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ANZ Commodity Daily 827 200513

ANZ Commodity Daily 827 200513

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Published by: Belinda Winkelman on May 20, 2013
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ANZ RESEARCH
COMMODITY DAILY
 
Contacts: Mark Pervan +613 8655 9243 | mark.pervan@anz.com Victor Thianpiriya +65 6681 8869 | victor.thianpiriya@anz.comNatalie Rampono +613 8655 9258 | natalie.rampono@anz.com Paul Deane +613 8655 9078 | paul.deane@anz.com
MARKET HIGHLIGHTS
May 20, 2013
 COMMODITY WRAP
 
US data buoy crude oil prices
 
Gold selling continues
 
Copper up after US confidence, but USD capped gains
 
Coal prices could be impacted by China import ban
KEY THEMES
 
y
 
Overnight themes
 
Commodity prices came off an average2% last week, led by declines in precious metals and bulks.Stronger-than-expected US economic data saw the US dollarcontinue to appreciate on Friday night to finish the weekstronger against the major crosses. The preliminary USUniversity of Michigan consumer confidence measure rose bymore than expected in May, increasing to 83.7 from 76.4 inApril (mkt: 77.9). This is its highest level since 2007. Both thecurrent conditions and expectations components rose stronglyin the month. Comments from ECB officials on Friday nightsuggest that the risk to policy rates in the euro zone remainsto the downside. Some of the comments also imply they arewell aware of the risk that current ECB policy could cause newbubbles to emerge. This may, at the margin, help to checktalk of a negative deposit rate. Globally, key data will be theflash HSBC China manufacturing PMI on Thursday and the Fedwill release the Minutes from the latest FOMC meeting.
OVERNIGHT RANKED PRICE MOVES (%)
 
(2.0)(1.9)(1.7)(1.5)(1.1)(0.5)(0.3)(0.0)0.10.30.50.80.91.01.1(2.5) (2.0) (1.5) (1.0) (0.5) 0.0 0.5 1.0 1.5SilverGoldPlatinumIron oreBaltic FreightNickelCoal (NEWC)Aluminium TinCopperZincUSD (DXY)WTI OilS&P 500Lead
 
Note: Coal (NEWC) refers to front month futuresSources: Bloomberg, ANZ Commodity Strategy
y
 
Crude oil continues its march higher.
 
Oil prices rallied onFriday, as the S&P500 hit a record high. The market traded inquite volatile fashion, with June WTI reaching a low of USD95.0/bbl, before a recovery to USD96.20/bbl. Brent alsofell USD1.0/bbl from the intra-day peak before recovering toUSD104.80/bbl. Prices were lifted by the strong US economicdata, despite the USD reaching a 5-year high against the JPY,and the dollar index (DXY) touching a 3-year high.
y
 
Gold is trading at USD1,350/oz
, down USD38/oz from thistime on Friday. Gold and silver both saw sharp selling on theAsian open today, but have recovered from the lows. Goldwas choppy, though trended lower before selling on the NYopen saw gold trading down USD20/oz in the space of a fewhours. This morning, spot gold bounced off the downsidesupport around USD1,340 (the 18 April intra-day low) beforea mild bounce back up to the current level aroundUSD1,350/oz. The short term outlook is negative, in the faceof continued ETF outflows and physical demand that remainsless than voracious. The downside support is USD1,340/ozfollowed by the April 16 low of USD1,322/oz.
 
y
 
Base metals were mixed
. Copper prices rallied during theUS session after the better-than-expected consumerconfidence reading, but the stronger US dollar cappedpotentially further gains. Also buoying copper was a 2.4%drop in Shanghai copper stockpiles, a 7-month low, but thiscoincided with a 4.3% build in LME copper stocks, blurring abetter demand trend. Non-commercial traders appear to bepulling out of copper futures market as a result, with openinterest down 7% in the past week. With a lot of negativenews priced-in, we think it would be difficult to be muchshorter in base metals space – but for prices to improve, wewill be looking for a settling down in inventory levels first.
y
 
Iron ore prices ended the week with a 5% drop
, thesharpest fall since mid-March when China’s growthexpectations for this year were reduced. Iron ore prices arenow sitting around 6-month lows and remain under pressurefrom the weakness in Chinese steel prices. Coking coal pricesalso posted the 4th consecutive week of declines toUSD144.9/t, with prices at three and a half year lows. Inresponse, Baltic Capesize rates (key gauge for iron ore andcoal shipping), turned lower for the first time in 4 weeks. Coalmarkets could be hit by China’s National EnergyAdministration’s proposal to ban high sulphur coking coalimports alongside a proposed ban on low calorific value (CV)thermal coal imports to protect domestic producers. At thisstage, there is still uncertainty over the legislation, but if implemented, US coking coal imports to China could decline.In addition, domestic and global prices for high CV thermalcoal could potentially be supported by the ban.
 
