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ANZ Commodity Daily 778 180213

ANZ Commodity Daily 778 180213

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02/21/2013

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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
February 18, 2013
 
 
WTI crude lower on US IP data, Brent recovers
 
Gold down, eyes test of 
 
USD1,550/oz
 
Copper eases, looks to return of Chinese buyers
 
Market weighs restocking potential for iron ore, metcoal
KEY THEMES
 
 
Overnight themes
– The G20 meeting over the weekendhad slightly stronger language towards exchange ratescompared to the G7 statement out earlier in the week. Japanwas essentially given the green light by the G20 to continuemonetary easing, as long as the objective is to defeatdeflation, not to target the yen. This saw USD/JPY moveslightly higher as the statement made markets morecomfortable about the current level of the yen. Economic dataout of the US was mixed but generally positive. Thepreliminary read for the University of Michigan consumerconfidence index improved, but remains at depressed levels.Industrial Production in the US fell by 0.1% in January,weaker than the expected gain of 0.2%. Despite the fall,there were upward revisions to recent months’ outcomes. Aregional manufacturing survey for the New York arearebounded in February by more than expected. Meanwhile,UK retail sales disappointed expectations, falling 0.6% m/m inJanuary. Equity markets in the US were mostly unchangedwhile European equities fell.
OVERNIGHT RANKED PRICE MOVES (%)
 
(2.0)(1.7)(1.5)(1.5)(0.8)(0.4)(0.4)(0.1)(0.1)0.00.20.60.70.71.1(2.5) (2.0) (1.5) (1.0) (0.5) 0.0 0.5 1.0 1.5SilverPlatinumGoldWTI OilZincCoal (NEWC)Copper TinS&P 500Iron oreUSD (DXY)AluminiumBaltic FreightNickelLead
 
Note: Coal (NEWC) refers to front month futuresSources: Bloomberg, ANZ Commodity Strategy
 
Oil benchmarks were lower
. Oil prices were lower after thesofter than expected US industrial production print. Marketswere also subject to the typical round of position squaringahead of the US President’s Day holiday today. In Friday’ssession, April 13 Brent saw heavy selling as it traded nearUSD117.88/bbl, Thursday’s closing price. After falling to a lowof USD116.28 in the session, prices recovered to finish nearunchanged. March 13 WTI crude futures sold off in line withBrent but couldn’t recover and closed down 1.5%.
 
 
Gold broke down last week
after support at USD1,640/ozfinally failed and prices pushed below USD1,600. Thismorning, bullion is trading at USD1,614, versus USD1,635this time Friday. The technical profile remains bearish. If prices are unable to regain USD1,640 the market would targetUSD1,525-1,550. The RSI is down at 30.1, on the threshold of oversold and its lowest in a year. The current spell of weakness adds to the risks that we may undershoot our Q1forecast of USD1,730, especially if physical buyers hold backon expectations of further falls. In PGMs, platinum hit itslowest in two weeks, falling by 2%. Palladium fared better,dipping 1.3%. Platinum bounced back to USD1,688/oz earlyMonday, and unlike gold, chart indicators are bullish, with aretest of resistance at USD1,740 possible.
 
 
Copper dipped on Friday
ahead of the return of China fromthe New Year holidays. Copper closed at USD8,207/t, downUSD25 from when China closed a week ago. China is likely tocome to the market as a buyer and we expect to see priceschallenge the recent highs around USD8,350. Zinc fell abouthalf a percent, having touched a 17-month high last week. Ameteor shower on Friday damaged buildings at theChelyabinsk zinc plant in Russia, but there are no reports of production being affected. Aluminium continued itstechnically-driven bounce, bucking the mostly weaker trend inthe LME and targeting resistance at USD2,200.
 
 
Newcastle thermal coal prices fell slightly.
The strike atColombia’s Cerrejon mine continued into its second week witha resolution between Cerrejon, the Government and minersyet to be reached. Uncertainty over the strike, impactingabout 30 million tonnes of thermal coal exports into theseaborne market, may have contributed to choppy tradingover the past week. Meanwhile, coking coal spot prices edgedhigher despite the absence of Chinese buyers due to holidays.Coking coal appears to be playing catch up to the 7% rally iniron ore prices, and tighter availabilities for delivered cargoesto India and China suggests demand should remain firm.Limited movement in the iron ore complex continued astraders held off on taking positions until the market returns tonormal after the Lunar New Year holiday break. Views remainmixed as to whether we will see any physical re-stockingactivity this week, but a lack of available spot material shouldsee prices supported in the short-term.
 
