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ANZ Commodity Daily 631 250512

ANZ Commodity Daily 631 250512

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Published by: ChrisBecker on May 25, 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 Robertson +613 9273 3415 | natalie.robertson@anz.com
MARKET HIGHLIGHTS OVERNIGHT WRAP
May 25, 2012
 
 
Oil prices up on rumours of additional ECB liquidity
 
Gold down slightly, on firmer USD. CME cut gold margins
 
Base metals steady, on hopes of China easing moves
 
Newc coal down, on expectations of lower China imports
OVERNIGHT RANKED PRICE MOVES (%)
 
(3.8)(0.4)(0.3)(0.1)0.10.10.20.40.51.01.61.82.12.4(5.0) (4.0) (3.0) (2.0) (1.0) 0.0 1.0 2.0 3.0Baltic FreightPlatinumCoal (NEWC)GoldS&P 500WTI OilUSD (DXY)AluminiumZincCopperLeadSilverNickelTin
 
WEEK-TO-DATE RANKED PRICE MOVES (%)
 
(7.3)(4.0)(2.5)(2.5)(2.1)(1.5)(0.9)(0.8)(0.6)(0.3)1.21.61.82.0(9.0) (7.0) (5.0) (3.0) (1.0) 1.0 3.0Baltic FreightCoal (NEWC)AluminiumPlatinumGoldSilverWTI OilZincCopperLeadUSD (DXY)NickelTinS&P 500
 
Note: Coal (NEWC) refers to front month futuresSources: Bloomberg, ANZ Commodity Strategy
 
Both benchmark crude prices rose 0.4% this morning(WTI: US$91/bbl, Brent: US$107/bbl)
extending gainsfrom the previous session. Markets reversed early lossesfollowing weak flash PMIs in China, Europe and the US for May,meanwhile, a larger-than-expected decline in Germany’s IFOsurvey added to the risk-off tone. Oil losses were reversedahead of the US open, as rumours of additional ECB liquidityvia a coordinated response buoyed sentiment. Additionalsupport came from a potential break-down in negotiationsbetween Iran and the West, with Iran apparently putting upresistance towards recent economic sanctions. WTI prices couldmove higher today, as traders cover downside bets ahead of the US long weekend given the ongoing volatility in widermarkets. The combination of CME oil margin cuts and prices inoversold territory could also encourage some buying. We seeresistance just above the US$93/bbl level, but if Iran talksbreakdown, there is potential for prices rise above those levels.
 
 
Gold traded at US$1,555.7/oz this morning
, down fromUS$1,559.3/oz this time yesterday and nearly US$3.00 lowerthan late Thursday. After a choppy day where gold showed itcould temporarily cut the apron strings attaching it to thedollar, bullion scurried back to its traditional inverserelationship with the greenback. Despite trading in an averageUS$19/oz range, CME cut initial margins on 100/oz gold futuresby 10% to $9,113 per lot, bringing margins down 21% so farthis year. Margin reductions tend to have a less immediateimpact on prices than margin hikes – nevertheless, thereduction is likely to be mildly supportive going forward.Investors continue to eye US$1,550/oz support with someanxiety (gold tested and held those levels overnight), but wasequally thwarted in a breakout higher that touchedUS$1,577.5/oz. More of the same to come.
 
Base metals were steady early Friday
, with copper tradingUS$4.00 down from Thursday’s kerb close at US$7,606/t aftera 1% rally overnight. Weak data continued to cause stress forinvestors, in particular the soggy PMI numbers from China, butat the same time, market expectations for more governmentstimulus are rising. While the crisis in Europe festers, andwithout any concrete action from China, we think risks in thevery near-term are skewed mildly to the downside. However,we still hold a more constructive outlook for the medium andlonger term, predicated on tighter market fundamentalsdeveloping in the second half of this year. Aluminium ticked upby US$1.00 to US$2,016/t early Friday as reports that smeltersin a Chinese province have idled about 700kt of capacity.
 
Newcastle June coal futures slipped to US$91.6/t
.Ongoing reports of defaults from China continue to weigh onmarket sentiment. A potential decline in imported coal volumesto China could occur this month, as China’s domestic coalprices continued to fall after the recent coal railwaymaintenance period ended and local coal supplies rose
.
 
