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ANZ Commodities Daily - 22.11.2012

ANZ Commodities Daily - 22.11.2012

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12/04/2012

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ANZ RESEARCH
COMMODITY DAILY
 
Contacts: Mark Pervan +613 9273 3716 | mark.pervan@anz.com Nick Trevethan +65 6681 6714 | nicholas.trevethan@anz.comNatalie Rampono +613 9273 3415 | natalie.rampono@anz.com
MARKET HIGHLIGHTS COMMODITY WRAP
November 22, 2012
 
 
Oil up on US data and surprise fall in US stockpiles
 
Gold higher on IMF report of central bank buying
 
Metals weaker ahead of China’s HSBC flash PMI
 
Caution in bulk markets after reports of China defaults
KEY THEMES
 
y
 
Overnight themes
– Markets were mixed again overnight,with mild rises in equity prices and core bond yields, butgenerally weaker commodity markets (oil and gold wereexceptions). Sentiment was supported by reports of aceasefire in Gaza and anticipation that EU Finance Ministerswould make a resolution on Greece. Although, US economicdata flow was a mixed bag. Despite the positive tone fromGreece aid efforts after German Chancellor Merkel said a dealcould be reached in coming weeks, our economists suggestthere is yet to be any meaningful progress by EU FinanceMinisters on the nation’s fiscal problems and deep divisionsamong EU nations remain. In the US, Nov preliminary MarkitPMI improved to a five-month high of 52.4, while initial jobless claims mildly fell last week as the impact of HurricaneSandy appears to be easing. However, the US consumerconfidence survey was downwardly revised to 82.7 in Nov.Consumer sentiment has likely been affected by anintensification of ‘fiscal cliff’ concerns and the possible impactthis might have for personal incomes in the New Year. USmarkets will be closed tonight for Thanksgiving, so we’ll likelysee subdued trading in key commodity markets.
OVERNIGHT RANKED PRICE MOVES (%)
 
(1.9)(1.8)(1.2)(1.0)(0.9)(0.5)(0.0)0.00.10.20.20.60.60.71.1(2.5) (2.0) (1.5) (1.0) (0.5) 0.0 0.5 1.0 1.5TinAluminiumCopperZincLeadCoal (NEWC)USD (DXY)Iron oreGoldPlatinumS&P 500NickelSilverBaltic FreightWTI Oil
 
Note: Coal (NEWC) refers to front month futuresSources: Bloomberg, ANZ Commodity Strategy
y
 
Benchmark crude oil markets were choppy
, but finallyended 1.1% higher than the previous day. An improvement inUS initial jobless claims and a surprise decline in domestic oilinventories were supportive. US EIA crude stockpiles fell by1.5mbbls, against market expectations for a 1.0mbblincrease, while crude product stockpiles also declined morethan expected. Reports of a ceasefire in the Middle Eastremoved some of the geopolitical risk premium in oil.However, Israel has said it may take more forceful action if the ceasefire is not adhered to and there was a possibleterrorist attack on a bus in Tel Aviv, which could see thegeopolitical risk premium rise again. With the US on holidaystonight, oil markets could be subdued.
 
y
 
Gold ticked higher this morning
, rallying to USD1,730/ozfrom USD1,726 this time 24 hours ago. The IMF reported thatBrazil, Kazakhstan and Turkey had increased their goldholdings. Brazil increased its gold stockpile by a third to 52tonnes. The other two nations raised their gold holdings by7.5 tonnes and 11.5 tonnes respectively. Less positively, theReserve Bank of India ordered banks not to lend money forpurchases of gold, which may add to the downside pressureon import demand. India has already increased duties earlierthis year and the weak rupee has also made foreign goldmore costly. As a result we expect Indian gold import demandto fall by more than 20% this year and could fall further in2013.
 
y
 
Base metals mostly fell on Wednesday
, led by a 2% fall inaluminium. Nickel was the only metal to end in the black witha rise of about half a percent. Worries about Europe and theUS fiscal cliff continue to erode positive sentiment, pushingcopper prices down by 1% to close at USD7,692/t after stronggains earlier this week. Chinese copper cathode imports fellby a quarter in October from the previous month. Theslowdown related in part to week-long holidays, but risingdomestic output and high levels of stocks in Shanghaicontributed to the sharp decline. Today we may see someaction in copper this morning when the HSBC flash PMI data isreleased. The absence of US players for the Thanksgivingholiday should make for low-key business later in the day.
 
y
 
Newc thermal coal futures declined
. Reports suggestChinese buyers had defaulted on three Australian thermal coalimports and some from South Africa, but are unlikely to sparka wave of cancellations (that we saw in May/June). We remaincautious - China’s domestic stockpiles at power plants arehigh and many traders in China could face tight liquidityconditions as bank lending restrictions kick-in. Iron ore andcoking coal price gains appear to be losing momentum, asmarkets remain cautious. Declines in China’s domestic steelprices in the past week could pressure iron ore and cokingcoal markets going forward. Reports suggest Q113 contractagreements for coking coal could be settled around USD160-170/t.
 
