ANZ RESEARCH

COMMODITY DAILY
March 30, 2012

Contacts: Mark Pervan Natalie Robertson

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

MARKET HIGHLIGHTS
Oil declined on potential strategic stockpile release Gold unchanged, but weaker oil weighing on prices Base metals mixed, nickel the worst performer Coal prices fell slightly. Chinese buyers returning

OVERNIGHT WRAP
Overnight Themes It was another softer session for commodity markets, dragged by declines in oil and equity markets and modest gains in the US dollar. Portfolio adjustments ahead of quarter-end and the recent trend of softening US economic readings also pressured commodity markets. Higher than expected US weekly jobless claims data weighed on sentiment. Following revisions to the seasonally adjusted data, the rate of decline in jobless claims has not been altered and therefore our forecasts for non-farm payrolls remain unchanged. We continue to expect non-farm payrolls of around +240k over coming months with slight upside risk to March. The slight upward revision (of around 15k) to the level of jobless claims is now more closely aligned to our model predictions for non-farm payrolls. This Sunday, Chinas Official PMI data for March (ANZ: 51.2, mkt: 50.6) will be watched. Crude benchmarks declined, with US prices falling to the lowest levels since mid-February and Brent prices at a twoweek low. Recent talks by US and European officials over a potential release of strategic stockpiles added to Saudi Arabian Oil Ministers recent rhetoric against high oil prices, pressuring the market. Last year when strategic stockpiles were released, crude prices dropped around 8%, with Brent crude impacted more heavily than WTI. Overnight WTI fell more than Brent, widening Brents premium to around US$20/bbl. The magnitude of WTI losses escalated after prices broke below US$104/bbl, the lower end of the recent trading range. Meanwhile Brent still appears to be supported by Totals disruption in the North Sea and violence in Sudan. Gold unchanged around US$1,662/oz. Weakness in US equities and adverse currency markets weighed on gold during the session. Ongoing declines in energy prices may have spilled over into the gold market, weighing on inflationary expectations. Base metals were mixed again, with nickel the worst performer. According to Norilsk Nickel (top producer), nickel prices should average just under US$20,000/t this year, which was almost the average level of the first quarter. The miner added that at current prices close to US$17,000/t around 5% of global production is unprofitable and about 8% of global capacity is at risk. On the flipside, copper and zinc may have received support from statistics showing Japans exports of refined copper and zinc to China doubling in February from January, as Chinese buyers boost purchases ahead of the second quarter. Newcastle coal futures fell slightly to US$109/t, after bouncing yesterday from US$107/t levels. Chinese buyers were said to be buying South African supplies on a 5500 NAR basis, priced at a discount of $1-2/t on a delivered basis than coals originating from Australia. For coking coal, an expected improvement in global steel markets after bottoming this quarter (according to POSCO) and pick-up in daily crude steel output in China in the beginning of March could be supportive.

OVERNIGHT RANKED PRICE MOVES (%)

1 .2 0.9 0.9 0.6 0.5 0.2 (0.0) (0.1 ) (0.2) (0.5) (0.5) (1 .6) (2.4) (2.7) (4.0) (3.0) (2.0) (1 .0) 0.0 1 .0 2.0 Tin Lead B altic Freight Silver Zinc Co pper USD (DXY) Go ld S&P 500 Co al (NEWC) P latinum A luminium Nickel WTI Oil

WEEK-TO-DATE RANKED PRICE MOVES (%)

3.1 2.7 2.1 1 .3 1 .3 1 .0 0.8 0.7 0.7 0.4 (0.8) (1 .6) (2.4) (7.1 ) (9.0) (7.0) (5.0) (3.0) (1 .0) 1 .0 3.0 5.0 B altic Freight Tin Silver Lead Co al (NEWC) Go ld S&P 500 Zinc Co pper P latinum USD (DXY) A luminium WTI Oil Nickel

