SEB Commodities Research Nasdaq OMX Stockholm Nov 5-2014 Bjarne Schieldrop Head of SEB Commodities Research Bjarne.schieldrop@seb.no +47 9248 9230
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Aug-13 Dec-13 Feb-14 Jun-14 Aug-14 Oct-14 End of US QE, looking forward to first US rate hike Volatility is back. Multi-speed world: Strong US, weakness EU, slowing China 58 JPM global manufacturing PMI 3.3 World GDP Forecast - 2015 MS World Equity index (RHS) 1800 56 54 52 50 48 46 44 3.2 3.1 3 1750 1700 1650 1600 42 40 2.9 1550 38 36 2.8 1500 34 32 2.7 1450 13 FICC Oslo 2
Commodities indices performance 20% 15% 10% Commodity indices in nominal USD CMCI Ener USD Pr Ind CMCI IndMet USD Pr Ind CMCI Agri USD Pr Ind CMCI PrMet USD Pr Ind 20% 15% 10% Commodity indices in adj. for USD index change CMCI Ener USD Pr Ind CMCI IndMet USD Pr Ind CMCI Agri USD Pr Ind CMCI PrMet USD Pr Ind 5% 5% 0% 0% -5% -5% -10% -10% -15% -15% -20% -20% Oct-14 Sep-14 Aug-14 Jul-14 Jun-14 May-14 Mar-14 Feb-14 Jan-14 Dec-13 Nov-13 Oct-14 Sep-14 Aug-14 Jul-14 Jun-14 May-14 Mar-14 Feb-14 Jan-14 Dec-13 Nov-13 13 FICC Oslo 3
Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Nov-04 Nov-05 Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12 Nov-13 Nov-14 Copper - weak surplus in 2015-2016 before new deficit Non-China demand still 2 mt/y below pre-crisis level. Stocks are low. China to continue to be in structural deficit of copper 1,000,000 900,000 800,000 Comex Copper Stocks (LHS) Shanghai Copper stocks (LHS) LME Copper stocks (LHS) LME 3mth copper price USD/ton (RHS) 8,500 8,000 16,000,000 14,000,000 12,000,000 10,000,000 Regional copper demand (ton per year) China copper demand ------ Refined Cu Dmnd North America 12,000,000 10,000,000 8,000,000 700,000 600,000 500,000 400,000 7,500 7,000 8,000,000 6,000,000 4,000,000 Refined Cu Dmnd - Europe 6,000,000 4,000,000 300,000 200,000 6,500 2,000,000 Refined Cu Dmnd Asia ex-china 2,000,000 100,000 6,000 - - 13 FICC Oslo 4
Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Jan-14 Jul-14 Oct-14 Zinc: Bullish mines are closing and stocks are falling Falling prices lately on risk-off, stronger USD and softer world GDP outlook Shanghai Zinc stocks (LHS) Old mines are closing Closed: - Canada Xstrata s Brunswick and Perseverance 335 ktpa - Ireland Vendata s Lisheen mine 170 ktpa Fully closing 2015: - Australia MMG s Century mine 500 ktpa 1,600,000 1,500,000 1,400,000 1,300,000 1,200,000 1,100,000 LME Zinc stocks (LHS) LME Zinc 3 mth USD/ton (RHS) 2,500 2,400 2,300 2,200 2,100 2,000 Deficit to continue Price target 2015: $2500/t (now $2233/t) 1,000,000 900,000 800,000 1,900 1,800 1,700 700,000 1,600 600,000 1,500 13 FICC Oslo 5
Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Gold: Bearish US moving towards first rate hike Gold to move towards pre-crisis level of $800-900/ozt on stronger USD and end of financial crisis in the US. Strong appetite from China, India and Thailand. 250 200 150 100 50 Thailand - Gold imports ton/mth India - Gold imports ton/mth China - Gold imports ton/mth 3,000 2,900 2,800 2,700 2,600 2,500 2,400 2,300 2,200 Gold min production 12mth sum - metric ton - (LHS) Gold average monthly price USD/ozt (RHS) 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 0 2,100 2,000 200-13 FICC Oslo 6
1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Jan-14 Jul-14 Outage mb/d Crude oil: Neutral $85/b Challenges from all directions Price held up post crisis due to supply disruptions in MENA region. Now strongly rising US shale oil supply has caught up with weak demand growth. 150 140 Brent crude oil USD/b 4.0 Unplanned supply outage mb/d 130 120 110 100 90 3.5 3.0 2.5 Other Colombia Brazil Yemen 80 70 60 50 40 30 20 2.0 1.5 1.0 0.5 China Syria Sudan / S. Sudan Iraq Nigeria Libya Iran 10 0 0.0 13 FICC Oslo 7
1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 Crude oil demand growth - First rapidly, then how slowly? Politics & technology propelling us towards much slower oil demand growth rates already? Demand growth outlook for 2014 and 2015 likely to be adjusted lower after latest IMF downgrade of world economic growth 7.0% 10 yr average oil global oil demand growth rate 1.4% Oil demand growth rates projections IEA BP 6.0% 1.2% 5.0% 1.0% 4.0% 0.8% 3.0% 0.6% 2.0% 1.0% 1.3% 0.4% 0.2% 0.0% 0.0% 2014 2015 2015-20 2020-25 2025-30 2030-35 13 FICC Oslo 8
SEB s Commodities price forecast (From Oct 10 2014) 13 FICC Oslo 9
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