seb report: new year rally – but not in commodities
TRANSCRIPT
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7/29/2019 SEB report: New Year rally but not in commodities
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Commodities MonthlyNew Year Rally But Not in Commodities 22 JANUARY 2013
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7/29/2019 SEB report: New Year rally but not in commodities
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Commodities Monthly
New Year Rally But Not in Commodities
GENERAL 0-3 M 4-6 M 7-12 M The World Bank has lowered its 2013 global GDP growth
projection from 3.0% to 2.4%, forecasting continued
contraction in Europe and only 1.9% expansion in the US. While confirming US economic improvements, the Federal
Reserve Beige Book warns momentum is weak.
Limited growth this year should ensure quantitative easingand ultra-low interest rates continue throughout, despitewishes expressed by some US Fed members that monetarystimulus measures may be scaled back in 2013.
ENERGY 0-3 M 4-6 M7-12 M Saudi Arabia must double production cutbacks made in Q4-12
to ensure market equilibrium in H1-13.
Brent crude prices continue to move sideways, despite theNew Year rally in global equity markets on increased hopes of
recovery fuelling risk-on sentiment. The IEA has raised its oil demand estimates for 2012 and 2013
due to increases in China, US and Brazil, while only slightlyupgrading its forecast call on OPEC for this year.
INDUSTRIAL METALS 0-3 M4-6 M7-12 M Industrial metals look most likely to end 2013 higher as global
economic conditions stabilize and growth accelerates slightly.
Reasonable prices relative to production costs still limitdownside risk.
However, with the recent (dubious) rally on more positiveChinese sentiment having lost momentum, we see betterbuying opportunities in H1.
Most likely, the exclusive market focus on Chinese economicconditions will end this year as OECD demand appearsincreasingly likely to improve.
PRECIOUS METALS 0-3 M4-6 M7-12 M Gold continues to disappoint even our already downgraded
forecasts and new offensives in the global devaluation war.
With macroeconomic conditions expected to stabilize andgrowth to pick up slightly, a return to the gold bull market isnow less likely.
Still, increasing inflation expectations or a US debt ceilingdebacle as in 2011 are upside risks.
This year, we recommend exposure to palladium and
platinum, both of which are more likely to respond well toimproving global economic prospects.
AGRICULTURE 0-3 M4-6 M7-12 M Persistent US Midwest drought conditions are worrying with
the new planting season only two months off.
We therefore remain tactically cautious though long-termdownside risk is decreasing.
Otherwise, global crop conditions are largely normal.
US soil moisture conditions will most likely be decisive forgrain markets in 2013.
Arrows indicate the expected price action during the period in question.
(price indices, weekly closing, January 2011 = 100)
75
80
85
90
95
100
105
110
115
120
125
130
135
140
jan-11
feb-11
mar-11
apr-11
m
aj-11
jun-11
jul-11
aug-11
sep-11
okt-11
nov-11
dec-11
jan-12
feb-12
mar-12
apr-12
m
aj-12
jun-12
jul-12
aug-12
sep-12
okt-12
nov-12
dec-12
jan-13
Industrial Metals
Precious MetalsEnergyAgriculture
(MSCI World, UBS Bloomberg CMCI price indices)
-2
-1
0
1
2
3
4
5
Equities
Commodities
Energy
Industrial
metals
Precious
metals
Agriculture
YTD (%) M/M (%)
(%)
-30
-25
-20
-15
-10
-5
0
5
10
15
20
CO2(EUA)
Power(Cont.)
Power(Nordic)
Sugar
Cocoa(US)
AluminiumZinc
Soybeans
Wheat
Nickel
Lead
Copper
Silver
CornGold
Heat.oil(US)
Brent
Steelbillets
Cotton
Gasoline(US)
Nat.gas(US)
Palladium
PlatinumTinWTI
Coffe(Ar.)
Chart Sources: Bloomberg, SEB Commodity Research
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Commodities Monthly
General
Despite efforts by the World Bank to dampen currentpositive market sentiment by downgrading itseconomic outlook for 2013, we expect improvements inH1-13, reflecting stimulus measures announced duringH2-12. In the US, for example, the Fed initiated yetanother round of quantitative easing in December,while in China infrastructure investments andsubstantially expanded total financing have boostedlocal activity. Furthermore, we expect PMIs worldwideto become increasingly positive in H1-13. While the USdebt ceiling will remain of concern, we believe it will beraised yet again. The question now is - how far will lastyears stimulus measures carry growth momentum into2013?
Since our previous monthly Commodity Report onNovember 20 last year, the CMCI commodity price indexhas increased by only 0.7%, a poor performance during a
period in which markets have become substantially moreoptimistic concerning the possibility of a global economic
recovery, prompting a 14% rally in Chinese equities and a6% rise in European and US stocks. Even a 1.7% decline inthe USD index added little to commodity prices. Currently,
OECD Composite Leading Indicators suggest economicactivity is finally stabilizing in most major economies,
supported by stronger growth in the US and UK andevidence markets have bottomed and are recovering in bothIndia and China. The JPMorgan Global PMI returned to
(modest) positive growth in January with indications of evenhigher readings in coming months. Strong Chinese import
and export values in December and further expansion intotal local financing provisions also provided furtherevidence that the countrys economy has bottomed and is
recovering. Partial resolution of the US fiscal cliff furtherencouraged positive market sentiment as the New Year
began. Indications from many US Fed members that theywant an end to quantitative easing later this year led many
investors and markets to speculate whether it is almost timeto rotate out of safe-haven into growth assets. Suchthoughts have been very apparent in changes in asset class
values generally, with prices of government bonds (safe)falling and equities (unsafe) rising. Concurrently, the same
pattern was apparent within the commodities sector withindustrial metals the strongest performer, adding 8% overthe period, while gold and silver lost almost 6% of their
value.
Currently, markets are more cautious, wondering if presentpositive sentiment has been exaggerated. The latest USFederal Reserve Bank Beige Book suggests the countrys
economy is recovering but that momentum is weak, a viewimplying no imminent threat of higher interest rates or an
end to quantitative easing. Moreover, optimism has recededsomewhat thanks to the World Banks decision todowngrade its 2013 global growth outlook from 3% to
2.4%, signalling that while risks have decreased, growth
remains weak.