 
COMMODITY DATA
PRICE DATA
Close1 Day1 Wk1 Mth3 MthClose1 Day1 Wk1 Mth3 Mth
LME BASE METALS
(USD/t)
LME BASE METALS
(kt)
Aluminium 1820(0.3) (1.3) (2.1) (14.4)(1.1) (11.0)(0.5) (3.5) (2.3) (19.4) (0.5) (0.1)(1.0) (2.2) (15.7) (0.2) (6.7)(17.1) (1.0) (1.9) (7.3) (16.1)(15.5) (0.8) (0.1) (3.2)Aluminium 5,239 0.1 1.8 1.0 1.8Copper 7275 0.3 4.5 Copper 630 0.9 4.3 2.5 56.8Nickel 14752 Nickel 178 3.3 15.9Zinc 1810 0.5 Zinc 1,114 6.8 0.3Lead 2006 1.1 1.6 0.4 Lead 241Tin 20920 0.1 0.7 1.0 Tin 14 5.2
PRECIOUS METALS
(USD/oz)
Close1 Day1 Wk1 Mth3 Mth
Gold 1,360Gold (A$/oz) 1,397 2.3 S&P 500 1,667 1.0 2.1 7.2 9.7Silver 22 VIX Volatility Index 12Platinum 1,455 1.9 CRB Index 288 0.5 1.6Palladium 737 4.2 8.9 LME Metals Index 3,130 0.2 1.9
ENERGY
(1.9) (6.1) (3.2) (15.6)(0.8) (3.3) (10.6)(2.0) (6.8) (4.3) (25.3) (4.7) (1.1) (16.8) (0.1)(1.7) (2.6) (13.5) (0.4) (3.6)(0.3) (2.8) (1.0) (13.1)
(USD/bbl)
Close1 Day1 Wk1 Mth3 Mth
WTI Oil* 96.02 0.9 9.1 0.2Brent Oil* 104.64 0.8 0.7 5.0 Baltic Freight Rate 841 11.7Sing Gasoil 0.5% 118 1.6 0.2 5.0 Baltic Capesize 1,326 7.5Sing Fuel Oil
180cst
 
(US$/t)
610 0.7 1.0 Baltic Panamax 930 11.8
OTHER 
(0.0)(11.1) (1.1) (4.9) (5.3)(12.5) (0.6) (4.1) (7.5)(1.6) (7.7) (2.2) (6.4) (22.2)
(USD/t)
Baltic Handysize 553 0.4 2.6 34.2China HR Coil (RmB/t) 3,587 #VALUE!
Close1 Day1 Wk1 Mth3 Mth
Richards Bay Coal 81 0.6Newcastle Coal* 86.6 0.2 DXY - USD Index 84.3 0.8 1.3 1.9 4.6Australia Coking Coal** 145 AUD/USD - Aussie 0.973Iron Ore Spot 123.1 NZD/USD - Kiwi 0.807
CommoditiesInventories% Change% Change% ChangeCurrencies% ChangeKey Indices% ChangeFreight
(0.2)(0.7) (2.1) (4.3)(0.2) (0.7) (5.4)(0.3) (0.7) (7.9)(0.7) (5.2) (15.0) (1.1) (2.9) (5.3) (5.6)(1.5) (5.0) (10.8) (20.6) (1.4) (2.9) (4.2) (4.6)
 
80859095100May J ul Sep Nov J an Mar
NEWCASTLE COAL
USD/t1,3001,4001,5001,6001,7001,800May J ul Sep Nov J an Mar
GOLD
USD/oz7580859095100May J ul Sep Nov J an Mar
WTI OIL
USD/bbl0.970.991.011.031.051.07May J ul Sep Nov J an Mar
AUD
USD14,00015,00016,00017,00018,00019,000May J ul Sep Nov J an Mar
NICKEL
USD/t6,5007,0007,5008,0008,500May J ul Sep Nov J an Mar
COPPER 
USD/t1,7001,8001,9002,0002,1002,200May J ul Sep Nov J an Mar
ALUMINIUM
USD/t1,7001,8001,9002,0002,1002,200May J ul Sep Nov J an Mar
ZINC
USD/t85105125145165May J ul Sep Nov J an Mar
IRON ORE
USD/t
 
Notes: *Front-month futures **Weekly pricesSources: Bloomberg, McCloskey, ANZ Commodity Strategy
 
