Commodity Research

Commodities Daily 17 March 2010

OPEC is likely to maintain output quotas

Energy: The WTI oil price has advanced by nearly 3% since yesterday and trades above the
mark of US$82/bbl this morning. Brent trades at US$81/bbl after the roll-over to the May
contract. A weaker US dollar boosted the oil price. Last night's API data release on inventories
lent additional support to the oil price. Accordingly, crude oil inventories rose again by 400K
barrel last week, despite a marked contraction in crude oil imports. Gasoline stocks, on the
other hand, declined significantly by 3.7m barrel and inventories of distillates also saw a
moderate decrease. Refinery capacity utilization remained unchanged and the reduction in oil
product inventories should be primarily attributable to a rise in demand. Current data provided
by MasterCard confirms this trend. Accordingly, last week's gasoline consumption in the US
was only slightly off its eight-month high that was recorded during the previous week. Average
US-inventories crude oil /products
gasoline consumption during the past four weeks was up 2.3% y-o-y. Since gasoline prices at API DOE
gas stations in the US rose to their highest level since October 2008, demand for gasoline may 12.3. Survey 5.3.
level off. Further, the most recent widening in refinery margins could lead to an expansion in Crude oil +0.40 +1.1 +1.43
Gasoline -3.65 -1.0 -2.96
gasoline output, which may prevent a reduction in gasoline inventories. Today, the US Distillates -0.76 -1.3 -2.22
Department of Energy releases its official inventory data. Moreover, the regular meeting of Utiliz. (%) +0.40 +0.0 -1.14
Imports -1.23 -0.74
OPEC member countries is also taking place today. In view of the comfortable price level, Weekly change in mm barrels, imports in
OPEC is unlikely to decide on a change to the formal output quotas. We believe that the mbpd

current price level of above US$80/bbl is not sustainable and expect a correction. Owing to the Source: API, DOE, Bloomberg

seasonally low demand for oil during the second quarter, the market is likely to face a
significant oversupply, which could bring prices under pressure during the coming months.
Precious metals: The gold price gained 2% on the back of a softer US dollar and is currently
trading at around US$1,130/oz. The US Fed confirmed yesterday that it will maintain the
exceptionally low level of interest rates for an extended period of time. Prior to this
announcement, the Euro had already significantly appreciated, since the rating agency
Standard & Poor's affirmed Greece's sovereign debt rating at BBB+.
The platinum price temporarily advanced to US$1,640/oz, the highest level since mid-January.
As a result, the platinum-gold ratio increased to the highest level since mid-September 2008.
In addition to an increased demand for autocatalysts, helped by a recovery of the car industry,
platinum also benefits from a significant rise in investment demand. Analyzing the historical
platinum-gold ratio reveals that at 1.46, the ratio is not particularly high, implying that platinum
Head of Commodity Research
still has potential to catch up. Platinum could already see significant gains during the coming
months, should there be power-supply rationing during the Football World Cup in South Africa, Eugen Weinberg
+49 69 136 43417
which could potentially impair platinum production. South Africa accounts for nearly 80% of the eugen.weinberg@commerzbank.com

global mining production of platinum. Analyst

CHART OF THE DAY: Platinum is still not expensive compared to gold Carsten Fritsch
+49 69 136 21006
carsten.fritsch@commerzbank.com
2.60

2.40
Analyst
Barbara Lambrecht
2.20 Platinum rises faster than Gold +49 69 136 22295
barbara.lambrecht@commerzbank.com
2.00
Analyst
1.80 Michaela Kuhl
+49 69 136 29363
1.60 michaela.kuhl@commerzbank.com