(price index, weekly closing)
750800850900950
10001050110011501200125013001350140014501500155016001650
170017501800
2007
2008
2009
2010
2011
2012
2013
(monthly, PMIs >50 expansive)
34
36
38
40
42
44
46
48
50
52
54
56
58
2007
2008
2009
2010
2011
2012
(monthly, 100 corresponds to long term trend growth in industrial production)
93
94
95
96
97
98
99
100
101
102
103
104
2007
2008
2009
2010
2011
2012
China
Eurozone
OECDUSAReference
Chart Sources: Bloomberg, SEB Commodity Research
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7/29/2019 SEB report: New Year rally but not in commodities
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Commodities Monthly
Crude oil
Saudi Arabia cut oil production as necessary in Q4-12 making further reductions more credible. Wetherefore slightly raise our Brent crude oil price
forecast for Q1-13 from $105/b to $107.5/b.However, given their potential large scale, weremain sceptical whether Saudi Arabia will make allcuts needed in H1-13. In addition, the bullish NewYear rally has been unable to drive Brent crudeprices significantly higher. Consequently, evenmodest setbacks to sentiment will see Brent crudeonce again testing the downside towards $105/b.
Between October and December, Saudi Arabiaconvincingly cut production by 600 kb/d, helping reducetotal OPEC production to 30.6 mb/d in December, largelyin line with the total call on OPEC output in Q4-12. Thecountrys determination makes it more likely it willcontinue to reduce production as necessary.Consequently, we raise our Brent crude oil forecast forQ1-13 from $105/b to $107.5/b while leaving our Q2-13estimate unchanged at $105/b. We maintain our H2-13projection at $110/b. Moving into Q1-13, demand forOPEC oil will decrease by 1 mb/d compared with Q4-12before falling by a further 0.5 mb/d in Q2-13. In otherwords, Saudi Arabia may need to cut current output byan additional 1.5 mb/d heading into Q2-13 to avoid therisk that global oil stocks may increase, unless of courseits production cutbacks are also supported by other
OPEC members. With the requisite reductionssubstantial, it remains unclear whether Saudi Arabia willin fact make them all. This uncertainty, together with theknowledge that US oil production is steadily increasing,is likely to weigh on the oil price during H1-13. Moreover,markets are highly optimistic regarding possibleeconomic recovery with equities having rallied into theNew Year. Nevertheless, despite such positive sentimentand generally improving markets, the Brent crude pricehas been unable to move much out of a fairly tighttrading band since October last year. Consequently, ifcurrent positive market conditions recede even slightly in
H1-13, Brent crude could easily fall back towards $105/b.
Middle East tensions will remain a wild card in 2013, asthey have for several years. The Iranian nuclear situationis by no means resolved with sanctions expected tointensify in February. Currently, Iran suffers from aliquidity shortage, adversely affecting maintenance andoil production investments. In addition, since last month,problems have escalated in Iraq, the second largestOPEC producer, with increasing tension between thecountrys Sunni Muslim minority which sides with rebelsin Syria, and the Shia Muslim majority which supportsShia-ruled Iran. A continued deterioration in the situation
in Syria will probably also adversely affect the position inIraq.
(NYMEX/ICE, $/b, front month, weekly closing)
30
40
50
60
70
80
90
100
110
120
130
140
150
2007
2008
2009
2010
2011
2012
2013
NYMEXWTI
ICE Brent
(DOE, mb, weekly data)
315
320
325
330
335
340345
350
355
360
365
370
375
380
385
390
j f m a m j j a s o n d
2008-2012 avg.
2012
2013
Chart Sources: Bloomberg, SEB Commodity Research
2012
(mb/d)
Revision
(kb/d)
2013
(mb/d)
Revision
(kb/d)IEA 89.8 +170 90.8 +240EIA 89.17 +130 90.11 +110
OPEC 88.80 -10 89.55 -10
($/b) Q1 Q2 Q3 Q4 FullYear
2013 107.5 105 110 110 108.12014 - - - - 110.02015 - - - - 115.0
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Commodities Monthly
Energy
(NYMEX, $/b) (ICE, $/b)
85
86
87
88
89
90
91
92
93
94
9596
97
98
feb-13
maj-13
aug-13
nov-13
feb-14
maj-14
aug-14
nov-14
feb-15
maj-15
aug-15
nov-15
feb-16
maj-16
aug-16
nov-16
feb-17
12-11-16
12-12-18
13-01-18
90919293949596979899
100101102103104105106107108109
110111112113
mar-13
jun-13
sep-13
dec-13
mar-14
jun-14
sep-14
dec-14
mar-15
jun-15
sep-15
dec-15
mar-16
jun-16
sep-16
dec-16
mar-17
jun-17
sep-17
dec-17
mar-18
jun-18
12-11-16
12-12-18
13-01-18
(NYMEX, /gal, front month, weekly closing) (DOE, mb, weekly data)
75
100
125
150
175200
225
250
275
300
325
350
375
400
425
2007
2008
2009
2010
2011
2012
2013
NYMEXGasoline
NYMEXHeating oil
120
130
140
150
160
170
180
190
200
210
220
230
240
j f m a m j j a s o n d
Gasoline 2008-2012 avg.
Gasoline 2013
Distillate fuel oil 2008-2012 avg.
Distillate fuel oil 2013
(NYMEX, $/MMBtu, front month, weekly closing) (NYMEX, $/MMBtu)
2
3
4
5
6
7
8
9
10
11
12
13
14
2
007
2
008
2
009
2
010
2
011
2
012
2
013
3,25
3,50
3,75
4,00
4,25
4,50
4,75
5,00
jan-13
m
aj-13
s
ep-13
jan-14
m
aj-14
s
ep-14
jan-15
m
aj-15
s
ep-15
jan-16
m
aj-16
s
ep-16
12-11-16
12-12-18
13-01-18
Chart Sources: Bloomberg, SEB Commodity Research
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7/29/2019 SEB report: New Year rally but not in commodities
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6
Commodities Monthly
Nordic power
Since our last report there has been a fairly dramaticchange in overall Nordic power market conditions. Forthe past two years hydroresources have been readily
available. Indeed, supplies have remained high with ahydrologic balance well above normal (at +12 TWh asrecently as early December). However, winter began withcold weather and little precipitation. In our last report westated that prolonged low temperatures were the onlything likely to push prices higher. They are now doing so.In addition, around the turn of the year the hydrologicalbalance had returned to normal and today it stands at -3TWh. Based on current weather forecasts indicatingcontinued cold, dry weather for the next 10 days, weexpect it to increase to -15 TWh over the next month.This is an excellent illustration of just how rapidly theNordic power system can shift from one extreme toanother. Still, nuclear availability is better than in recentwinters, with between 90% and 95% capacity availablesince current cold conditions began, reducing the risk ofspot prices spiking when temperatures drop.
Continental European power prices have come undersevere pressure. The emissions market has traded lowerwith EUA contracts for delivery in 2013 now well belowEUR 6/tonne and coal prices also continuing downward.Further, the German power market is experiencing aseismic shift in favour of more environmentally friendlyproduction, supported by subsidies for the manufacture
of solar panels and windmills to replace gas firedproduction and other traditional sources.
