ANZ RESEARCH

COMMODITY DAILY
April 5, 2012

Contacts: Mark Pervan Natalie Robertson

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

MARKET HIGHLIGHTS
Oil slipped after US crude stocks rose by 9.0mbbls Gold fell on reduced expectations of QE3 in the US Base metals plunged on worries over Europe Coal down. Worries over Indonesias potential export tax

OVERNIGHT WRAP
Overnight Themes It was a risk-off session overnight with the focus back on Europe following a poorly subscribed Spanish government bond auction. Spain sold fewer government bonds than hoped and following the auction yields in the secondary market for Spanish government debt advanced by 20-30 bps across the curve. Italian (+21bps) and Portuguese (+26bps) government yields all increased. The European Central Bank (ECB) kept its policy rate unchanged at 1.00%, as unanimously expected by the market. The ECB appears to be reorienting monetary policy back to a more traditional approach, with policy focusing on maintaining price stability. Commodity markets were hit, despite a positive employment read from the US. ADP private sector employment rose by 209K (market: 206K) in March, whilst the previous months data was revised up by 14K to 230K. Non-farm payrolls data are released on Friday night, and we expect an increase of 220K (Market: 205K, Last: 227K). The unemployment rate will also be a focal point given its importance for monetary policy we expect the unemployment rate to remain around 8.3% near term. Crude benchmarks slipped, following the negative tone in outside markets. WTI was further pressured by the US DOE data showing another sharp 9.0mbbls build in crude stockpiles (Market: +2.5mbbls) to the highest level since late June 2011, despite just a 500kbbls increase in crude imports. Most of the build came from higher production levels in the Gulf Coast of 6.0mbbls/day, potentially catching up after recent shipping delays in the Houston channel. Brents premium to US crude widened further to US$21.5/bbl, given the weakness in US oil prices. Although we think the dip in prices could present buying opportunities for investment funds going long oil, creating some upside risk near term. Gold fell 1.5% to US$1,621/oz, with prices removing nearly all the gains it had accumulated since the beginning of the year. Prices remained under selling pressure after the FOMC signalled it saw no need to add more easing unless growth stalls, firming the US dollar in the process. Although the weaker than expected service sector index in the US triggered a mild recovery in prices. Base metals plunged, still under pressure as markets reassess QE3 in the US and Europe crawled back into the headlines after the disappointing Spanish bond auction. Copper prices fell back towards the middle of the recent trading range, but held above the 200-day moving average. Markets will likely focus on US non-farm payrolls this Friday. With our house view for US employment data to come in above consensus, we could see room for potential upside in copper prices. Newcastle coal futures declined 1.6% to US$107/t in line with other commodities. Indonesias consideration of a 25% coal export tax next year stirred some anxiety for local coal producers who are increasingly more reliant on price-sensitive buyers from India and China. Although we maintain that such a tax would be controversial with implementation likely to be delayed, as local miners seek compensation.

OVERNIGHT RANKED PRICE MOVES (%)

0.3 (0.5) (1 .0) (1 .4) (1 .5) (1 .5) (1 .6) (2.3) (2.5) (2.6) (3.0) (3.2) (3.2) (3.8) (5.0) (4.0) (3.0) (2.0) (1 .0) 0.0 1 .0 USD (DXY) B altic Freight S&P 500 Tin A luminium Go ld Co al (NEWC) Zinc WTI Oil P latinum Lead Nickel Co pper Silver

WEEK-TO-DATE RANKED PRICE MOVES (%)

1 .7 1 .2 1 .0 0.8 0.4 (0.1 ) (0.5) (0.6) (1 .8) (2.1 ) (2.2) (2.6) (3.5) (3.7) (5.0) (4.0) (3.0) (2.0) (1 .0) 0.0 1 .0 2.0 3.0 Nickel Tin Lead USD (DXY) B altic Freight Co pper S&P 500 Zinc Co al (NEWC) Silver P latinum Go ld A luminium WTI Oil

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
2,053 8,359 17,785 1,976 2,007 22,631 (1.5) (3.2) (3.2) (2.3) (3.0) (1.4) (3.5) (0.1) 1.7 (0.6) 1.0 1.2 (5.2) 0.8 (5.4) (0.9) (2.5) 2.0 (3.8) 7.6 (8.4) 2.5 2.1 10.9

