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 up slightly, buoyed by hopes of QE Gold down, fails to break six-month high Metals up, but market looks overbought Newc down, iron ore rebounds strongly

COMMODITY WRAP
!

KEY THEMES
! Overnight themes Markets were relatively quiet overnight ahead of Wednesdays key German court decision on the ESM and the US FOMC meeting on Thursday. European equities drifted sideways for the most part, but US bourses underperformed. Commodities showed more strength, despite disappointing Chinese trade data which supported our view that further monetary easing is required. Exports rose +2.7% y/y, below market expectations. The value of imports declined 2.6% y/y, against expectations of a 3.5% y/y gain. Key commodity imports were a mixed bag with the volume of iron ore imports rising 7.9% m/m (+5.7% y/y), while crude oil imports dropped 15.7% m/m (-12.5% y/y). Its worth noting that iron ore price fell 24% in August, while crude has surged nearly 30% since mid June. In base metals, aluminium imports rose by 20.3% m/m (+65.6 y/y), but at 117k tonnes, remain low versus the 45mtpa market. Copper imports fell 2.9% m/m (+4.5 y/y). Today, Chinese bank lending data for August will be of interest (mkt/ANZ: +RMB600bn, last: +540bn). !

September 11, 2012 Crude benchmarks rose slightly in a tight trading range. Prices were buoyed by hopes for US stimulus measures, offsetting the worse-than-expected drop in Chinese crude oil imports. Saudi Arabias oil minister al Naimi said he was concerned about rising oil prices, dampening the mood a bit, suggesting the price of oil is simply not supported by market fundamentals and implying the market was well-balanced. Although, ongoing frustrations regarding Irans nuclear program may have provided some degree of support, with the IAEA requesting access to an Iranian military site to inspect for nuclear weapon developments. Gold fell to USD1,726.64/oz early Tuesday from USD1,733.69 this time yesterday. Prices failed to rally beyond Fridays six-month high of USD1,741.30 ahead of the FOMC meeting, with other markets also tending to mark time. Record ETF gold holdings and a 12-month high in speculative longs in US gold futures creates some downside risks if the Fed falls short of expectations. Hong Kong trade data showed 75.8t of gold shipped to the mainland China in July, up 12.0% from the previous month and the second highest value for the year. The backflow was also high at just short of 30.0t, versus 27.0t in June. Shipments into China have already surpassed those for all of 2011, and on a net basis, exports to the mainland are about 80t below the equivalent number for all of last year. Silver fell 42 cents to USD33.40/oz. Palladium rose USD16 or 2.5% to USD668.50/oz. Base metals fell by 0.4% on average early on Tuesday after a very positive session on Monday. Copper fell USD18.00 to USD8,050/t to it highest since May. The price outlook appears robust, but we think the market is overbought and a period of consolidation would be welcome. Assuming the Fed doesnt disappoint. We could see prices challenge USD8,170 and possibly USD8,450 in the next few weeks. Aluminium fell USD4.00 to USD2,056/t and appears to have ended the long downtrend that has characterised the market since March. A Fibonacci retracement study points to a test of resistance at USD2,090 and possibly USD2,150. The cash to three month spread this morning is bid at USD15.00 contango with an asking price of USD10.00 backwardation. Newcastle September coal futures down 0.2% to USD91.9/t. Job cuts and high cost mine closures by major Australian producers appear to be adding to the general bearishness in coal markets. Spot iron ore rebounded sharply yesterday, adding 6.7% to close at USD95/t its second largest one-day gain since the inception of the index. The rally was sparked by Chinese rebar prices, where the most active January contract rallied 6.5% to RMB3,452/t since Friday. Both markets were buoyed by Chinas approval of a USD150bn infrastructure spending plan and the jump in Chinese iron ore imports. However, it remains to be seen whether this is a temporary rally. Short covering in the Chinese rebar market could provide further support, but the official August steel production data due out today has the potential to cap gains if output holds near record highs.