1.40 Analyst
Daniel Briesemann
1.20
+49 69 136 29158
daniel.briesemann@commerzbank.com
1.00

0.80
Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10

cbcm.commerzbank.com
Source: Bloomberg, Commerzbank Corporates & Markets

For important disclosure information please see last two pages

Commodities Daily

Base metals: After metal prices already recorded gains across the board yesterday, they
continue their upward trend this morning. Copper, for instance, is currently trading above the
mark of US$7,500 per ton and nickel above US$22,000 per ton again. Metal prices are
benefiting from a weaker US dollar and firmer global equity markets, which leads to an increase
in risk appetite. Current price levels are, however, not justified by fundamental factors.
The spot price for iron ore rose to just under US$140 per ton, the highest level in 14 months. Not
only BHP Billiton, but also the world's top iron-ore producer Vale, based in Brazil, attempts in its
price negotiations with Chinese and Japanese steel producers to switch from annual to quarterly
contracts, in order to benefit from high spot prices. Reportedly, some iron ore contracts might be
retroactively priced to January 1st. It is questionable, however, whether steel producers are able
to pass on the expected significant raw material cost increases to their clients. China's largest
publicly traded steel maker, Baoshan Iron & Steel Co., keeps its steel prices unchanged in April.
Meanwhile, China's Ministry of Commerce announced that it will potentially become involved in
the price negotiations to ensure that the pricing mechanism based on annual contracts is being
maintained, in order to prevent higher price volatility. Not only face steel producers higher iron
ore prices, but they are also confronted with higher coal prices. BHP Billiton recently reached an
agreement with Japanese steel producers on a 55% increase in coking coal prices for the
second quarter.
Agriculturals: The sugar price dropped by yet another 6% to a 7-month low of US Cents 18.24
per pound yesterday. Since its high at the beginning of February, the sugar price has been
facing a 40% correction. The extent of the price decline leads us to conclude that speculative
financial investors are liquidating their positions. Moreover, the price decrease is being
exacerbated by the fact that physical buyers of sugar postpone their purchases on expectations
of a continued price erosion. India's sugar producers have started to demand that the Indian
government should revoke measures that were originally implemented to prevent sugar prices to
rise. Among others, these include duty free imports of raw and refined sugar. We view the extent
of the price decline as overdone, even though the outlook on sugar production has improved
recently. The Maharashtra State Cooperative Sugar Factories Federation estimates that India's
sugar production will rise to between 16.8m and 17.2m tons this crop season. For the next crop
season, the association expects a further expansion to 22m tons. This output level would still lag
far behind the production volume of 28m tons that was recorded about 2 years ago and the
consumption level of the past several years that ranged between 23m and 24m tons.