The system spot price in December was EUR42.94/MWh, compared with a EUR 31.20/MWh averagefor 2012, a post-2007 low, reflecting the current stronghydrological situation and low consumption due tocontinuing weak macroeconomic conditions.
The changed environment has had a serious effecton forward prices. The forward curve has twistedwith prompt contracts moving sharply higher due to
the cold spell, while contracts further out on thecurve trade ever lower, following continentalmarkets. Provided coal prices do not turn we seelittle upside for contracts far out on the curve. Whilethere may however still be some scope for a furtherrise, we have a neutral outlook at current levels withprices having already moved substantially higher.
(by Mats Forsell and Mats Hedberg, Commodities Trading)
(Nord Pool, /MWh, front quarter, weekly closing)
20
25
30
35
40
45
50
55
60
65
70
75
80
2007
2008
2009
2010
2011
2012
2013
(EEX, /MWh, front quarter, weekly closing)
20
25
30
35
40
45
50
55
60
65
70
75
80
85
90
95
2007
2008
2009
2010
2011
2012
2013
(ECX ICE, /t, Dec. 13, weekly closing)
4
5
6
7
8
9
10
11
12
13
14
15
16
1718
19
20
2009
2010
2011
2012
2013
Chart Sources: Bloomberg, SEB Commodity Research
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7/29/2019 SEB report: New Year rally but not in commodities
7/20
7
Commodities Monthly
Industrial metals
The industrial metal rally in late 2012, triggered byrelief that the Chinese economy was showing signs ofstabilizing, had already lost momentum by late
December. Still, we believe the industrial metals sectoris most likely of all commodity sectors to end 2013higher. Prices remain reasonable relative to productioncosts while demand fundamentals could more broadlystabilize this year. We therefore expect a positive pricetrend with smaller deviations from the trend comparedto 2012. Our opportunistic recommendation in 2012,i.e. to sell rallies and buy dips, is thus gradually turninginto a strategic recommendation to buy on dips andhold. There is a good chance that buying opportunitieswill materialize in Q1-13 as current prices reflect thegeneral New Year optimism that has boosted riskappetite in general and possibly fabricated positive
data coming out of China lately. Further, the generaluptrend in reported metals inventories should highlightthe risk of further short-term setbacks. Absoluteinventory levels, high for several metals, are lessproblematic with substantial volumes locked up incurve plays to create low risk returns in the current lowinterest rate environment.
Current data still support the view that the Chinese
economy has re-stabilized with growth consistent withgovernment objectives. However, positive local figures areroutinely accused of being largely fabricated, being more
bullish than those provided by more independent observers.
We recommend caution, pending a longer data series andanecdotal evidence showing economic stabilization and/orrecovery before entirely precluding the possibility of aChinese hard landing as a tail risk scenario. Regarding
stimulus measures once Chinas new political leaders takeoffice, we also recommend caution. Current rising inflation,
while blamed on cold weather, can also be matched withmonetary easing since mid-2012. Although the inflation
cycle may very well be turning, massive long-terminfrastructure projects will still guarantee healthy underlyingdomestic demand for industrial metals in all but the most
bearish scenarios. Thus a free fall in metal price fromcurrent levels appears unlikely in 2013.
In the industrial metal market, we have become used toattributing only marginal importance to the non-Chinese
world. Demand from both the US and Europe has remainedweak following the sub-prime crisis with market action
entirely dominated by China. This may however change in2013 as the European economy appears to be bottomingwhile its US counterpart is beginning to show very general
signs of a recovery. Still the main tail risk in both regions is alack of political resolve.
Overall, in all major areas, this years potential appearssignificantly better compared to the outcome of 2012.
However, current prices to some extent discount this view,leaving a limited room for bullish price action unless growth
forecasts are revised higher.
(weekly closing)
1400
1600
1800
2000
2200
2400
2600
2800
3000
3200
3400
3600
38004000
4200
4400
4600
2007
2008
2009
2010
2011
2012
(LME, indexed, weekly closing, January 2011 = 100)
60
65
70
7580
85
90
95
100
105
110
115
120
125
130
jan-11
feb-11
mar-11
apr-11
maj-11
jun-11
jul-11
aug-11
sep-11
okt-11
nov-11
dec-11
jan-12
feb-12
mar-12
apr-12
maj-12
jun-12
jul-12
aug-12
sep-12
okt-12
nov-12
dec-12
jan-13
Copper
Nickel
AluminiumZinc
Lead
Tin
(LME)
+57.2
-13
-11-9
-7-5
-3
-11
35
7
911
13
15
17
Aluminium
Copper
Nickel
Zinc
Lead Ti
n
Steel
Price (%)
Inventories (%)
Chart Sources: Bloomberg, SEB Commodity Research
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Commodities Monthly
Industrial metals
(weekly data)
Both LME and SHFE aluminium inventories trendedhigher through 2012, reflecting a substantial market
surplus likely to persist in 2013. The market is still quite likely to tighten due to stronger
demand, while inventory outflows are limited bywarehouse queues and financial transactions, restrictingphysical availability (cancelled warrants currently exceed40% of total inventories).
Positive for aluminium demand, global vehicleproduction data remain solid.
Absolute price levels are decisive for supply withcapacity likely to come back on line as prices edge higheralong the marginal production cost curve, reducingupside potential.
0
500000
1000000
1500000
2000000
2500000
3000000
3500000
4000000
4500000
5000000
5500000
2007
2008
2009
2010
2011
2012
2013
1250
1500
1750
2000
2250
2500
2750
3000
3250
3500LME inventoris (t, left axis)
LME price ($/t, right axis)
(weekly data)
In the most optimistic scenarios, copper mine supplygrowth will be substantial this year, even spurring someforecasters to expect a market surplus for the full year.
Historically however, supply has almost alwaysdisappointed due to frequent disruptions and projectdelays. For example, several South American labourcontracts are subject to renegotiation in 2013 with asignificant risk for labour conflicts.
We expect a less tight market in 2013 but still see asubstantial risk of a full year deficit. Consequently, thecopper market is likely to remain highly sensitive thisyear.
LME inventories ended 2012 trending sharply higher,indicating no current shortages of available metal.However, total inventories outside China are estimatedsignificantly tighter than inside.
0
50000
100000
150000
200000
250000
300000
350000
400000
450000
500000
550000
600000
650000
2007
2008
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3000
4000
5000
6000
7000
8000
9000
10000
11000LME inventoris (t, left axis)
LME price ($/t, right axis)
(weekly data)
The nickel market is likely to post a surplus in 2013 vs.2012, albeit smaller.
Stainless steel industry demand remains lacklustre whilevery strong production, inventories have continued on asolid uptrend throughout 2012 and into 2013, tocurrently stand near record highs.
