particularly in copper. When international prices fall it becomes more attractive for Chinese consumers to import than to buy from high cost domestic producers. Chinas potential impact on the industrial metals market should never be underestimated as the country represents around 40% of consumption of all industrial metals worldwide. In addition to the spillover effects of global growth concerns, there are several potential domestic hard landing triggers, the two biggest being the real estate market and banking sector. In addition, tight credit has created a black lending market in China, which is causing major problems for smaller businesses as large companies, with access to credit, lend to their smaller counterparts at exorbitant interest rates.

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 Tin 21 01

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

LME price and inventory changes last month

4 0 3 5 3 0 2 5 2 0 1 5 1 0 5 0 -5 -1 0 Alu in m m iu Cpe opr N icke l La ed Zin c Ste l e -1 5 Price (% ) In e to s (% v n rie )

Chart Sources: Bloomberg, SEB Commodity Research

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

Commodities Monthly

Industrial metals
Aluminium
Chinese domestic inventories have decreased so far this year as domestic production is currently restricted by power shortages. LME inventories also fell in September but remain close to record highs. Chinese consumption has stabilized at a new all time high over the past two months while global demand has decreased slightly, also from record highs. Aluminium currently trades below Chinese marginal production costs, limiting immediate downside risk. We think it unlikely aluminium prices will fall below $2000/t unless the global growth outlook deteriorates further.

LME aluminium price and inventories

(weekly data)
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 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
According to the latest International Copper Study Group (ICSG) forecast the refined copper market deficit will total 201 kt in 2011 (refined production: 19.68 mt) and 256 kt in 2012 (refined production: 20.39 mt). However, the ICSG expects the copper market to regain equilibrium in 2013, moderating the long term view. LME copper inventories stabilized over the summer, recently tending to decrease due to open arbitrage to Shanghai attributable to significant restocking demand. With Chinese buyers very likely to return in force at current levels, we are fairly confident copper prices have bottomed. Generally, we regard copper as attractive at present prices given the current strained market balance. However, support from marginal production costs does not apply above a price of $6500/t.

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 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 21 00 21 01 600 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 01 400 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) 100 10 100 00 90 00 80 00 70 00 60 00 50 00 40 00 30 00 20 00 10 00

Nickel
Nickel prices have fallen below Chinese NPI marginal production costs which should limit downside risk going forward. We expect nickel will trade around $20000/t in the short term if macroeconomic concerns persist. Nickel supply is likely to increase significantly in coming years, with 50% of volume from laterite ores. However, technical challenges continue to impact the extraction of nickel from laterite ores, leaving the supply outlook relatively uncertain. While we expect long term marginal production costs to approach $20000/t prices could dip towards $15000/t in coming years if supply increases in line with the strongest scenario.

inventories 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 Zin c
According to the International Lead and Zinc Study Group (ILZSG) refined zinc supply is expected to increase by 2.7% in 2011 (to 13.16 mt) and 2.4% in 2012 (to 13.48 mt). ILZSG expects demand to grow by 2.2% in 2011 (to 12.85 mt) and 3.9% in 2012 (to 13.35 mt), generating surpluses of 317 kt and 135 kt tonnes in 2011 and 2012, respectively. This supports our view that the zinc market is unlikely to tighten much before late 2012. We regard the metal as the least likely of all major industrial metals to rally in the short to medium term. Zinc is also supported by marginal production costs in line with the current price level.

LME zinc price and inventories

(weekly data)
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 10 30 10 20 10 10 10 00 600 00 500 00 400 00 300 00 200 00 100 00 0 ju 8 l-0 ju 9 l-0 ju 0 l-1 o 8 kt-0 o 9 kt-0 o 0 kt-1 ja -0 n 9 ja -1 n 0 a r-0 p 9 a r-1 p 0 ja -1 n 1 a r-1 p 1 ju 1 l-1 300 60 L E in e to (t, le a M v n ris ft xis) 30 50 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 01 300 50 300 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 L Ep M rice ($ rig t a /t, h xis) 300 00 200 70 200 40 200 10 100 80 100 50 100 20 90 00 60 00 30 00 300 30 90 0 80 0 70 0 60 0 50 0 40 0 30 0 20 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 20 50 20 00 10 50 10 00 50 0

Steel
Iron ore and scrap steel prices have traded down significantly during September and the first half of October. The latest TSI carbon steel market survey shows 70% of companies worldwide expect weaker prices while 47% forecast a lower off-take. Reportedly, several Chinese mills have (or plan to) shut down furnaces to counter negative profit margins. According to the latest World Steel Association forecast apparent global steel use will increase by 6.5% in 2011, compared with 15.1% in 2010. Stainless steel producers are reported to be facing significant overcapacity, especially in Europe.