Sources: Bloomberg, ANZ Commodity Strategy

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

Commodities

% Change
2,094 8,382 17,078 1,999 2,005 22,634 (1.6) 0.2 (2.4) 0.5 0.9 1.2 (1.6) 0.7 (7.1) 0.7 1.3 2.7 (9.4) (2.8) (12.0) (4.0) (5.9) (4.6) 4.0 11.3 (8.6) 9.9 1.1 14.3

Inventories

% Change
5,069 256 100 898 377 13 (0.1) (0.2) (0.0) (0.1) (0.0) (0.2) (0.3) 0.1 2.2 0.9 0.8 1.9 (0.7) (12.5) 0.9 3.5 1.8 21.8 1.8 (30.6) 11.2 9.4 7.1 13.8

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 1,662 1,606 32.2 1,628 646 (0.1) 0.1 0.6 (0.5) (0.3) 1.0 1.3 2.1 0.4 (1.5) (3.3) 0.9 (9.1) (4.2) (9.9) 2.4 1.6 9.9 15.0 1.2

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

Close
1,403 15 306 3,548

1 Day
(0.2) 0.1 (1.8) (0.4)

1 Wk
0.8 (0.6) (2.0) (0.3)

1 Mth
2.1 (10.3) (5.7) (5.4)

3 Mth
9.5 (27.9) (0.8) 7.6

% Change

ENERGY (US$/bbl)
WTI Oil* Brent Oil* Sing Gasoil 0.5% Sing Fuel Oil 180cst (US$/t) 103 123 137 751 (2.7) (1.4) 0.0 0.0 (2.4) (0.5) 0.7 0.6 (5.6) (2.9) 2.8 1.9 1.0 8.7 5.4 3.2

Freight
Baltic Freight Rate Baltic Capesize Baltic Panamax Baltic Handysize

Close
930 1,386 1,044 566

1 Day
0.9 1.8 0.4 0.0

1 Wk
3.1 0.1 1.8 4.8

1 Mth
21.9 (9.2) 24.4 31.9

3 Mth
(34.8) (43.9) (33.5) 0.5

% Change

OTHER (US$/t)
China HR Coil (RmB/t) Richards Bay Coal API4 Newcastle Coal*** Australia Coking Coal** Iron Ore Spot 4,376 104 109 208 148 0.1 (0.1) (0.5) 0.0 0.5 0.9 1.3 (0.4) 1.7 2.2 0.2 (2.3) (3.4) 3.1 3.6 (2.4) (3.3) (9.6) 5.6

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

Close
79.1 1.035 0.815

1 Day
(0.0) (0.2) (0.1)

1 Wk
(0.8) (0.3) 0.8

1 Mth
0.4 (4.2) (2.9)

3 Mth
(2.2) 0.8 4.4

% Change

US$ /t 2,900 2,700 2,500 2,300 2,1 00 1 ,900 M ar US$ /t 2,600 2,400 2,200 2,000 1 ,800 1 ,600 M ar US$ /bbl 1 20 10 1 1 00 90 80 70 M ar M ay M ay M ay