Prices Inventories
Energy 1) current 1 day 1 week 1 month 1 year
Energy (US (DOE))* current 1 day 1 week 1 month 1 year
Brent Blend 80.5 1.5% 0.6% 6.2% 68%
Crude oil 343003 - 0.4% 3.5% -2%
WTI 81.7 2.4% 0.1% 6.2% 67%
Gasoline 228984 -1.3% -0.6% 8%
Gasoline (95) 794.0 1.8% 1.8% 15.1% 97%
Distillates 3655 -4.1% 7.1% -14%
Gasoil 672.3 3.5% 1.9% 10.9% 69%
Jet fuel 149604 -1.5% -4.2% 3%
Diesel 687.3 2.7% 1.1% 10.2% 66%
Gas Henry Hub 1626 -6.4% -26.6% -3%
Jet Fuel 727.3 3.3% 1.6% 9.7% 72%
Gas Henry Hub 4.35 -1.0% -4.8% -19.5% 14% Base metals**
Base metals 2) Aluminium LME 4537775 0.6% 0.1% -1.1% 35%
COMEX 1767 0.0% 0.0% 0.0% -84%
Aluminium 2258 1.4% 1.9% 7.1% 66%
Shanghai 387549 3.0% 7.6% 119%
Copper, LME 7405 1.4% 0.9% 5.3% 98%
Copper LME 528050 -0.6% -2.0% -4.0% 7%
Copper, SHFE (CNY) 59290 2.0% -0.9% 12.1% 91%
COMEX 101875 -0.3% -0.3% -2.5% 129%
Lead 2270 0.7% -0.8% -0.9% 68%
Shanghai 155469 4.6% 32.7% 348%
Nickel 21900 1.9% 3.2% 10.3% 120%
Lead LME 170300 -0.1% 0.0% 6.8% 188%
Tin 17550 0.6% -0.4% 5.5% 73%
Nickel LME 158382 -0.1% -1.0% -3.9% 58%
Zinc 2307 1.2% -1.3% 2.0% 90%
3) Tin LME 23600 -0.7% -0.3% -9.9% 145%
Precious metals
Zinc LME 539700 0.2% 0.0% 7.6% 58%
Gold 1127.7 1.7% 1.9% 2.1% 23% Shanghai 223433 0.0% 0.1%
Silver 17.5 2.0% 2.8% 10.3% 37%
Precious metals ***
Platinum 1635.5 0.8% 2.3% 6.6% 56%
Gold 10011 -0.1% 0.4% 1.0% 15%
Palladium 473.0 2.4% 1.9% 8.6% 142%
1) Silver 116632 -0.3% 6.1% 7.3% -7%
Agriculturals
Platinum 135 0.0% -0.2% -0.5% 22%
Wheat, LIFFE (EUR) 122.3 0.4% 5.6% -2.6% -12% Palladium 630 0.0% -0.2% -0.1% 82%
Wheat, CBOT 487.0 1.6% 3.7% -1.4% -12%
Corn 366.8 1.0% 3.5% 2.2% -6%
Soybeans 945.0 1.6% -0.5% -0.5% 4% Currencies 3)
Cotton 81.8 1.3% 2.0% 8.9% 91% EUR/USD 1.3767 0.7% 0.9% 1.3% 6%
Sugar 18.3 0.1% -7.3% -30.1% 39%
Source: Bloomberg, Commerzbank Corporates & Markets
Coffee Arabica 130.4 1.3% 0.1% -2.3% 20%
Coffee Robusta 1206.0 0.4% -1.1% -6.2% -21% Percentage change on previous period
1)
Cocoa 2858.0 0.4% 0.7% -7.2% 19% 1 month forward, 2) 3 months forward, 3) spot
* ‘000 barrel, ** tons,*** ‘000 ounces

2 17 March 2010
Commodities Daily

GRAPH 1: Forward curve oil market (WTI) GRAPH 2: Forward curve gas market (Henry Hub)

90 7.5
7.0
6.5
85
6.0
5.5
80 5.0
4.5

75 4.0
1M 8M 15M 22M 29M 3Y 43M 1M 8M 15M 22M 29M 3Y 43M
actual oneweekago onemonthago actual oneweekago onemonthago

Source: NYMEX; Bloomberg, Commerzbank Corporates & Markets Source: NYMEX, Bloomberg, Commerzbank Corporates & Markets

GRAPH 3: Forward curve aluminium (LME) GRAPH 4: Forward curve copper (LME)
2600 7700

2500 7500

2400 7300

2300 7100

2200 6900

2100 6700
1M 8M 15M 22M 29M 3Y 43M 1M 8M 15M 22M 29M 3Y 43M
actual oneweekago onemonthago actual oneweekago onemonthago

Source: LME; Bloomberg, Commerzbank Corporates & Markets Source: LME; Bloomberg, Commerzbank Corporates & Markets

GRAPH 5: Forward curve Nickel (LME) GRAPH 6: Forward curve zinc (LME)
23000 2450

22000 2400

21000 2350

20000 2300

19000 2250
1M 8M 15M 22M 1M 8M 15M 22M
actual oneweekago onemonthago actual oneweekago onemonthago

Source: LME; Bloomberg, Commerzbank Corporates & Markets Source: LME; Bloomberg, Commerzbank Corporates & Markets

GRAPH 7: Forward curve lead (LME) GRAPH 8: Forward curve tin (LME)
2350 18000

17750
2300
17500

2250 17250

17000
2200
16750

2150 16500
1M 8M 15M 22M 1M 4M 7M 10M 13M
actual oneweekago onemonthago actual oneweekago onemonthago

Source: LME; Bloomberg, Commerzbank Corporates & Markets Source: LME; Bloomberg, Commerzbank Corporates & Markets

17 March 2010 3
Commodities Daily

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