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Commodity price forecast changes –
catching the knife
Feature article
In today‟s article, we outline the main changes to our commodity price forecast
profiles, which were released at 11am GMT on Tuesday. While our views on
the direction of most commodity prices are unchanged, we have become more
bullish on the prospects for the level of iron ore in particular (short, medium
and long term), and state our bullish 2H11/2012 copper view (ie, remove our
short-term bearish trading call). Meanwhile, zinc has fallen to the point that the
commodity is now viewed as a strong buy, together with lead, which we
continue to view as an attractive opportunity for those who can gain exposure.
We substantially downgrade our uranium price profile in this round, and
continue to hold a bearish view on the outlook for nickel (2H11) and aluminium
(2H12), although we expect aluminium to perform well in the short term.
For a summary of our views on the entire base, precious, steel/bulk,
agricultural and energy commodities that we cover, please ask your sales
representative for a copy of the May edition of the Macquarie Commodities
Compendium, released alongside our new forecasts on Tuesday.
Latest news
Aluminium prices fell by 2.8% on Tuesday, on reports of a potential large
delivery onto the LME this week, and concerns about the potential for the
LME to change warehousing rules in the coming week. The latter also
resulted in further selling of zinc, which fell by 3.0% on Tuesday, to a level
which is digging significantly into the Chinese zinc cost curve.
The International Nickel Study Group reports that estimated world nickel use
rose 5.8% YoY in the January-March 2011 period to 387.9k, while production
grew by 11.6% to 376.9kt, implying a deficit of 11.1kt. These numbers are
broadly in line with our own estimates with the exception of China where we
believe usage was an estimated 178kt vs. the INSG's estimate of 155kt and
suggest to us a further significant rundown in Chinese unreported nickel
stocks (of more than 25kt in 1Q). We expect the market to swing from a first
half deficit to a second half surplus as supply catches up and eventually
overtakes demand by mid-year.
Inside Coal have reported that Anglo American has agreed a price of $315/t
FOB Australia for its German Creek hard coking coal brand for Q3 shipments
with a European buyer. This is as yet unconfirmed, but would be in line with
our price forecast for 3Q. We expect to see more pushback from Japanese
buyers given the weakness at the lower end of the market; however, with hard
coking coal availability still limited, the price level looks set to remain above
the $300/t mark into 3Q.
US Industrial output was flat MoM in April, up 5% YoY, mainly due to a drop in
auto assemblies following the disruption in parts supplies from the Japan
disasters. Excluding the decline of motorvehicles from 9.0m annually to 7.9m
annually, factory production rose 0.2% MoM.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Commodity price forecast changes –
catching the knife
Feature article
In today‟s article, we outline the main changes to our commodity price forecast
profiles, which were released at 11am GMT on Tuesday. While our views on
the direction of most commodity prices are unchanged, we have become more
bullish on the prospects for the level of iron ore in particular (short, medium
and long term), and state our bullish 2H11/2012 copper view (ie, remove our
short-term bearish trading call). Meanwhile, zinc has fallen to the point that the
commodity is now viewed as a strong buy, together with lead, which we
continue to view as an attractive opportunity for those who can gain exposure.
We substantially downgrade our uranium price profile in this round, and
continue to hold a bearish view on the outlook for nickel (2H11) and aluminium
(2H12), although we expect aluminium to perform well in the short term.
For a summary of our views on the entire base, precious, steel/bulk,
agricultural and energy commodities that we cover, please ask your sales
representative for a copy of the May edition of the Macquarie Commodities
Compendium, released alongside our new forecasts on Tuesday.
Latest news
Aluminium prices fell by 2.8% on Tuesday, on reports of a potential large
delivery onto the LME this week, and concerns about the potential for the
LME to change warehousing rules in the coming week. The latter also
resulted in further selling of zinc, which fell by 3.0% on Tuesday, to a level
which is digging significantly into the Chinese zinc cost curve.
The International Nickel Study Group reports that estimated world nickel use
rose 5.8% YoY in the January-March 2011 period to 387.9k, while production
grew by 11.6% to 376.9kt, implying a deficit of 11.1kt. These numbers are
broadly in line with our own estimates with the exception of China where we
believe usage was an estimated 178kt vs. the INSG's estimate of 155kt and
suggest to us a further significant rundown in Chinese unreported nickel
stocks (of more than 25kt in 1Q). We expect the market to swing from a first
half deficit to a second half surplus as supply catches up and eventually
overtakes demand by mid-year.
Inside Coal have reported that Anglo American has agreed a price of $315/t
FOB Australia for its German Creek hard coking coal brand for Q3 shipments
with a European buyer. This is as yet unconfirmed, but would be in line with
our price forecast for 3Q. We expect to see more pushback from Japanese
buyers given the weakness at the lower end of the market; however, with hard
coking coal availability still limited, the price level looks set to remain above
the $300/t mark into 3Q.
US Industrial output was flat MoM in April, up 5% YoY, mainly due to a drop in
auto assemblies following the disruption in parts supplies from the Japan
disasters. Excluding the decline of motorvehicles from 9.0m annually to 7.9m
annually, factory production rose 0.2% MoM.
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