LME steel billet price and inventories

(weekly data)
900 00 800 00 700 00 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

LME tin price and inventories

(weekly data)
400 00

Chart Sources: Bloomberg, SEB Commodity Research

Commodities Monthly

Industrial metals
Aluminium futures curve
(LME, $/t)
27 65 25 60 22 65 20 60 27 55 25 50 22 55 20 50 27 45 25 40 22 45 20 40 27 35 25 30 22 35 20 30 27 25 25 20 22 25 20 20 27 15 o 1 kt-1 o 2 kt-1 o 3 kt-1 a r-1 p 2 a r-1 p 3 a r-1 p 4 ja -1 n 2 ja -1 n 3 ja -1 n 4 ju 2 l-1 ju 3 l-1 ju 4 l-1

Copper futures curve

(LME, $/t)
90 00 80 90 80 80 80 70 80 60 80 50 80 40 80 30 80 20 80 10 80 00 70 90 70 80 70 70 70 60 70 50 70 40 o 1 kt-1 a r-1 p 2 ja -1 n 2 o 5 kt-1 ju 5 l-1

1 -0 -1 1 8 2 1 -0 -1 1 9 4 1 -1 -1 1 0 4

1 -0 -1 1 8 2 1 -0 -1 1 9 4 1 -1 -1 1 0 4

o 2 kt-1

o 3 kt-1

o 4 kt-1

o 4 kt-1

Nickel futures curve

(LME, $/t)
250 10 220 15 200 10 270 05 250 00 220 05 200 00 170 95 150 90 120 95 100 90 170 85 150 80 120 85 ju 2 l-1 ju 3 l-1 ju 4 l-1 ju 5 l-1 o 1 kt-1 o 2 kt-1 o 3 kt-1 o 4 kt-1 o 5 kt-1 ja -1 n 2 ja -1 n 3 ja -1 n 4 ja -1 n 5 a r-1 p 2 a r-1 p 3 a r-1 p 4 a r-1 p 5 1 -0 -1 1 8 2 1 -0 -1 1 9 4 1 -1 -1 1 0 4

a r-1 p 5

Zinc futures curve

(LME, $/t)
22 35 20 30 27 25 25 20 22 25 20 20 27 15 25 10 22 15 20 10 27 05 25 00 22 05 20 00 17 95 15 90 12 95 10 90 ju 2 l-1 ju 3 l-1 o 1 kt-1 o 2 kt-1 o 3 kt-1 ja -1 n 2 ja -1 n 3 ja -1 n 4 a r-1 p 2 a r-1 p 3 a r-1 p 4

1 -0 -1 1 8 2 1 -0 -1 1 9 4 1 -1 -1 1 0 4

ju 4 l-1

o 4 kt-1

ju 5 l-1 n v-1 o 2

Lead futures curve

(LME, $/t)
27 45 25 40 22 45 20 40 27 35 25 30 22 35 20 30 27 25 25 20 22 25 20 20 27 15 25 10 22 15 20 10 27 05 25 00 22 05 20 00 17 95 ju 2 l-1 ju 3 l-1 o 1 kt-1 o 2 kt-1 a r-1 p 2 a r-1 p 3 ja -1 n 2 ja -1 n 3

Tin futures curve

(LME, $/t)
280 40 240 40 200 40 1 -0 -1 1 8 2 1 -0 -1 1 9 4 1 -1 -1 1 0 4 260 30 220 30 280 20 240 20 200 20 n v-1 o 1 fe -1 b 2 260 10 ju 4 l-1 ju 5 l-1 o 3 kt-1 o 4 kt-1 o 5 kt-1 o 1 kt-1 a r-1 p 4 a r-1 p 5 ja -1 n 4 ja -1 n 5 m r-1 a 2 m j-1 a 2 d c-1 e 1 ja -1 n 2 ju 2 l-1 o 2 kt-1 a r-1 p 2 se -1 p 2 ag 2 u -1 d c-1 e 2 ju -1 n 2 1 -0 -1 1 8 2 1 -0 -1 1 9 4 1 -1 -1 1 0 4