 
 
COMMODITY DATA
PRICE DATA
Close1 Day1 Wk1 Mth3 MthClose1 Day1 Wk1 Mth3 Mth
LME BASE METALS
(USD/t)
LME BASE METALS
(kt)
Aluminium 2127 0.6 2.3 6.0 10.2 Aluminium 5,145(0.1) (0.3) (0.8)0.8Copper 8172(0.4) (1.1)1.7 7.6 Copper 402 0.6 0.5 16.3 57.4Nickel 18312 0.7 0.3 4.7 15.2 Nickel 153(0.2)0.7 3.8 15.5Zinc 2147(0.8) (1.6)6.4 13.4 Zinc 1,194 0.5 0.0(2.6)2.8 Lead 2421 1.1 0.5 5.5 12.0 Lead 287 0.0(0.3) (3.0) (13.6)Tin 24766(0.1) (0.2) (1.0)21.2 Tin 13 0.2 0.5 3.9 16.6
PRECIOUS METALS
(USD/oz)
Close1 Day1 Wk1 Mth3 Mth
Gold 1,610(1.5) (3.4) (4.4) (6.0)Gold (A$/oz) 1,562(1.0) (3.3) (2.5) (5.7)S&P 500 1,520(0.1)0.1 2.3 11.8 Silver 30(2.0) (5.1) (6.5) (7.8)VIX Volatility Index 12(1.6) (4.3)0.0(24.1) Platinum 1,682(1.7) (2.0)0.7 7.8 CRB Index 293(2.3) (2.8) (2.8) (0.3) Palladium 759(0.9)0.5 5.1 20.9 LME Metals Index 3,602(0.1) (0.1)3.2 10.2
ENERGY
(USD/bbl)
Close1 Day1 Wk1 Mth3 Mth
WTI Oil* 95.86(1.5)0.1 0.3 10.6Brent Oil* 117.66(0.3) (1.0)5.2 8.0 Baltic Freight Rate 753 0.7 0.7(10.0) (27.3) Sing Gasoil 0.5%*** 135(0.0) (0.1)6.4 10.3 Baltic Capesize 1,434 0.3(1.8) (10.7) (38.9) Sing Fuel Oil
180cst
 
(US$/t)***
660(0.7) (0.0)2.2 6.7 Baltic Panamax 832 3.0 15.1 12.4(6.1)
OTHER 
(USD/t)
Baltic Handysize 412 0.0(2.1) (12.3)1.7China HR Coil (RmB/t)*** 4,153 0.0 0.9 2.2 5.1
Close1 Day1 Wk1 Mth3 Mth
Richards Bay Coal 85 0.0(1.1) (1.6)0.1Newcastle Coal* 94.0(0.4) (2.3)0.4 3.5 DXY - USD Index 80.6 0.2 0.4 0.7(0.8) Australia Coking Coal** 171 1.6 5.5 7.6 AUD/USD - Aussie 1.031(0.5) (0.1) (2.0) (0.3)Iron Ore Spot*** 155.1 0.0 0.0 6.9 26.3 NZD/USD - Kiwi 0.845(0.7)1.1 1.0 4.0*
Front-month futures
**
Weekly FOB price
CommoditiesInventories% Change% Change% ChangeCurrencies% ChangeKey Indices% ChangeFreight
 
80859095100105110115120Feb Apr J un Aug Oct Dec
NEWCASTLE COAL
USD/t1,5001,5501,6001,6501,7001,7501,800Feb Apr J un Aug Oct Dec
GOLD
USD/oz708090100110Feb Apr J un Aug Oct Dec
WTI OIL
USD/bbl0.940.971.001.031.061.09Feb Apr J un Aug Oct Dec
AUD
USD15,00016,00017,00018,00019,00020,00021,000Feb Apr J un Aug Oct Dec
NICKEL
USD/t7,0007,5008,0008,5009,000Feb Apr Jun Aug Oct Dec
COPPER 
USD/t1,7001,8001,9002,0002,1002,2002,300Feb Apr J un Aug Oct Dec
ALUMINIUM
USD/t1,7001,8001,9002,0002,1002,200Feb Apr J un Aug Oct Dec
ZINC
USD/t25.027.029.031.033.035.037.0Feb Apr J un Aug Oct Dec
SILVER 
USD/oz
 