Inventories

% Change
5,065 260 101 896 374 13 (0.1) (0.4) 0.1 (0.1) (0.5) 0.0 (0.2) 1.4 0.7 (0.3) (0.7) 2.6 (0.5) (7.6) 2.6 3.3 2.8 15.9 2.1 (28.7) 8.4 9.3 5.8 18.1

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 1,621 1,579 31.4 1,600 636 (1.5) (0.6) (3.8) (2.6) (2.8) (2.6) (1.6) (2.1) (2.2) (1.9) (3.8) (0.9) (6.1) (1.9) (7.4) (1.3) (1.0) 4.7 7.1 (0.8)

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

Close
1,399 16 305 3,540

1 Day
(1.0) 5.0 (1.9) (2.7)

1 Wk
(0.5) 6.3 (2.1) (0.6)

1 Mth
3.4 (13.8) (3.0) (1.2)

3 Mth
8.2 (21.9) (2.8) 3.4

% Change

ENERGY (US$/bbl)
WTI Oil* Brent Oil* Sing Gasoil 0.5% Sing Fuel Oil 180cst (US$/t) 101 123 137 747 (2.5) (1.7) 0.0 (1.0) (3.7) (1.2) 0.1 (0.5) (4.4) (1.1) 1.9 0.6 0.6 9.3 4.6 1.0

Freight
Baltic Freight Rate Baltic Capesize Baltic Panamax Baltic Handysize

Close
926 1,475 1,043 552

1 Day
(0.5) 1.3 (0.6) (0.7)

1 Wk
0.4 8.4 0.3 (2.5)

1 Mth
16.0 (2.6) 21.6 21.1

3 Mth
(22.4) (26.0) (25.1) 0.7

% Change

OTHER (US$/t)
China HR Coil (RmB/t) Richards Bay Coal API4 Newcastle Coal*** Australia Coking Coal** Iron Ore Spot 4,375 103 107 208 148 0.0 (0.7) (1.6) 0.0 0.1 (1.1) (1.8) (0.4) (0.1) 1.9 (1.1) (2.0) (4.1) 3.2 3.5 (2.1) (5.8) (9.6) 3.8

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

Close
79.7 1.026 0.815

1 Day
0.3 (0.9) (1.0)

1 Wk
0.8 (1.0) (0.1)

1 Mth
0.0 (3.0) (0.6)

3 Mth
(2.0) (0.3) 2.5

% Change

US$ /t 2,900 2,700 2,500 2,300 2,1 00 1 ,900 A pr US$ /t 2,600 2,400 2,200 2,000 1 ,800 1 ,600 A pr US$ /bbl 1 20 10 1 1 00 90 80 70 A pr Jun Jun Jun

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

A ug

Oct

Dec

Feb

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

Jun

A ug

Oct

Dec

Feb

A pr US$ /o z 50.0 45.0 40.0 35.0 30.0 25.0

Jun

A ug

Oct

Dec

Feb

ZINC

GOLD

SILVER

A ug

Oct

Dec

Feb

A pr US$ /t 1 30 1 25 1 20 15 1 10 1 1 05

Jun

A ug

Oct

Dec

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

A pr

Jun

A ug

Oct

Dec

Feb

WTI OIL

NEWCASTLE COAL

AUD

A ug

Oct

Dec

Feb

A pr

Jun

A ug

Oct

Dec

Feb

A pr

Jun

A ug

Oct

Dec

Feb

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 US$ US$ US$ C$ 1.08 0.82 1.46 81.03 0.96 1.05 0.83 1.41 76.78 0.99 1.04 0.79 1.35 77.48 1.01 1.06 0.83 1.33 80.06 1.00 1.05 0.84 1.35 78.96 0.99 1.09 0.86 1.36 75.67 1.00 1.10 0.88 1.37 73.00 1.02 1.10 0.90 1.37 70.67 1.04 1.10 0.90 1.37 70.00 1.06 1.10 0.90 1.36 70.00 1.08 1.10 0.90 1.34 70.00 1.10 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 Commodity Strategy, ANZ FX Strategy

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