Chart Sources: Bloomberg, SEB Commodity Research

10

o 5 kt-1

ja -1 n 5

a r-1 p 5

o 5 kt-1

a r-1 p 3

a r-1 p 4

a r-1 p 5

ja -1 n 3

ja -1 n 4

ja -1 n 5

ju 2 l-1

ju 3 l-1

ju 4 l-1

ja -1 n 5

ju 5 l-1

Commodities Monthly

Precious metals
We see a dominant upside risk for gold prices over the coming year and believe the metal has potential to post a new nominal term high before the end of this year and a new real term high (>$2300/ozt in nominal terms) before the end of 2012. The principal driver behind this scenario is an escalating European sovereign debt crisis and potential breakup of the Euro-zone. Additional support could come from further liquidity surges whenever increasingly desperate policymakers are forced to take extreme steps to try to boost growth. A fresh round of US quantitative easing would keep the dollar under pressure, also providing support for gold prices. Gold has acquired an undeservedly bad reputation due to the September correction. However, while the MSCI World index has fallen by about 14% since the current downturn began, gold is still up about 9.% over the same period. Furthermore, the correction itself is fully consistent with previous post-rally consolidations in recent years, and was driven by forced liquidation on profit-taking to cover losses elsewhere, by higher margin demands due to increased prices and greater volatility, and by a stronger US dollar attributable to risk aversion and generally overbought gold market conditions following the rally from $1500-1900/ozt. Regarding investor activity almost exclusively financial investors sold gold during the September correction while physical ETF providers reported only marginal outflows. Speculative COMEX gold longs are now back at levels not seen since 2009 and well below historical highs. Time is running out for European leaders to resolve the regions debt crisis. Stakes are high, both for the Eurozone and the rest of the world with no one likely to escape the effects of a further deterioration in the present situation. Chancellor Merkel and President Sarkozy have both promised to produce very substantial measures before the end of October following accusations from both China and the US that Europes response to the crisis has been too slow and not gone far enough. In a very short period European leaders need to agree how to resolve not only the immediate issues (Greece and bank recapitalization) but also the long term principles by which the EMU operates. If they fail to do so it could signal the beginning of the end of the euro in its current form. Important events include the European Council meeting on October 23 and the G20 meeting on November 3-4. If these discussions prove successful, it would of course reassure markets generally, reducing risk aversion which would be bearish for gold. However, it would probably also be dollar bearish which would in turn be again bullish for gold. In addition, the ECB would probably be required to initiate another round of quantitative easing which would also provide support for gold.

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 N K O 21 01 C F H

Gold and currencies vs. USD

2 0 1 8 1 6 1 4 1 2 1 0 8 6 4 2 0 -2 -4 -6 -8 G L OD EU R JPY G BP SEK R B U YT (% D ) M M (% o )

Chart Sources: Bloomberg, SEB Commodity Research

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

11

Commodities Monthly

Precious metals
Gold
Physical gold ETF holdings have been relatively stable after significant outflows in late August. They currently stand at 2218 tonnes, 82 tonnes below their record high. According to the GFMS central banks continue to buy gold. Their holdings increased by 216 tonnes in H1-11 and are forecast to rise by a further 120 tonnes before the end of this year. Net speculative long positions in COMEX gold have almost halved since hitting an all time high in August to stand at post-early 2009 lows. Following the gradual closure of hedging books over the last decade we now see signs that gold producers have restarted hedging future production, which could become a bearish factor if the process accelerates. Following a post-2008 recovery, mine production appears to have stalled according to latest industry data.

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 00 21 01 21 01 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 50 5 30 0 15 50 10 30 15 00

Silver
Physical silver ETF holdings have been trending higher since the summer to currently 17550 tonnes, recovering some lost ground from the major sell-off which occurred in Q2. US Mint silver coin sales were strong in September, attracting the second highest volumes this year. Like gold, net speculative positions in COMEX silver have fallen significantly since the end of August and are now well below their post-1990s historical average. We have once again become increasingly bullish towards silver with the gold to silver ratio having corrected to a more comfortable level.

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

Palladium Platinum & Palladium

Physical platinum ETF holdings at 42.7 tonnes are still near record highs (44.4 tonnes). Holdings have remained stable since March this year. Conversely, palladium holdings have continued to decrease to currently 53.0 tonnes, well below their March all time high (73.0 tonnes). While net long speculative positions in platinum have fallen only slightly compared to gold and silver the correction in palladium positions was the strongest in the sector with net speculative longs now only slightly above the lowest levels seen during the financial crisis. We see value in both metals at current prices with the main downside risk a substantial slowdown in the auto industry.