ANZ Commodity Daily / 20 May 2013 / 3 of 5
ANZ PRICE FORECASTS
ANZ FORECAST TABLE
COMMODITY
Unit Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 2013F 2014F 2015F 2016F LTBASE METALS
Aluminium USD/lb 0.85 0.87 0.90 0.92 0.95 0.96 0.97 0.92 0.99 1.02 1.04 1.0Copper USD/lb 3.41 3.30 3.45 3.60 3.70 3.80 3.80 3.60 3.70 2.97 2.85 2.80Nickel USD/lb 7.53 7.25 7.50 7.80 8.20 8.50 8.80 7.80 8.80 8.50 8.20 8.00Zinc USD/lb 0.85 0.88 0.90 0.93 0.96 0.99 1.03 0.93 1.06 1.09 1.04 1.02Lead USD/lb 0.95 0.92 0.95 0.97 1.00 1.02 1.05 0.97 1.07 1.07 1.02 1.00Tin USD/lb 10.52 9.50 9.90 10.10 10.20 10.40 10.40 10.10 10.20 9.10 8.40 8.00Aluminium USD/t 1,880 1,920 1,980 2,030 2,090 2,120 2,140 2,030 2,180 2,250 2,290 2,310Copper USD/t 7,510 7,270 7,610 7,940 8,160 8,380 8,380 7,940 8,160 6,550 6,280 6,170Nickel USD/t 16,590 15,980 16,530 17,200 18,080 18,740 19,400 17,200 19,400 18,740 18,080 17,640Zinc USD/t 1,860 1,940 1,980 2,050 2,120 2,180 2,270 2,050 2,340 2,400 2,290 2,250Lead USD/t 2,090 2,030 2,090 2,140 2,200 2,250 2,310 2,140 2,360 2,360 2,250 2,200Tin USD/t 23,190 20,940 21,820 22,270 22,480 22,930 22,930 22,270 22,490 20,060 18,520 17,640
PRECIOUS METALS
Gold USD/oz 1,599 1,520 1,550 1,580 1,625 1,650 1,675 1,580 1,700 1,680 1,600 1,460Platinum USD/oz 1,572 1,510 1,560 1,620 1,660 1,700 1,720 1,620 1,730 1,690 1,630 1,480Palladium USD/oz 772 710 740 780 800 825 830 780 835 810 765 700Silver USD/oz 28.5 25.3 26.0 27.2 28.5 29.5 30.5 27.2 31.0 30.6 29.1 27.0
ENERGY
WTI NYMEX USD/bbl 98 95 97 100 103 104 105 100 102 94 92 90Dated Brent USD/bbl 109 104 106 109 112 113 115 109 112 102 98 95Uranium USD/lb 42 42 43 45 46 46 48 45 50 62 65 7
BULKS
Iron ore Spot (CIF China, fines) USD/t 137 130 124 127 128 128 127 127 125 118 115 100Iron ore Contract (FOB Aust, fines) USD/t 138 128 121 116 118 119 118 116 117 110 105 90Coking coal - Premium hard USD/t 165 172 155 170 180 185 185 170 190 185 180 175Coking coal - Hard USD/t 155 157 140 155 160 165 165 155 170 165 160 155Coking coal - Semi-soft USD/t 117 122 105 120 137 142 142 120 147 142 137 132Newc Thermal Coal (Spot) USD/t 88 88 91 95 97 100 102 95 104 110 110 100Newc Thermal Coal (JPY Contract) USD/t 115 95 95 95 95 98 98 95 98 108 110 100
OTHER METALS
Alumina USD/t 234 240 248 253 262 264 267 253 273 281 284 289Molybdenum USD/lb 10.8 11.3 11.8 12.2 13.0 13.5 14.0 12.2 14.0 14.5 14.8 15.0Cobalt USD/lb 12.0 13.0 13.5 14.0 14.5 14.8 15.0 14.0 15.2 15.6 15.8 15.0
AGRICULTURE
Corn US¢/bu 711 631 555 516 544 551 491 603 520 550 550 550Wheat US¢/bu 742 707 632 599 638 637 680 670 658 661 661 661Soybeans US¢/bu 1,437 1,344 1,300 1,200 1,185 1,116 1,104 1,320 1,150 1,150 1,150 1,150Cotton US¢/lb 90 91 78 82 95 93 92 85 95 125 95 95Sugar US¢/lb 18 18 17 19 17 18 18 18 18 20 20 2Palm Oil MYR/t 2,473 2,299 2,500 2,500 2,500 2,500 2,500 2,443 2,500 2,500 2,500 2,500500
 
Note 1: Base/precious metals, energy and bulk forecasts are end of period prices; Agriculture forecasts are average pricesNote 2: Historical data are actualsSources: Bloomberg, ANZ Commodity Strategy

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