The biggest upside risk concerns potential delays in thenew supply project pipeline.
Highly unpredictable Chinese NPI production will, as sooften, prove a decisive factor, determining importdemand and therefore market sentiment.
Chinese imports of Indonesian nickel ore are back at thesame level they reached prior to the, in retrospect, fartoo premature export restrictions.
High marginal production costs still substantially limitnickel downside risk.
0
20000
40000
60000
80000
100000
120000
140000
160000
180000
200000
2007
2008
2009
2010
2011
2012
2013
5000
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15000
20000
25000
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35000
40000
45000
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55000LME inventoris (t, left axis)
LME price ($/t, right axis)
Chart Sources: Bloomberg, SEB Commodity Research
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Commodities Monthly
Industrial metals
(weekly data)
LME zinc inventories stand just below all-time highsfollowing a consistent five-year uptrend.
After suffering near chronic oversupply, the zinc marketmay see its demand-side deficit decrease this yearfollowing refined supply cuts in 2012. However, minesupply increased substantially last year, despite fallingrefined demand.
Significant price improvements will very likely and easilyboost and refining activity, depressing them once again.Consequently, zinc rallies should be short lived relativeto the rest of the sector.
Refined zinc supply exceeded demand by 267 ktbetween January and November 2012, according to theILZSG, down from 323 kt during the correspondingperiod in 2011, with refined supply pegged at 11,560 ktand demand at 11,293 kt.
0
100000
200000
300000
400000
500000
600000
700000
800000
900000
1000000
1100000
1200000
1300000
2007
2008
2009
2010
2011
2012
2013
1000
1500
2000
2500
3000
3500
4000
4500
LME inventoris (t, left axis)
LME price ($/t, right axis)
(by Maximilian Brodin, Commodities Sales)(weekly data)
Recent sharply higher iron ore prices ignorefundamentals. A correction was inevitable.
Concerns regarding potential weather-related disruptionin Australia are receding, while cold weather in China hasdeferred construction activity, weakening steel demand.
Steel mills are offering material in the spot market inexpectation of continued weaker prices.
Iron ore prices have fallen for four consecutive days atthe time of writing. The index stands at 145.40$/t withthe February contract bid at 135$/t and Q2 at just under130$/t.
0
10000
20000
30000
4000050000
60000
70000
80000
90000
100000
110000
120000
130000
2008
2009
2010
2011
2012
200
300
400
500
600
700
800
900
1000
1100
1200
1300LME inventoris (t, left axis)
LME price ($/t, right axis)
(weekly data) (weekly data)
0
25000
50000
75000
100000
125000
150000
175000
200000
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275000
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350000
375000
400000
2007
2008
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500
1000
1500
2000
2500
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4000LME inventoris (t, left axis)
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0
2500
5000
7500
10000
12500
15000
17500
20000
22500
2500027500
30000
32500
2007
2008
2009
2010
2011
2012
2013
9000
12000
15000
18000
21000
24000
27000
30000
33000
36000LME inventoris (t, left axis)
LME price ($/t, right axis)
Chart Sources: Bloomberg, SEB Commodity Research
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7/29/2019 SEB report: New Year rally but not in commodities
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Commodities Monthly
Industrial metals
(LME, $/t) (LME, $/t)
1900
1950
2000
2050
2100
2150
2200
2250
2300
23502400
2450
2500
feb-13
maj-13
aug-13
nov-13
feb-14
maj-14
aug-14
nov-14
feb-15
maj-15
aug-15
nov-15
feb-16
maj-16
aug-16
nov-16
feb-17
12-11-16
12-12-18
13-01-18
7500
7600
7700
7800
7900
8000
8100
8200
feb-13
maj-13
aug-13
nov-13
feb-14
maj-14
aug-14
nov-14
feb-15
maj-15
aug-15
nov-15
feb-16
maj-16
aug-16
nov-16
feb-17
12-11-16
12-12-18
13-01-18
(LME, $/t) (LME, $/t)
15800
16000
16200
16400
16600
16800
17000
17200
17400
17600
17800
18000
18200
18400
18600
feb-13
maj-13
aug-13
nov-13
feb-14
maj-14
aug-14
nov-14
feb-15
maj-15
aug-15
nov-15
feb-16
maj-16
aug-16
nov-16
feb-17
12-11-16
12-12-18
13-01-18
1850
1900
1950
2000
2050
2100
2150
2200
2250
2300
2350
feb-13
maj-13
aug-13
nov-13
feb-14
maj-14
aug-14
nov-14
feb-15
maj-15
aug-15
nov-15
feb-16
maj-16
aug-16
nov-16
feb-17
12-11-16
12-12-18
13-01-18
(LME, $/t) (LME, $/t)
2125
2150
2175
2200
2225
2250
2275
2300
2325
2350
2375
feb-13
maj-13
aug-13
nov-13
feb-14
maj-14
aug-14
nov-14
feb-15
maj-15
aug-15
nov-15
feb-16
maj-16
aug-16
nov-16
feb-17
12-11-16
12-12-18
13-01-18
20000
20500
21000
21500
22000
22500
23000
2350024000
24500
25000
25500
feb-13
mar-13
apr-13
maj-13
jun-13
jul-13
aug-13
sep-13
okt-13
nov-13
dec-13
jan-14
feb-14
mar-14
apr-14
12-11-16
12-12-18
13-01-18
Chart Sources: Bloomberg, SEB Commodity Research
-
7/29/2019 SEB report: New Year rally but not in commodities
11/20
11
Commodities Monthly
Precious metals
Gold trades almost exactly in line with the averageprice for the past 18 months. We had expected QE3 andcorresponding money printing by other central banksto drive the gold above its nominal record high postedin mid-2011 ($1900/ozt) but it stopped short at$1800/ozt before falling backwards to currently thehigh 1600s. While growth is only expected to recovermodestly in 2013 downside risks have decreasedsubstantially with the potential for positive surprises,certainly within the OECD, having increased.Consequently, the market looks set to refocus ongrowth, at the expense of liquidity, a bearish factor forgold unless inflation expectations increase. So far,there is no suggestion that will happen. In combinationwith, for example, an expected strong dollar, we adopta slightly bearish view on gold for this year (Q1:$1700/ozt, Q2: $1650/ozt, Q3: $1600/ozt, Q4: $1600/ozt,Year average: $1638/ozt). Indeed, if global growth wereto accelerate more rapidly than expected, withoutsignificant inflation pressure, a sell-off in physicalinvestment products as investors seek higher returnscould quickly push gold prices significantly lower. For2013 we prefer exposure to palladium and platinuminstead of gold and silver.