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

Commodities Monthly

Precious metals
Gold futures curve
(COMEX, $/ozt)
20 00 17 95 15 90 12 95 10 90 17 85 15 80 12 85 10 80 17 75 15 70 12 75 10 70 17 65 15 60 o 1 kt-1 ja -1 n 2 a r-1 p 2 ju 2 l-1 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 1 -0 -1 1 8 2 1 -0 -1 1 9 4 1 -1 -1 1 0 4

Silver futures curve

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

1 -0 -1 1 8 2 1 -0 -1 1 9 4 1 -1 -1 1 0 4

ju -1 n 3

ju -1 n 4

ju -1 n 5

se -1 p 3

d c-1 e 3

se -1 p 4

d c-1 e 4

se -1 p 5

m r-1 a 3

m r-1 a 4

m r-1 a 5

d c-1 e 5

Palladium futures curve

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

Platinum futures curve

(NYMEX, $/ozt)
14 80 12 80 10 80 18 70 16 70 14 70 12 70 10 70 18 60 16 60 14 60 12 60 10 60 18 50 16 50 14 50 o 1 kt-1 ja -1 n 2

1 -0 -1 1 8 2 1 -0 -1 1 9 4 1 -1 -1 1 0 4

1 -0 -1 1 8 2 1 -0 -1 1 9 4 1 -1 -1 1 0 4

se -1 p 2

d c-1 e 2

ju -1 n 2

ju 2 l-1

m r-1 a 6

Physical silver Physical silver and gold ETP holdings

(weekly data, tonnes)
20 30 20 20 20 10 20 00 10 90 10 80 10 70 10 60 10 50 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 10 40 S e h ld g / 1 ilv r o in s 0 G ld h ld g o o in s

palladium Physical palladium and platinum ETP holdings

(weekly data, tonnes)
7 5 7 0 6 5 6 0 5 5 5 0 4 5 4 0 3 5 3 0 2 5 ja -1 n 0 fe b-10 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 b-11 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 2 0 Palla m diu Pla u tin m

Chart Sources: Bloomberg, SEB Commodity Research

13

o 2 kt-1

a r-1 p 2

ju -1 n 6

Commodities Monthly

Agriculture
Despite a slightly brighter global inventory picture, we have turned short term bullish towards grains following the September sell-off. The correction triggered an expected wave of buying in global grain markets that cushioned prices. In September grains and agricultural commodities in general were depressed by macroeconomic concerns as the global growth outlook was hurt by the European sovereign debt crisis. However, the fundamental situation continues to support grain with healthy demand, low inventories and greater weather risk due to increasingly strong La Nia conditions. We do not expect prices to exceed 2011 highs in the foreseeable future absent additional adverse weather strikes. Anecdotal evidence supports our view that demand destruction was a significant factor in preventing grain prices from rising further in August. Our medium term view is therefore neutral and our long term perspective more bearish as the weather risk premium should dissipate when La Nia ends next year. It should however be remembered that agricultural commodities are not immune from macroeconomic concerns, although reactions to them tend to be more modest compared with, for example, industrial metals and energy commodities. During periods of sharply higher risk aversion the sector will be affected by a strong USD and the sell-off of higher risk assets. The USDA quarterly grain stock report traditionally contains surprise elements. On this occasion, corn inventories exceeded the most optimistic expectations, although they are still sharply lower compared with last year. They remain critically low. Consequently, we still believe corn is the most bullish grain with the greatest sensitivity to additional disturbances. Given the strong relationships that exist within the grains sector, corn also remains a bullish influence on wheat and soybeans. According to the latest meteorological forecasts we have entered a new period for the La Nia phenomenon which appears likely to strengthen going forward and remain in place during the northern hemisphere winter. Historical parallels suggest that strong La Nia developments, such as occurred in 2011/12, are often followed by weaker events. At present, global crop weather is relatively favourable, except for the prolonged drought in the south-central US which may be prolonged by the developing La Nia phenomenon. A current extreme risk is an eruption of the Katla volcano in Iceland, The first indication came with the Eyjafjallajkull eruption last year. Recently increased seismic activity has once again highlighted this risk although the probability remains very low. Historically Katla eruptions have resulted in significant crop failures.