OVERNIGHT RANKED PRICE MOVES (%)

6.7 3.1 2.2 2.0 1 .7 1 .2 1 .1 0.2 0.1 0.1 (0.2) (0.4) (0.5) (0.6) (1 .0) (2.0) 0.0 2.0 4.0 6.0 8.0 Iro n o re Tin Zinc A luminium Nickel Co pper Lead USD (DXY) P latinum WTI Oil Co al (NEWC) B altic Freight Go ld S&P 500 Silver

Note: Coal (NEWC) refers to front month futures 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
2050 8055 16718 1989 2105 20603 2.0 1.2 1.7 2.2 1.1 3.1 7.4 4.9 3.4 7.5 5.3 4.1 12.9 9.1 9.2 10.6 13.7 16.4 6.2 9.1 (2.3) 6.0 11.9 4.4

Inventories

% Change
4,870 215 121 938 303 12 (0.0) (0.6) (0.2) (0.4) (0.1) 0.0 (0.3) (4.7) 0.9 (1.3) (1.5) 0.3 0.0 (10.3) 4.1 (3.3) (6.3) 0.0 0.4 (10.4) 15.8 (0.9) (12.1) (3.2)

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 1,726 1,668 33 1,594 668 (0.5) (0.2) (1.0) 0.1 2.1 2.0 1.1 3.9 2.9 5.8 7.2 8.9 19.9 14.9 16.2 7.2 2.8 15.1 9.5 6.8

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

Close
1,429 16 313 3,439

1 Day
(0.6) 13.2 0.5 1.5

1 Wk
1.7 (9.5) 1.2 5.4

1 Mth
1.8 18.8 4.8 10.0

3 Mth
7.9 (26.3) 15.6 7.1

% Change

ENERGY (US$/bbl)
WTI Oil* Brent Oil* Sing Gasoil 0.5% Sing Fuel Oil 180cst (US$/t) 96.54 114.75 132 700 0.1 0.4 0.5 0.5 1.3 (0.9) (1.5) 0.4 4.1 1.0 2.9 4.4 15.9 18.1 19.8 16.1

Freight
Baltic Freight Rate Baltic Capesize Baltic Panamax Baltic Handysize

Close
666 1,188 582 461

1 Day
(0.4) 0.2 (2.8) 0.7

1 Wk
(4.6) 0.7 (18.5) 0.7

1 Mth
(12.8) 2.6 (27.6) (11.9)

3 Mth
(25.4) (2.0) (40.3) (25.4)

% Change

OTHER (US$/t)
China HR Coil (RmB/t) Richards Bay Coal API4 Newcastle Coal* Australia Coking Coal** Iron Ore Spot 3,372 88 91.9 162 95.0 3.7 (1.3) (0.2) 6.7 (0.4) (2.3) 0.1 (1.9) 6.6 (7.2) (4.1) (1.2) (11.2) (15.9) (19.1) 8.9 8.2 (26.3) (28.6)

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

Close
80.4 1.0 0.8

1 Day
0.2 (0.3) (0.3)

1 Wk
(1.0) 0.9 1.5

1 Mth
(2.5) (1.5) 0.2

3 Mth
(2.4) 4.4 4.4

% Change

US$ /t 2,500 2,300 2,1 00 1 ,900 1 ,700 Sep US$ /t 2,300 2,200 2,1 00 2,000 1 ,900 1 ,800 1 ,700 Sep US$ /bbl 10 1 1 00 90 80 70 Sep No v No v No v

ALUMINIUM

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

COPPER

US$ /t 22,000 21 ,000 20,000 1 9,000 1 8,000 1 7,000 1 6,000 1 5,000 1 4,000

NICKEL

Jan

M ar

M ay

Jul

Sep US$ /o z 1 ,900 1 ,800 1 ,700 1 ,600 1 ,500

No v

Jan

M ar

M ay

Jul

Sep US$ /o z 45.0 40.0 35.0 30.0 25.0

No v

Jan

M ar

M ay

Jul

ZINC

GOLD

SILVER

Jan

M ar

M ay

Jul

Sep US$ /t 1 30 1 20 10 1 1 00 90 80

No v

Jan

M ar

M ay

Jul A$ 1 .09 1 .06 1 .03 1 .00 0.97 0.94

Sep

No v

Jan

M ar

M ay

Jul

WTI OIL

NEWCASTLE COAL

AUD

Jan

M ar

M ay

Jul

Sep

No v

Jan

M ar

M ay

Jul

Sep

No v

Jan

M ar

M ay

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

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