Central bankers appear convinced that inflation is undercontrol despite the OECDs ultra-dovish monetary policy.However, what they think and what the future will produce
are not necessarily the same things. A vast economicexperiment is being conducted in which enormous
quantities of potentially combustible inflationary money arebeing printed as central bank balance sheets continue togrow. However, money multipliers remain low while
borrowers are deleveraging. If this situation changes andexit policies are not implemented quickly enough, it would
spell trouble.
S&Ps US credit rating downgrade in 2011 was acontributory factor in driving the gold price to a newnominal high. The downgrade was a direct result of the
inability of US politicians to agree on a plan to reducedeficits to sustainable levels over the coming decade. With
US politics still highly polarized, there is an appreciable riskwe may see similar turbulence this year. This represents anupside event risk for the gold market. However, it should be
remembered that, in 2011, Euro-zone stress was alsoincreasing exponentially, sending risk-averse European
investors running for cover, in other words into gold.However, from this perspective, we are seeing adiametrically opposed development at the moment with
PIIGS yields falling rapidly.
Both platinum and palladium are likely to post solid gains in2013 with supply probably stretched and strengtheningdemand likely. Palladium may lead the way being more
exposed to the Chinese and US economies than platinum
whose consumption is skewed towards troubled Europeanmarkets.
(COMEX/NYMEX, indexed, weekly closing, January 2011 = 100)
70
80
90
100
110
120
130
140150
160
170
jan-11
feb-11
mar-11
apr-11
maj-11
jun-11
jul-11
aug-11
sep-11
okt-11
nov-11
dec-11
jan-12
feb-12
mar-12
apr-12
maj-12
jun-12
jul-12
aug-12
sep-12
okt-12
nov-12
dec-12
jan-13
Silver
Platinum
Gold
Palladium
(front month, weekly closing)
30
34
38
42
46
50
54
58
62
66
70
74
78
82
86
2007
2008
2009
2010
2011
2012
2013
c
-7
-6
-5
-4
-3
-2
-1
0
1
2
GOLD EUR JPY GBP SEK RUB NOK CHF
YTD (%) MoM (%)
Chart Sources: Bloomberg, SEB Commodity Research
-
7/29/2019 SEB report: New Year rally but not in commodities
12/20
12
Commodities Monthly
Precious metals
(COMEX, $/ozt, front month, weekly closing)
Net speculative long positions in COMEX gold fell backsharply in Q4-12, largely due to a reduction in long
positions, but also increasing shorts. They currentlystand near 2012 lows.
Physical gold ETF holdings stabilized around a newrecord high (2,633 tonnes) in December beforedecreasing slightly in early 2013 to 2,615 tonnes.
Last year, US Mint monthly gold coin sales exceeded2011 only in October and November. Total sales in 2012(753,000 ozt) were 25% lower than during the previousyear.
However, gold coin sales appear to have begun 2013strongly, possibly attributable to greater inflation fearsamongst retail investors than in financial markets.
500
600
700
800
900
1000
1100
1200
1300
1400
1500
1600
1700
1800
1900
2000
2007
2008
2009
2010
2011
2012
2013
(COMEX, $/ozt, front month, weekly closing)
In December, net speculative long positions in COMEXsilver fell back from high levels, mainly due to areduction of long positions.
Since decreasing in H1-11, physical silver ETF holdingshave trended upwards, hitting new highs last December.Current holdings total 19,700 tonnes.
Like gold, US Mint silver coin sales rebounded in late2012 and appear also to have begun this year relatively
strongly. Sales in 2012 totalled 33,742,500 ozt, down15% compared to 2011.
The gold-to-silver ratio is 53.1, stable in the mid 50-60range, where it has traded for the last 18 months.
8101214161820222426283032343638404244464850
2007
2008
2009
2010
2011
2012
2013
(NYMEX, $/ozt, front month, weekly closing)
Net long speculative positions in NYMEX platinum andpalladium are high, reflecting relatively bullish market
expectations for both. While physical platinum ETF holdings have printed a new
record of 54 tonnes palladium positions are relatively
stable, around 13 tonnes below their previous 2011 all-timepeak (73 tonnes).
Gold-to-platinum and gold-to-palladium ratios remain closeto 1.05 and 2.5, respectively, as they have for the past 18
months, but seem keen to break out lower.
Both markets, palladium in particular, will probably betightly balanced this year if global growth remains on track.Mine closures due to poor profitability could tighten
balances further while unpredictable recycling is mainly adownside risk.
100
200
300
400
500
600
700
800
900
1000
1100
2
007
2
008
2
009
2
010
2
011
2
012
2
013
300
550
800
1050
1300
1550
1800
2050
2300
Palladium (left axis)
Platinum (right axis)
Chart Sources: Bloomberg, SEB Commodity Research
-
7/29/2019 SEB report: New Year rally but not in commodities
13/20
13
Commodities Monthly
Precious metals
(COMEX, $/ozt) (COMEX, $/ozt)
1650
1675
1700
1725
1750
1775
1800
1825
feb-13
maj-13
aug-13
nov-13
feb-14
maj-14
aug-14
nov-14
feb-15
maj-15
aug-15
nov-15
feb-16
maj-16
aug-16
nov-16
feb-17
maj-17
aug-17
nov-17
feb-18
maj-18
12-11-16
12-12-1813-01-18
31,4
31,6
31,8
32,0
32,2
32,4
32,6
32,8
jan-13
apr-13
jul-13
okt-13
jan-14
apr-14
jul-14
okt-14
jan-15
apr-15
jul-15
okt-15
jan-16
apr-16
jul-16
okt-16
jan-17
apr-17
jul-17
12-11-16
12-12-18
13-01-18
(NYMEX, $/ozt) (NYMEX, $/ozt)
620
630
640
650
660
670
680
690
700
710
720
730
mar-13
jun-13
sep-13
dec-13
mar-14
12-11-16
12-12-18
13-01-18
1540
1560
1580
1600
1620
1640
1660
1680
1700
jan-13
apr-13
jul-13
okt-13
jan-14
12-11-16
12-12-18
13-01-18
(weekly data, tonnes) (weekly data, tonnes)
2050
2100
2150
2200
2250
2300
2350
2400
2450
2500
2550
2600
2650
jan-11
feb-11
mar-11
apr-11
maj-11
jun-11
jul-11
aug-11
sep-11
okt-11
nov-11
dec-11
jan-12
feb-12
mar-12
apr-12
maj-12
jun-12
jul-12
aug-12
sep-12
okt-12
nov-12
dec-12
jan-13
16500
17000
17500
18000
18500
19000
19500
20000Gold holdings
Silver holdings
35
40
45
50
55
60
65
70
75
jan-11
feb-11
m
ar-11
apr-11
m
aj-11
jun-11
jul-11
a
ug-11
s
ep-11
okt-11
nov-11
d
ec-11
jan-12
feb-12
m
ar-12
apr-12
m
aj-12
jun-12
jul-12
a
ug-12
s
ep-12
okt-12
nov-12
d
ec-12
jan-13
Palladium holdings
Platinum holdings
Chart Sources: Bloomberg, SEB Commodity Research
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7/29/2019 SEB report: New Year rally but not in commodities
14/20
14
Commodities Monthly
Agriculture
During Q4-12 persistent US drought conditions madeus increasingly cautious concerning short-term outlookfor the grain market, ensuring a three month neutraloutlook in our last Commodities Monthly. With nosigns of anything other than marginal improvements,we remain tactically cautious while the long termdownside risk has also started to moderate slowly. Ifsoil moisture conditions do not improve in comingmonths, we will probably further upgrade our priceexpectations. With the rest of the world enjoying fairlynormal weather conditions, at least from anagricultural production perspective, markets arefocused on the US. Winter wheat conditions arealready terrible, a fact well known and fullydiscounted. Thus the most important issue is whethersoil moisture levels in the Midwest can improvesufficiently to encourage farmers to plant acreage aslarge as price incentives suggest. It is highly probablethat developments in this area will be the decisivefactor for grain markets in 2013.