 
COMMODITY DATA
Close1 Day1 Wk1 Mth3 MthClose1 Day1 Wk1 Mth3 Mth
LME BASE METALS
(USD/t)
LME BASE METALS
(kt)
Aluminium 1911(1.8) (1.9) (0.1)1.8 Aluminium 5,167(0.1)1.4 2.2 5.2 Copper 7676(1.2)0.6(1.8) (0.0)Copper 254 0.1(0.1)14.2 7.1 Nickel 16640 0.6 3.3 1.9 1.3 Nickel 134(0.3) (0.0)4.4 16.3Zinc 1893(1.0) (1.7)4.3 2.7 Zinc 1,174(0.2)1.7 5.8 21.2 Lead 2151(0.9) (1.7)7.3 10.7 Lead 362 7.5 10.6 16.3 14.5Tin 20460(1.9) (0.3)0.8 2.8 Tin 12 0.0 0.4(2.0) (0.9)
PRECIOUS METALS
(USD/oz)
Close1 Day1 Wk1 Mth3 Mth
Gold 1,729 0.1 0.2 1.6 3.5Gold (A$/oz) 1,670 0.3 0.5 1.5 4.6 S&P 500 1,391 0.2 2.6(1.3) (0.8)Silver 33 0.6 2.1 5.0 9.1 VIX Volatility Index 15 1.5(14.6) (16.5) (4.1)Platinum 1,577 0.2(0.6)1.1 2.2 CRB Index 298 0.4 1.2(0.0) (3.1) Palladium 647 1.6 1.6 8.6(1.2)LME Metals Index 3,295(1.2)0.1(0.3)1.1
ENERGY
(USD/bbl)
Close1 Day1 Wk1 Mth3 Mth
WTI Oil* 87.70 1.1 1.6 2.3(8.9)Brent Oil* 111.01 1.1 1.3 2.9(3.5)Baltic Freight Rate 1,073 0.7 6.1(1.4)50.1 Sing Gasoil 0.5% 125(0.4)2.1 1.1(6.9)Baltic Capesize 2,335(1.4) (1.7) (7.7)111.7 Sing Fuel Oil
180cst
 
(US$/t)
616(1.5)0.3(3.6) (11.6)Baltic Panamax 963 3.2 24.4 16.7 14.6
OTHER
(USD/t)
Baltic Handysize 416 1.7 3.5(5.5) (12.8)China HR Coil (RmB/t) 3,895(0.4) (1.5)4.3 10.0
Close1 Day1 Wk1 Mth3 Mth
Richards Bay Coal API4 88(0.4)0.2 5.4(0.2) Newcastle Coal* 89.2(0.5) (0.1)4.8(1.6)DXY - USD Index 80.9(0.0) (0.2)1.3(0.5) Australia Coking Coal** 158 0.9 6.7(8.8)AUD/USD - Aussie 1.036(0.2) (0.3)0.1(1.0) Iron Ore Spot 120.6 0.0(1.5)1.6 21.1 NZD/USD - Kiwi 0.813(0.4)0.2(0.5) (0.2)
CommoditiesInventories% Change% Change% ChangeCurrencies% ChangeKey Indices% ChangeFreight
 
80859095100105110115120Nov Jan Mar May Jul Sep
NEWCASTLE COAL
USD/t1,5001,5501,6001,6501,7001,7501,800Nov Jan Mar May Jul Sep
GOLD
USD/oz708090100110Nov Jan Mar May Jul Sep
WTI OIL
USD/bbl0.940.971.001.031.061.09Nov Jan Mar May Jul Sep
AUD
USD14,00015,00016,00017,00018,00019,00020,00021,00022,000Nov Jan Mar May Jul Sep
NICKEL
USD/t7,0007,5008,0008,5009,000Nov Jan Mar May Jul Sep
COPPER
USD/t1,7001,8001,9002,0002,1002,2002,300Nov Jan Mar May Jul Sep
ALUMINIUM
USD/t1,7001,8001,9002,0002,1002,200Nov Jan Mar May Jul Sep
ZINC
USD/t25.027.029.031.033.035.037.0Nov Jan Mar May Jul Sep
SILVER
USD/oz
 