ALUMINIUM

US$ /t 1 0,500 9,500 8,500 7,500 6,500

COPPER

US$ /t 30,000 28,000 26,000 24,000 22,000 20,000 1 8,000 1 6,000

NICKEL

Jul

Sep

No v

Jan

M ar US$ /o z 2,000 1 ,900 1 ,800 1 ,700 1 ,600 1 ,500 1 ,400 1 ,300

M ay

Jul

Sep

No v

Jan

M ar US$ /o z 50.0 45.0 40.0 35.0 30.0 25.0

M ay

Jul

Sep

No v

Jan

ZINC

GOLD

SILVER

Jul

Sep

No v

Jan

M ar US$ /t 1 30 1 25 1 20 15 1 10 1 1 05

M ay

Jul

Sep

No v

Jan A$ 12 .1 1 .09 1 .06 1 .03 1 .00 0.97 0.94

M ar

M ay

Jul

Sep

No v

Jan

WTI OIL

NEWCASTLE COAL

AUD

Jul

Sep

No v

Jan

M ar

M ay

Jul

Sep

No v

Jan

M ar

M ay

Jul

Sep

No v

Jan

Notes: * Front-month futures ** Weekly prices ***Newcastle ICE coal futures contract 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 Thermal coal2 Premium hard coking Hard coking Semi-soft coking coal Iron ore lump Iron ore fines OTHER METALS Alumina Molybdenum Cobalt EXCHANGE RATES AUD/USD NZD/USD EUR/USD USD/JPY USD/CAD USD/CNY US$ US$ US$ C$ Yuan 1.08 0.82 1.46 81.03 0.96 6.46 1.05 0.83 1.41 76.78 0.99 6.38 1.04 0.79 1.35 77.48 1.01 6.36 1.08 0.84 1.33 78.77 0.99 6.35 1.10 0.86 1.35 77.67 0.99 6.29 1.10 0.86 1.36 75.67 1.00 6.23 1.10 0.88 1.37 73.00 1.02 6.17 1.10 0.90 1.37 70.67 1.04 6.12 1.10 0.90 1.37 70.00 1.06 6.08 1.10 0.90 1.36 70.00 1.08 6.03 1.10 0.90 1.34 70.00 1.10 5.99 US$/t US$/lb US$/lb 326 16.7 18.3 300 14.6 17.1 262 13.4 15.1 265 13.8 14.8 278 14.8 15.3 280 15.8 16.2 288 16.3 16.8 291 16.5 17.0 288 16.8 17.5 288 16.9 18.0 291 16.7 18.0 US$/t US$/t US$/t US$/t US$/t US$/t 130.0 330.0 300.0 275.0 206.1 171.8 130.0 315.0 290.0 230.0 202.0 168.3 130.0 285.0 265.0 208.0 177.6 148.0 130.0 235.0 225.0 171.0 168.0 140.0 115.0 206.0 196.0 151.0 175.2 146.0 115.0 215.0 195.0 170.0 180.0 150.0 115.0 220.0 200.0 175.0 183.9 152.0 115.0 220.0 200.0 175.0 183.9 152.0 125.0 225.0 200.0 175.0 181.5 150.0 125.0 225.0 200.0 175.0 176.7 146.0 125.0 220.0 195.0 170.0 173.2 142.0 US$/bbl US$/bbl US$/lb 102.5 117.0 56.4 89.5 112.9 51.8 94.1 109.3 52.6 102.4 115.8 53.1 107.0 123.5 56.0 108.5 122.5 60.5 111.0 123.0 65.0 114.5 124.5 68.5 116.5 125.0 71.5 116.0 123.5 74.0 114.5 121.0 76.0 US$/oz US$/oz US$/oz US$/oz 1,508 1,785 760 38.5 1,706 1,771 752 38.9 1,683 1,531 630 31.8 1,632 1,526 673 31.2 1,740 1,685 700 34.8 1,790 1,700 730 35.3 1,815 1,700 775 36.2 1,855 1,765 820 37.4 1,870 1,795 850 37.5 1,830 1,765 850 36.9 1,770 1,725 838 36.3 US$/lb US$/lb US$/lb US$/lb US$/lb US$/lb 1.18 4.16 11.05 1.02 1.16 13.08 1.09 4.07 9.98 1.01 1.11 11.16 0.95 3.41 8.34 0.86 0.90 9.45 0.96 3.62 8.70 0.87 0.94 9.09 1.01 3.85 9.15 0.90 0.96 9.45 1.02 3.98 9.70 0.91 0.96 9.75 1.05 4.08 10.15 0.95 0.99 10.30 1.06 4.08 10.25 0.98 1.02 10.55 1.05 4.13 10.40 1.01 1.05 10.80 1.05 4.15 10.45 1.03 1.06 10.95 1.06 3.95 10.15 1.04 1.07 10.80 Unit Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13

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

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