Grains prices
(CBOT, indexed, weekly closing, January 2010 = 100)
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 -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 Wet ha So e n yb a s 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 7 0 Wet ha So e n yb a s C rn o

Year end grain inventories (days of supply)

(USDA, 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 1 2

Chart Sources: Bloomberg, USDA, SEB Commodity Research

14

Commodities Monthly

Agriculture
Corn
The US corn harvest has progressed well under relatively favourable conditions and is now approaching 50% completion. As usual, the crop is likely to be one of the largest ever although quality has suffered from wet planting conditions and high temperatures during crop development. As winter approaches we see a significant risk of frost damage before the harvest has been completed. USDA quarterly grain stocks significantly exceeded even the most optimistic estimates although they still remain well below last year at 1.128 bn bushels (vs. 1.708 bn). According to USDAs October WASDE report global 2011/12 corn ending stock estimates were revised upward by 5.80 mt to 123.19 mt due to higher beginning stock and production estimates (860.09 mt).

Corn price
(CBOT, /bu, front month, weekly closing)
80 0 70 0 60 0 50 0 40 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
2 010 2 010

Wheat
US winter wheat planting is slightly behind schedule due to the drought situation in south-central regions although it is still over 50% completed. Some farmers have postponed planting until the resumption of significant rainfall. USDA quarterly grain stocks slightly exceeded expectations but were still below last year (2.150 bn bushels vs. 2.450). The October WASDE report revealed a significant increase in 2011/12 ending stocks (up 7.78 mt to 202.37 mt) due to higher beginning stocks and production (681.20 mt). The wheat market still appears well supplied, particularly in lower qualities. We expect it to lag the grains sector as a whole going forward with some upside risk mainly related to the US drought situation.

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 30 0 20 0
2 002 2 003 2 004 2 005 2 006 2 007 2 008 2 009 2 011

Soybeans
About half the US soybean harvest has been completed, mainly due to largely favourable weather. Crop conditions are currently stable but below last year. With winter approaching we see a significant risk of frost damage before the harvest has been completed. USDA quarterly grain stocks of 0.215 bn bushels were slightly below expectations, albeit still above last year at 0.151 bn bushels. According to the October WASDE global soybean ending stocks rose 0.46 mt to 63.01 mt due to higher beginning stocks and lower use. Production fell to 258.60 mt. The South American crop is developing well under favourable conditions.

Soybean price
(CBOT, /bu, front month, weekly closing)
10 80 10 60 10 40 10 20 10 00 80 0 60 0 40 0
2 002 2 003 2 004 2 005 2 006 2 007 2 008 2 009 2 011

Chart Sources: Bloomberg, SEB Commodity Research

15

21 01

Commodities Monthly

Agriculture
Corn futures curve
(CBOT, /bu)
75 0 11-08-12 72 5 70 0 67 5 65 0 62 5 60 0 625 57 5 m ar-12 m ar-13 m ar-14 dec-11 dec-12 dec-13 dec-14 jun -12 jun -13 sep -12 sep -13 jun -14 sep -14 600 m 2 ar-1 m 3 ar-1 jun-1 2 dec-1 1 sep-1 2 dec-1 2 jun-1 3 sep-1 3 11-09-14 11-10-14

Wheat futures curve

(CBOT, /bu)
850 825 800 775 750 725 700 675 650 11-0 8-12 11-0 9-14 11-1 0-14

Soybean futures curve

(CBOT, /bu)
1425 1400 1375 1350 1325 1300 1275 1250 nov-11 nov-12 nov-13 nov-14 1225 11-08-12 11-09-14 11-10-14

Sugar
(NYBOT, /lb)
4 0 3 5 3 0 2 5 2 0 1 5 1 0 5

feb-12

feb-13

feb-14

aug-12

aug-13

aug-14

m aj-12

m aj-13

m aj-14

0 2 02 0 2 03 0 2 04 0 2 05 0 2 06 0 2 07 0 2 08 0 2 09 0 2 10 0 2 11 0

Cotton
(NYBOT, /lb)
2 20 2 00 1 80 1 60 1 40 1 20 1 00 80 60 40 20 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

Cocoa
(NYBOT, $/t)
3 0 80 3 0 60 3 0 40 3 0 20 3 0 00 2 0 80 2 0 60 2 0 40 2 0 20 2 0 00 1 0 80 1 0 60 1 0 40 1 0 20 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

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
5,3 1,2 80,9 48,5 1,6 0,2 3,0 0,8 -19,1 3,4 0,2 77,4 51,6 1,6 1,3 3,8 0,4 103,4 57,5 103 0,4 0,6 89,0 49,3 -1,1 -0,5 -0,2 0,2 104,9 38,5 13,5 51,2 9,5 6,1 102,3 110,4 15,9 25,6 103,2 49,9