In the current nervous grain market environment we shouldnot forget circumstances which brought us to this point.
Weather conditions differed substantially from the normalmost constantly between mid-2009 and mid-2012. What
is worse is that these deviations have had a significantimpact on several important agricultural regions duringcritical stages of crop development, i.e. worst case
scenarios. As a result, in recent years, grain prices havebeen deflected from their long term bearish real price trend.
Considering the still far from optimized global agriculturalproduction system, an uptrend in real grain prices is unlikelyto be maintained for a prolonged period. It should also be
remembered that current tight grain stocks mainly concerncorn. From a global perspective, soybean inventories
trended slightly higher between 2000 and 2010 in terms ofdays of supply. During the same period, wheat inventories
have been both significantly higher and lower thancurrently. US corn inventories are trending lower due to thecountrys ethanol production. However, with booming tight
oil production, the role played by highly questioned ethanolin the countrys efforts to establish energy independence is
no longer that obvious.
Outside the US, global weather conditions are fairly
satisfactory, certainly from an agricultural perspective.Australian bush fires and exceptionally low Asian winter
temperatures have had only a marginal impact. ENSOconditions are neutral and expected to remain so thisspring. ENSO models forecast only modest deviations from
normal meteorological conditions, with no bias towardseither la Nia or el Nio conditions. Few and fairly limited
disturbances are reported from Europe, the FSU, SouthAmerica and Asia.
(CBOT, indexed, weekly closing, January 2011 = 100)
70
75
80
85
90
95
100
105
110
115
120
125
130
135
jan-11
feb-11
mar-11
apr-11
maj-11
jun-11
jul-11
aug-11
sep-11
okt-11
nov-11
dec-11
jan-12
feb-12
mar-12
apr-12
maj-12
jun-12
jul-12
aug-12
sep-12
okt-12
nov-12
dec-12
jan-13
Wheat
SoybeansCorn
(WASDE, yearly data updated monthly)
45
55
65
75
85
95
105
115
125
135
00/01
01/02
02/03
03/04
04/05
05/06
06/07
07/08
08/09
09/10
10/11
11/12
12/13
Wheat
Soybeans
Corn
(WASDE, monthly data, %, 2012/2013)
-14-13-12-11-10-9-8-7-6-5-4-3-2-10123456789
jun-12
jul-12
aug-12
sep-12
okt-12
nov-12
dec-12
jan-13
Corn productionCorn stocksWheat production
Wheat stocksSoybean productionSoybean stocks
Chart Sources: Bloomberg, USDA, SEB Commodity Research
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7/29/2019 SEB report: New Year rally but not in commodities
15/20
15
Commodities Monthly
Agriculture
(CBOT, /bu, front month, weekly closing)
Net long speculative positions in CBOT corn fell sharplyin late 2012, driven by reduced long and increasing short
positions. Considering the US drought situation, netpositions at H1-12 levels signal rebound risk.
USDA US quarterly corn stocks of 8.03 bn bu were belowaverage consensus expectations of 8.21, and were welldown from 9.65 bn at the end of 2011, furtherconfirming corn as the tightest grain market.
Global 2012/2013 corn ending stocks were revised downmarginally in the December WASDE but by 1.4% inJanuary.
So far South American crop conditions suggest aplentiful crop this year, while dry US conditions are causefor concern going forward.
US corn ethanol production continues to decline asprofitability deteriorates.
250
300
350
400
450
500
550
600
650
700
750
800
850
2007
2008
2009
2010
2011
2012
2013
(CBOT, /bu, front month, weekly closing)
Net long speculative positions in CBOT wheat becamenegative in December as long positions continued totrend lower and short positions increased sharply.Consequently, if fundamentals deteriorate speculatorsmay fuel a rebound when rebuilding long positions.
Concerning wheat, US quarterly grain stocks of 1.66 bnbu were largely in line with expectations (average: 1.67bn) and unchanged since the end of 2011 (1.66 bn).
Global 2012/2013 wheat ending stocks were revised1.6% higher in the December WASDE and marginallylower in the January report.
Northern hemisphere wheat will remain dormant foranother month while the southern hemisphere harvest islargely finished.
400
500
600
700
800
900
1000
1100
1200
2007
2008
2009
2010
2011
2012
2013
(CBOT, /bu, front month, weekly closing)
Net long speculative positions in CBOT soybeanstrended lower through Q4-12 due to reduced long andincreasing short positions.
US quarterly soybean stocks at 1.97 bn bu were largely inline with consensus (average: 1.98 bn) but down from2.37 bn at the end of 2011.
Global 2012/2013 soybean ending stocks were revisedslightly lower in the December WASDE and by 0.8% inJanuary.
So far, South American crop conditions indicate anexcellent harvest this year while dry US conditions createmajor planting concerns.
Meal prices have fallen slightly vs. soybeans following astrong H2-12 while oil prices are recovering slowly afterthe palm oil market stabilized.