Notes: *Front-month futures **Weekly pricesSources: Bloomberg, McCloskey, ANZ Commodity Strategy
 
 
ANZ FORECASTS
ANZ Forecast Table
1
 
COMMODITY
UnitSep-12Dec-12Mar-13Jun-13Sep-13Dec-13Mar-14Jun-14Sep-14Dec-14Mar-15BASE METALS
Aluminium US$/lb 0.87 0.96 0.97 0.99 1.04 1.06 1.06 1.05 1.03 1.01 0.99Copper US$/lb 3.50 3.76 3.90 4.06 4.14 4.20 4.20 4.10 3.98 3.85 3.70Nickel US$/lb 7.41 8.38 8.55 8.80 9.00 9.25 9.35 9.25 9.15 9.05 9.00Zinc US$/lb 0.86 0.95 0.96 0.98 1.01 1.03 1.05 1.07 1.09 1.11 1.13Lead US$/lb 0.90 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 1.12 1.13Tin US$/lb 8.76 9.97 10.00 10.05 10.20 10.40 10.35 10.10 9.75 9.35 9.10
PRECIOUS METALS
Gold US$/oz 1,653 1,776 1,800 1,835 1,860 1,880 1,880 1,860 1,835 1,810 1,775Platinum US$/oz 1,500 1,681 1,730 1,790 1,828 1,848 1,855 1,845 1,835 1,820 1,795Palladium US$/oz 613 670 720 765 810 828 823 817 808 793 779Silver US$/oz 29.9 34.3 34.6 35.3 35.8 36.5 36.8 35.8 34.5 33.5 32.5
ENERGY
WTI NYMEX US$/bbl 92.2 95.6 102.5 108.5 111.5 112.0 111.0 109.5 108.5 107.0 104.5Dated Brent US$/bbl 109.9 114.6 118.0 120.0 119.0 117.5 116.0 114.5 113.0 111.0 108.0Uranium US$/lb 49.3 51.3 56.0 57.0 59.0 61.5 64.0 66.5 69.0 72.5 77.5
BULKS
Iron ore Spot (CIF China, fines) US$/t 111.9 107.1 112.5 117.5 122.5 126.5 129.0 130.0 129.0 126.5 125.0Iron ore Contract (FOB Aust, fines) US$/t 117.9 96.3 104.0 108.2 113.2 116.6 119.4 120.9 119.5 117.3 115.1Coking coal - Premium hard US$/t 225.0 170.0 175.0 185.0 195.0 200.0 200.0 195.0 195.0 190.0 190.0Coking coal - Hard US$/t 174.0 160.0 165.0 170.0 180.0 185.0 180.0 175.0 175.0 170.0 170.0Coking coal - Semi-soft US$/t 147.0 120.0 125.0 130.0 145.0 150.0 160.0 155.0 155.0 150.0 150.0Newc Thermal Coal (Spot) US$/t 86.5 87.5 92.5 98.5 103.0 105.0 106.5 108.5 110.5 112.0 113.5Newc Thermal Coal (JPY Contract) US$/t 115.0 115.0 115.0 105.0 105.0 105.0 105.0 110.0 110.0 110.0 110.0
OTHER METALS
Alumina US$/t 240 265 267 273 285 291 291 288 284 277 273Molybdenum US$/lb 11.9 12.9 14.6 14.9 15.3 15.8 16.3 16.5 16.3 16.0 16.0Cobalt US$/lb 13.4 14.8 15.8 16.5 17.0 17.3 17.5 17.3 16.8 16.5 16.3
EXCHANGE RATES
AUD/USD US$ 1.040 1.026 1.037 1.062 1.070 1.070 1.070 1.063 1.068 1.049 1.057NZD/USD US$ 0.815 0.810 0.817 0.842 0.850 0.850 0.850 0.847 0.849 0.839 0.843EUR/USD US$ 1.258 1.262 1.263 1.283 1.297 1.307 1.303 1.317 1.313 1.310 1.317USD/JPY ¥ 78.163 76.653 76.000 76.000 76.000 76.000 76.000 72.667 74.222 73.333 72.667USD/CAD C$ 0.991 1.015 1.043 1.063 1.083 1.097 1.093 1.100 1.099 1.100 1.100USD/CNY Yuan 6.280 6.200 6.150 6.100 6.200 6.167 6.183 6.150 6.156 6.133 6.133
 Note 1: Average prices Note 2: Thermal coal prices are for JPY year starting April 1 Note 3: Historical data are actualsSources: Bloomberg, ANZ Commodity Strategy, ANZ FX Strategy
 

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