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

Previous
4,4 1,1 81,6 49,0 2,4 0,8 2,5 0,2 -16,5 3,4 0,9 77,3 50,6 2,2 0,4 3,6 0,5 103,1 59,4 57 -3,0 0,4 86,9 51,9 -1,0 -0,9 -0,2 0,0 104,2 37,5 14,0 50,9 9,7 6,2 102,1 111,8 16,4 25,0 103,0 50,2

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

Next
2011-11-14 2011-11-14 2011-10-24 2011-11-15 2011-11-15 2011-11-16 2011-11-16 2011-10-20

2011-10-17 2011-10-17 2011-11-01 2011-10-27 2011-10-19 2011-10-19 2011-10-28 2011-11-04 2011-10-17 2011-10-17 2011-10-31 2011-11-14 2011-10-28

2011-10-18 2011-11-01 2011-10-18 2011-11-09

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 (%)
-3,9 -3,9 -3,4 3,2 -16,7 16,0 -5,2 21,1 -5,0 21,0 -9,9 -21,4 -23,7 -21,3 -5,4 18,3 1,7 -21,6 -8,9

1m (%)
-5,8 -5,8 -5,6 -1,6 -10,2 -9,8 -7,0 12,8 -2,4 2,0 -5,7 -12,6 -11,7 -10,6 -7,9 -7,8 -10,2 -11,3 -7,6

1q (%)
-9,6 -9,6 -9,2 -8,5 -17,9 2,1 -6,4 21,1 -9,3 -3,1 -11,2 -21,7 -22,0 -17,8 -6,3 5,8 -10,7 -9,9 -8,7

1y (%)
5,4 5,3 6,2 12,7 -10,0 23,0 6,7 -21,5 5,0 35,7 -7,8 -10,2 -22,3 -20,0 11,7 22,2 12,8 -11,1 6,9

5y (%)
28,7 19,3 53,8 38,0 -0,6 176,2 100,5 -47,9 48,2 92,7 -15,6 1,1 -38,6 -49,1 N/A 185,6 103,5 18,5 114,7

1309,23 1231,45 1564,77 1486,56 1074,84 2507,60 1863,92 2173,00 86,80 114,68 2225,00 7545,00 18875,00 1931,00 539,00 1681,80 640,00 622,75 1270,00

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, 22.00 CET November 10 November 9 November 8 November 9 November 24 December 14

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

E-mail
torbjorn.iwarson@seb.se

Phone
+46 8 506 234 01

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 +46 8 506 230 51 +47 22 82 71 62 +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 +46 73 642 31 76 +47 92 45 67 27 +358 40 844 187 7 +45 616 211 59

18

Commodities Monthly

DISCLAIMER & CONFIDENTIALITY NOTICE

The information in this document has been compiled by SEB Merchant Banking, a division within Skandinaviska Enskilda Banken AB (publ) (SEB). Opinions contained in this report represent the banks present opinion only and are subject to change without notice. All information contained in this report has been compiled in good faith from sources believed to be reliable. However, no representation or warranty, expressed or implied, is made with respect to the completeness or accuracy of its contents and the information is not to be relied upon as authoritative. Anyone considering taking actions based upon the content of this document is urged to base his or her investment decisions upon such investigations as he or she deems necessary. This document is being provided as information only, and no specific actions are being solicited as a result of it; to the extent permitted by law, no liability whatsoever is accepted for any direct or consequential loss arising from use of this document or its contents. SEB is a public company incorporated in Stockholm, Sweden, with limited liability. It is a participant at major Nordic and other European Regulated Markets and Multilateral Trading Facilities (as well as some non-European equivalent markets) for trading in financial instruments, such as markets operated by NASDAQ OMX, NYSE Euronext, London Stock Exchange, Deutsche Brse, Swiss Exchanges, Turquoise and Chi-X. SEB is authorized and regulated by Finansinspektionen in Sweden; it is authorized and subject to limited regulation by the Financial Services Authority for the conduct of designated investment business in the UK, and is subject to the provisions of relevant regulators in all other jurisdictions where SEB conducts operations. SEB Merchant Banking. All rights reserved.

SEB Commodity Research

Bjarne Schieldrop, Chief Commodity Analyst bjarne.schieldrop@seb.no +47 9248 9230 Filip Petersson, Commodity Strategist filip.petersson@seb.se +46 8 506 230 47

19

www.seb.se/mb