600
800
1000
1200
1400
1600
1800
20
07
20
08
20
09
20
10
20
11
20
12
20
13
Chart Sources: Bloomberg, SEB Commodity Research
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7/29/2019 SEB report: New Year rally but not in commodities
16/20
16
Commodities Monthly
Agriculture
(CBOT, /bu) (CBOT, /bu)
560
580
600
620
640
660
680
700
720
740
mar-13
jun-13
sep-13
dec-13
mar-14
jun-14
sep-14
dec-14
mar-15
12-11-16
12-12-18
13-01-18
790
800
810
820
830
840
850
860
870
mar-13
jun-13
sep-13
dec-13
mar-14
jun-14
sep-14
dec-14
12-11-16
12-12-18
13-01-18
(CBOT, /bu) (NYBOT, /lb)
1200
1225
1250
12751300
1325
1350
1375
1400
1425
1450
1475
1500
mar-13
jun-13
sep-13
dec-13
mar-14
jun-14
sep-14
dec-14
mar-15
12-11-16
12-12-18
13-01-18
8
10
12
14
1618
20
22
24
26
28
30
32
34
36
2007
2008
2009
2010
2011
2012
2013
(NYBOT, /lb) (NYBOT, $/t)
30405060708090
100110120130140150160170180190
200210220
2
007
2
008
2
009
2
010
2
011
2
012
2
013
1400
1600
1800
2000
2200
2400
2600
2800
3000
3200
3400
3600
3800
2
007
2
008
2
009
2
010
2
011
2
012
2
013
Chart Sources: Bloomberg, SEB Commodity Research
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7/29/2019 SEB report: New Year rally but not in commodities
17/20
17
Commodities Monthly
Commodity related economic indicatorsEUROZONE Current Date Previous Date NextIndustrial production (%, YoY) -3,7 2012-11-30 -3,3 2012-10-31 2013-02-13
Industrial production (%, MoM) -0,3 2012-11-30 -1,0 2012-10-31 2013-02-13
Capacity utilization (%, sa) 76,8 2012-12-31 77,9 2012-09-30
Manufacturing PMI 46,1 2012-12-31 46,2 2012-11-30 2013-01-24
Real GDP (%, YoY) -0,6 2012-09-30 -0,5 2012-06-30 2013-02-14
Real GDP (%, QoQ, sa) -0,1 2012-09-30 -0,2 2012-06-30 2013-02-14
CPI (%, YoY) 2,2 2012-12-31 2,2 2012-11-30 2013-02-22
CPI (%, MoM) 0,4 2012-12-31 -0,2 2012-11-30 2013-02-22
Consumer confidence -26,5 2012-12-31 -26,9 2012-11-30 2013-01-23
USA
Industrial production (%, YoY) 2,3 2012-12-31 2,9 2012-11-30
Industrial production (%, MoM) 0,3 2012-12-31 1,0 2012-11-30 2013-02-15
Capacity utilization (%) 78,8 2012-12-31 78,7 2012-11-30 2013-02-15
Manufacturing PMI 50,7 2012-12-31 49,5 2012-11-30 2013-02-01
Real GDP (%, YoY) 2,6 2012-09-30 2,1 2012-06-30
Real GDP (%, QoQ, saar) 3,1 2012-09-30 1,3 2012-06-30 2013-01-30
CPI (%, MoM) 1,7 2012-12-31 1,8 2012-11-30 2013-02-21
CPI (%, MoM, sa) 0,0 2012-12-31 -0,3 2012-11-30 2013-02-21
OECD Composite Leading Indicator 103,4 2011-03-31 103,1 2011-02-28Consumer confidence (Michigan) 71,3 2013-01-31 72,9 2012-12-31 2013-02-01
Nonfarm payrolls (net change, sa, 000) 155 2012-12-31 161 2012-11-30 2013-02-01
JAPAN
Industrial production (%, YoY, nsa) -5,5 2012-11-30 -4,5 2012-10-31 2013-01-31
Industrial production (%, MoM, sa) -1,4 2012-11-30 1,6 2012-10-31 2013-01-31
Capacity utilization (%, sa) 82,2 2012-11-30 82,4 2012-10-31
Manufacturing PMI 45,0 2012-12-31 46,5 2012-11-30
Real GDP (%, YoY) 0,5 2012-09-30 3,9 2012-06-30
Real GDP (%, QoQ, sa) -0,9 2012-09-30 2012-06-30 2013-02-14
CPI (%, YoY) -0,6 2012-12-31 -0,5 2012-11-30 2013-01-25
CPI (%, MoM) -0,4 2012-11-30 0,0 2012-10-31
OECD Composite Leading Indicator 104,9 2011-02-28 104,2 2011-01-31
Consumer confidence 39,1 2012-12-31 39,0 2012-11-30
CHINAIndustrial production (%, YoY) 10,3 2012-12-31 10,1 2012-11-30 2013-03-09
Manufacturing PMI 50,6 2012-12-31 50,6 2012-11-30 2013-02-01
Real GDP (%, YoY) 7,9 2012-12-31 7,4 2012-09-30 2013-04-15
CPI (%, YoY) 2,5 2012-12-31 2,0 2012-11-30 2013-02-08
OECD Composite Leading Indicator 102,3 2011-03-31 102,1 2011-02-28
Consumer confidence 105,1 2012-11-30 106,1 2012-10-31
Bank lending (%, YoY) 15,0 2012-12-31 15,7 2012-11-30
Fixed asset investment (%, YoY) 20,5 2012-09-30 20,4 2012-06-30
OTHER
OECD Area Comp. Leading Indicator 103,2 2011-03-31 103,0 2011-02-28
Global manufacturing PMI 50,2 2012-12-31 49,6 2012-11-30
Sources: Bloomberg, SEB Commodity Research
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7/29/2019 SEB report: New Year rally but not in commodities
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Commodities Monthly
PerformanceClosing
last weekYTD(%)
1 m(%)
1 q(%)
1 y(%)
5 y(%)
UBS Bloomberg CMCI Index (TR) 1316,08 1,0 0,6 -1,9 1,3 -0,3UBS Bloomberg CMCI Index (ER) 1236,72 1,0 0,6 -1,9 1,2 -2,1UBS Bloomberg CMCI Index (PI) 1591,43 0,9 0,6 -1,5 2,0 22,0UBS B. CMCI Energy Index (PI) 1547,44 2,3 4,1 -0,1 2,3 8,4UBS B. CMCI Industrial Metals Index (PI) 1095,56 0,0 -1,1 0,3 -3,5 0,9UBS B. CMCI Precious Metals Index (PI) 2518,05 1,7 1,1 -3,1 2,2 89,4UBS B. CMCI Agriculture Index (PI) 1783,78 0,3 -1,7 -5,1 4,1 25,1Baltic Dry Index 837,00 19,7 12,7 -15,4 -9,6 -87,0
Crude Oil (NYMEX, WTI, $/b) 95,56 4,1 8,7 3,8 -5,0 5,5Crude Oil (ICE, Brent, $/b) 111,89 0,7 2,8 -0,5 1,1 25,4Aluminum (LME, $/t) 2042,00 -1,5 -2,8 1,3 -7,4 -16,7Copper (LME, $/t) 8061,00 1,6 0,5 -1,9 -2,2 12,9Nickel (LME, $/t) 17550,00 2,9 -1,4 1,3 -10,0 -39,0Zinc (LME, $/t) 2034,00 -2,2 -2,7 5,9 1,6 -13,6Steel (LME, Mediterranean, $/t) 325,00 6,6 3,2 -7,1 -39,3 N/AGold (COMEX, $/ozt) 1687,00 0,7 1,0 -3,2 1,6 91,3
Corn (CBOT, /bu) 727,50 4,2 1,0 -4,4 22,6 46,0Wheat (CBOT, /bu) 791,25 1,7 -2,5 -8,9 33,6 -17,8Soybeans (CBOT, /bu) 1429,25 0,7 -2,5 -7,5 20,8 13,1
Sources: Bloomberg, SEB Commodity Research
Major upcoming commodity eventsDate Source
Department of Energy, US inventory data Wednesdays, 16:30 CET www.eia.doe.gov
American Petroleum Institute, US inventory data Tuesdays, 22:30 CET www.api.org
CFTC, Commitment of Traders Fridays, ~21:30 CET www.cftc.gov
US Department of Agriculture, Crop Progress Mondays, ~22.30 CET (season) www.usda.gov
International Energy Agency, Oil Market Report February 13 www.oilmarketreport.com
OPEC, Oil Market Report February 12 www.opec.org
Department of Energy, Short Term Energy Outlook February 12 www.eia.doe.gov
US Department of Agriculture, WASDE February 8 www.usda.gov
International Grains Council, Grain Market Report February 21 www.igc.org.uk
OPEC ordinary meeting, Vienna, Austria May 31 www.opec.orgSources: Bloomberg, SEB Commodity Research