 
 
COMMODITY DATA
Close1 Day1 Wk1 Mth3 MthClose1 Day1 Wk1 Mth3 Mth
LME BASE METALS
(US$/t)
LME BASE METALS
(kt)
Aluminium 1,977 0.4(2.5) (4.5) (14.5)Aluminium 4,956 0.1(0.4) (1.6) (2.9) Copper 7,656 1.0(0.6) (10.6) (11.2)Copper 224(0.7)1.3(11.0) (23.3) Nickel 17,032 2.1 1.6(5.5) (12.2)Nickel 106 0.3(0.6)3.7 6.5 Zinc 1,878 0.5(0.8) (7.7) (9.8)Zinc 941(0.2) (0.3)3.3 8.5 Lead 1,947 1.6(0.3) (9.0) (8.6)Lead 353(0.3) (1.5) (3.0) (4.7) Tin 19,953 2.4 1.8(11.1) (15.9)Tin 14(2.6) (5.6) (5.4)28.4
PRECIOUS METALS
(US$/oz)
Close1 Day1 Wk1 Mth3 Mth
Gold 1,559(0.1) (2.1) (6.2) (9.3)Gold (A$/oz) 1,602(0.4) (1.0)0.9 0.7 S&P 500 1,321 0.1 2.0(5.9) (3.9) Silver 28 1.8(1.5) (9.5) (20.2)VIX Volatility Index 22(3.5) (14.2)32.0 24.8 Platinum 1,420(0.4) (2.5) (9.7) (16.5)CRB Index 282 0.2(2.9) (7.7) (13.1) Palladium 588(0.9) (2.8) (14.0) (18.0)LME Metals Index 3,294 1.0(0.7) (8.2) (12.2)
ENERGY
(US$/bbl)
Close1 Day1 Wk1 Mth3 Mth
WTI Oil* 91 0.1(0.9) (13.6) (16.7)Brent Oil* 107 0.4(0.6) (11.1) (15.6)Baltic Freight Rate 1,058(3.8) (7.3) (8.5)38.7 Sing Gasoil 0.5% 115 0.0(0.5) (11.0) (14.1)Baltic Capesize 1,457(5.3) (10.8) (2.8) (4.6) Sing Fuel Oil
180cst
 
(US$/t)
118 0.0(1.7) (10.9) (11.3)Baltic Panamax 1,130(4.7) (11.3) (35.0)34.7
OTHER
(US$/t)
Baltic Handysize 650 0.2 1.7 10.4 51.5China HR Coil (RmB/t) 4,191(0.4) (0.9) (3.5) (2.1)
Close1 Day1 Wk1 Mth3 Mth
Richards Bay Coal API4 89 0.4(3.8) (10.0) (14.1)Newcastle Coal* 92(0.3) (4.0) (10.2) (17.7)DXY - USD Index 82.3 0.3 1.3 4.6 4.5Australia Coking Coal** 219 0.0 0.1 3.9 1.0 AUD/USD - Aussie 1.0 0.3(1.1) (7.0) (9.9)Iron Ore Spot 130 0.3(0.8) (10.4) (9.0)NZD/USD - Kiwi 0.8 0.5(0.8) (8.8) (10.6)
% ChangeCurrencies% ChangeKey Indices% ChangeFreightCommoditiesInventories% Change% Change
 
95100105110115120125May Jul Sep Nov Jan Mar
NEWCASTLE COAL
US$/t1,4001,5001,6001,7001,8001,900May Jul Sep Nov Jan Mar
GOLD
US$/oz708090100110May Jul Sep Nov Jan Mar May
WTI OIL
US$/bbl0.940.971.001.031.061.091.12May Jul Sep Nov Jan Mar
AUD
A$16,00018,00020,00022,00024,00026,000May Jul Sep Nov Jan Mar
NICKEL
US$/t6,5007,0007,5008,0008,5009,0009,50010,000May Jul Sep Nov Jan Mar
COPPER
US$/t1,9002,1002,3002,5002,700May Jul Sep Nov Jan Mar
ALUMINIUM
US$/t1,6001,8002,0002,2002,4002,600May Jul Sep Nov Jan Mar
ZINC
US$/tUS$/t25.030.035.040.045.0May Jul Sep Nov Jan Mar
SILVER
US$/oz
 