Notes: *Front-month futures **Weekly prices ***Market closed for Lunar New Year holidaysSources: Bloomberg, McCloskey, ANZ Commodity Strategy
 
 
ANZ FORECASTS
ANZ Forecast Table
1
 
COMMODITY
Unit Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15BASE METALS
Aluminium USD/lb 0.91 0.93 0.96 1.00 1.03 1.04 1.04 1.03 1.00 0.99Copper USD/lb 3.59 3.67 3.82 3.95 4.02 4.07 4.07 3.97 3.85 3.70Nickel USD/lb 7.70 7.91 8.25 8.65 9.15 9.35 9.25 9.15 9.05 9.00Zinc USD/lb 0.88 0.94 0.98 1.00 1.03 1.05 1.07 1.09 1.11 1.12Lead USD/lb 1.00 1.07 1.08 1.06 1.06 1.07 1.08 1.10 1.11 1.12Tin USD/lb 9.80 10.30 10.05 10.20 10.40 10.35 10.10 9.75 9.35 9.10
PRECIOUS METALS
Gold USD/oz 1,718 1,703 1,760 1,813 1,863 1,880 1,860 1,835 1,810 1,780Platinum USD/oz 1,598 1,615 1,755 1,828 1,848 1,855 1,845 1,835 1,820 1,795Palladium USD/oz 654 722 750 770 790 810 823 823 818 808Silver USD/oz 32.6 31.2 32.8 34.5 36.2 37.0 37.1 36.8 36.0 34.3
ENERGY
WTI NYMEX USD/bbl 88.2 94.9 99.0 100.5 101.5 102.5 103.5 103.0 101.0 98.3Dated Brent USD/bbl 110.5 114.5 118.5 119.5 119.0 118.5 117.5 116.0 112.5 108.0Uranium USD/lb 43.4 45.0 46.5 49.5 52.0 54.5 57.0 59.0 61.5 64.0
BULKS
Iron ore Spot (CIF China, fines) USD/t 121.0 144.0 144.5 144.5 141.5 138.0 134.0 130.0 126.5 125.0Iron ore Contract (FOB Aust, fines) USD/t 103.7 134.2 133.5 135.5 129.8 126.2 124.7 119.6 117.3 115.1Coking coal - Premium hard USD/t 170.0 165.0 175.0 185.0 190.0 195.0 195.0 195.0 190.0 190.0Coking coal - Hard USD/t 160.0 155.0 160.0 170.0 175.0 175.0 175.0 175.0 170.0 170.0Coking coal - Semi-soft USD/t 115.0 110.0 120.0 135.0 140.0 155.0 155.0 155.0 150.0 150.0Newc Thermal Coal (Spot) USD/t 83.8 92.4 96.5 99.5 102.5 104.5 106.0 108.0 109.5 110.0Newc Thermal Coal (JPY Contract) USD/t 115.0 115.0 98.0 98.0 98.0 98.0 105.0 105.0 105.0 105.0
OTHER METALS
Alumina USD/t 250 257 264 276 284 288 288 284 277 273Molybdenum USD/lb 11.2 11.7 12.0 12.5 13.0 13.4 13.6 13.9 14.0 14.1Cobalt USD/lb 12.5 12.1 13.1 13.7 14.3 14.6 14.9 15.0 15.1 15.2
EXCHANGE RATES
AUD/USD USD 1.040 1.047 1.050 1.050 1.050 1.050 1.043 1.048 1.029 1.036NZD/USD USD 0.823 0.842 0.840 0.840 0.840 0.840 0.835 0.838 0.825 0.830EUR/USD USD 1.305 1.355 1.360 1.390 1.420 1.410 1.437 1.429 1.450 1.443USD/JPY ¥ 82.983 89.484 84.667 82.667 82.000 82.000 82.000 82.000 82.000 82.000USD/CAD CAD 0.996 0.994 0.990 0.990 0.990 0.990 0.997 0.992 1.008 1.003USD/CNY Yuan 6.200 6.150 6.100 6.167 6.117 6.133 6.083 6.100 6.050 6.067
 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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