Contact listCOMMODITIES Position E-mail Phone MobileTorbjrn Iwarson Head of Commodities [email protected] +46 8 506 234 01
Peter Lvaas Head of Commodities
Norway
[email protected] +47 22 82 72 70
RESEARCH
Bjarne Schieldrop Chief analyst [email protected] +47 22 82 72 53 +47 92 48 92 30
Filip Petersson Strategist [email protected] +46 8 506 230 47 +46 70 996 08 84
SALES SWEDENPr Melander Corporate [email protected] +46 8 506 234 75 +46 70 714 90 79
Karin Almgren Institutional [email protected] maternity leave
SALES NORWAY
Maximilian Brodin Corporate/Institutional [email protected] +47 22 82 72 73 +47 92 45 67 27
SALES FINLAND
Jussi Lepist Corporate/Institutional [email protected] +358 9 616 285 21 +358 40 844 187 7
SALES DENMARK
Peter Lauridsen Corporate/Institutional [email protected] +45 331 777 34 +45 616 211 59
TRADING
Niclas Egmar Corporate/Institutional [email protected] +46 8 506 234 55 +46 70-618 560 4
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19
Commodities Monthly
COMMODITY RESEARCH DISCLAIMER
This statement affects your rightsThis report has been compiled by SEBs Commodity Research, a division within Skandinaviska Enskilda Banken AB (publ) (SEB),
to provide background information only. It is confidential to the recipient, any dissemination, distribution, copying, or other use ofthis communication is strictly prohibited.
Good faith & limitationsOpinions, projections and estimates contained in this report represent the authors present opinion and are subject to changewithout notice. Although information contained in this report has been compiled in good faith from sources believed to be reliable,
no representation or warranty, expressed or implied, is made with respect to its correctness, completeness or accuracy of thecontents, and the information is not to be relied upon as authoritative. To the extent permitted by law, SEB accepts no liabilitywhatsoever for any direct or consequential loss arising from use of this document or its contents.
DisclosuresThe analysis and valuations, projections and forecasts contained in this report are based on a number of assumptions andestimates and are subject to contingencies and uncertainties; different assumptions could result in materially different results.The inclusion of any such valuations, projections and forecasts in this report should not be regarded as a representation or
warranty by or on behalf of the SEB Group or any person or entity within the SEB Group that such valuations, projections and
forecasts or their underlying assumptions and estimates will be met or realized. Past performance is not a reliable indicator offuture performance. Foreign currency rates of exchange may adversely affect the value, price or income of any security or relatedinvestment mentioned in this report. This document does not constitute investment advice and is being provided to you without
regard to your investment objectives or circumstances. Anyone considering taking actions based upon the content of thisdocument is urged to base investment decisions upon such investigations as they deem necessary. This document does notconstitute an offer or an invitation to make an offer, or solicitation of, any offer to subscribe for any securities or other financial
instruments.
Conflicts of InterestSEB has in place a Conflicts of Interest Policy designed, amongst other things, to promote the independence and objectivity ofreports produced by its Research departments, which are separated from the rest of SEB business areas by information barriers; as
such, research reports are independent and based solely on publicly available information. Your attention is drawn to the fact thata member of, or an entity associated with, SEB or its affiliates, officers, directors, employees or shareholders of such members (a)
may be represented on the board of directors or similar supervisory entity of the companies mentioned herein (b) may, to theextent permitted by law, have a position in the securities of (or options, warrants or rights with respect to, or interest in thesecurities of the companies mentioned herein or may make a market or act as principal in any transactions in such securities (c)
may, acting as principal or as agent, deal in investments in or with companies mentioned herein, and (d) may from time to timeprovide investment banking, underwriting or other services to, or solicit investment banking, underwriting or other business from
the companies mentioned herein.
RecipientsIn the UK, this report is directed at and is for distribution only to (I) persons who have professional experience in matters relatingto investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (The
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The SEB Group: members, memberships and regulators
Skandinaviska Enskilda Banken AB (publ) is incorporated in Sweden, as a Limited Liability Company. It is regulated byFinansinspektionen, and by the local financial regulators in each of the jurisdictions in which it has branches or subsidiaries,including in the UK, by the Financial Services Authority; Denmark by Finanstilsynet; Finland by Finanssivalvonta; Germanyby Bundesanstalt fr Finanzdienstleistungsaufsicht and Norway by Finanstilsynet. In the US, SEBAB is a U.S. broker-dealer,registered with the Financial Industry Regulatory Authority (FINRA). SEBAB is a direct subsidiary of SEB. SEB is active onmajor Nordic and other European Regulated Markets and Multilateral Trading Facilities, in as well as other non-Europeanequivalent markets, for trading in financial instruments. For a list of execution venues of which SEB is a member or
participant, visit http://www.seb.se.
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7/29/2019 SEB report: New Year rally but not in commodities
20/20
www.seb.se
SEB Commodity Research
Bjarne Schieldrop, Chief Commodity [email protected]
+47 9248 9230
Filip Petersson, Commodity [email protected]
+46 8 506 230 47