Notes: *Front-month futures **Weekly pricesSources: Bloomberg, McCloskey, ANZ Commodity Strategy
 
 
ANZ FORECASTS
ANZ Forecast Table
1
 
COMMODITY
UnitJun-11Sep-11Dec-11Mar-12Jun-12Sep-12Dec-12Mar-13Jun-13Sep-13Dec-13BASE METALS
Aluminium US$/lb 1.18 1.09 0.95 0.99 0.97 1.02 1.05 1.06 1.05 1.05 1.06Copper US$/lb 4.16 4.07 3.41 3.77 3.87 3.98 4.08 4.08 4.13 4.15 3.95Nickel US$/lb 11.05 9.98 8.34 8.90 8.23 8.75 9.45 10.00 10.40 10.45 10.15Zinc US$/lb 1.02 1.01 0.86 0.92 0.91 0.92 0.95 0.98 1.01 1.03 1.04Lead US$/lb 1.16 1.11 0.90 0.95 0.93 0.96 0.99 1.02 1.05 1.06 1.07Tin US$/lb 13.08 11.16 9.45 10.38 10.16 10.10 10.35 10.55 10.80 10.95 10.80
PRECIOUS METALS
Gold US$/oz 1,508 1,706 1,683 1,691 1,704 1,760 1,800 1,840 1,855 1,825 1,770Platinum US$/oz 1,785 1,771 1,531 1,609 1,665 1,698 1,713 1,765 1,795 1,765 1,725Palladium US$/oz 760 752 630 683 677 725 775 820 850 850 838Silver US$/oz 38.5 38.9 31.8 32.7 33.4 35.0 36.2 37.4 37.5 36.9 36.3
ENERGY
WTI NYMEX US$/bbl 102.5 89.5 94.1 102.9 105.5 108.5 111.0 114.5 116.5 116.0 114.5Dated Brent US$/bbl 117.0 112.9 109.3 118.5 123.9 123.0 123.0 124.5 125.0 123.5 121.0Uranium US$/lb 56.4 51.8 52.6 51.9 54.5 60.5 65.0 68.5 71.5 74.0 76.0
BULKS
Thermal coal
2
US$/t 130.0 130.0 130.0 130.0 115.0 115.0 115.0 115.0 125.0 125.0 125.0Premium hard coking US$/t 330.0 315.0 285.0 235.0 206.0 215.0 220.0 220.0 225.0 225.0 220.0Hard coking US$/t 300.0 290.0 265.0 225.0 196.0 195.0 200.0 200.0 200.0 200.0 195.0Semi-soft coking coal US$/t 275.0 230.0 208.0 171.0 151.0 170.0 175.0 175.0 175.0 175.0 170.0Iron ore lump US$/t 206.1 202.0 177.6 168.0 175.2 180.0 183.9 183.9 181.5 176.7 173.2Iron ore fines US$/t 171.8 168.3 148.0 140.0 146.0 150.0 152.0 152.0 150.0 146.0 142.0
OTHER METALS
Alumina US$/t 326 300 262 272 268 280 288 291 288 288 291Molybdenum US$/lb 16.7 14.6 13.4 14.3 14.8 15.8 16.3 16.5 16.8 16.9 16.7Cobalt US$/lb 18.3 17.1 15.1 15.2 15.1 16.2 16.8 17.0 17.5 18.0 18.0
EXCHANGE RATES
AUD/USD US$ 1.08 1.05 1.04 1.06 1.05 1.09 1.10 1.10 1.10 1.10 1.10NZD/USD US$ 0.82 0.83 0.79 0.83 0.84 0.86 0.88 0.90 0.90 0.90 0.90EUR/USD US$ 1.46 1.41 1.35 1.33 1.35 1.36 1.37 1.37 1.37 1.36 1.34USD/JPY ¥ 81.03 76.78 77.48 80.06 78.96 75.67 73.00 70.67 70.00 70.00 70.00USD/CAD C$ 0.96 0.99 1.01 1.00 0.99 1.00 1.02 1.04 1.06 1.08 1.10USD/CNY Yuan 6.46 6.38 6.36 6.29 6.27 6.23 6.14 6.10 6.08 #/NA #/NA
 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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