Commodities Comment：bullish into 2011,expecting a summer of opportunity
Please refer to the important disclosures and analyst certification on inside back cover of this document, or on our website www.macquarie.com.au/research/disclosures. GLOBAL LME cash price % Change US ¢/lb day on day Aluminium 89.0 -0.1 Copper 300.4 -0.2 Lead 76.7 -0.1 Nickel 907.9 -1.1 Tin 775.9 1.2 Zinc 80.6 0.8 Other prices % Change day on day Gold ($/oz) 1223.00 -0.1 Silver ($/oz) 18.42 -0.1 Platinum ($/oz) 1553.00 -0.2 Palladium ($/oz) 456.00 -0.2 Oil WTI 75.01 0.0 Cobalt (99.8%) 20.75 0.0 $US/€ exchange rate 1.23 0.3 US$/A$ exchange rate 0.86 -0.1 LME/COMEX stocks Tonnes Change LME Aluminium 4,495,775 9,550 LME Copper 461,525 -1,650 Comex Copper 92,465 -168 Lead 192,600 -400 Nickel 132,162 -1,158 Tin 20,445 -280 Zinc 616,775 -575 Source: LME, Comex, Nymex, SHFE, Metal Bulletin, Reuters, LBMA, Macquarie Research, June 2010 *** In order to publish this note the prices in the table above are as at 12.45pm BST*** Max Layton 44 20 3037 4273 Max.Layton@macquarie.com Jim Lennon 44 20 3037 4271 Jim.Lennon@macquarie.com Bonnie Liu +86 21 2412 9008 Bonnie.Liu@macquarie.com Colin Hamilton 44 20 3037 4061 colin.hamilton@macquarie.com Graeme Train +86 21 2412 9035 Graeme.Train@macquarie.com Hayden Atkins +44 20 3037 4476 Hayden.Atkins@macquarie.com Duncan Hobbs 44 20 3037 4497 Duncan.Hobbs@macquarie.com 15 June 2010 Commodities Comment Price forecasts: bullish into 2011, expecting a summer of opportunity Feature article In this forecast round we make only small changes to most of our commodity price forecasts, but we believe this is a good opportunity to reiterate our views given the recent commodity and equity sell-off. In the base metals we have generally downgraded our 2Q10 and 3Q10 forecasts in response to the earlier than expected pullback in prices (prices in most cases pulled back to around our 4Q10 forecasts, but in May), while we have upgraded a number of bulks price forecasts in an acknowledgement of higher than previously anticipated marginal costs of production and/or supply constraints. We continue to view copper and coking coal as our headline recommendations over the next 12-18 months, as these are the two markets we see being fundamentally tight, with supply relatively inelastic to price. We are also particularly bullish on the prospects for platinum, palladium and lead. Latest news Compared to Monday’s close, most base and precious metals prices were largely unchanged as at the time of writing (12.45 BST). The world's four largest steelmakers produced 183mt in 2009, according to Metal Bulletin, which works out to 15% of total world steel production. This marks a small reduction in the output share of the four largest steelmakers from 16% in 2008 and the world steel industry remains more fragmented than most other metals markets. ArcelorMittal remained the world's largest steel producer (6% of world total), despite a 29% drop in output. The other three of the world's four largest steelmakers are from China (Hebei, Baosteel and Wuhan). In total, nine of the world's top 20 steelmakers are from China and all bar one of them increased production in 2009. Chilean copper production was 1.71mt over the year to April 2010, up 61,400t or 3.7% from the corresponding period of 2009, according to Cochilco. The growth was driven by increases in production at Escondida and Collahuasi in particular. The La Oroya smelter in Peru has been idle since
