Open High Close Low Daily change Change (%) Cash Settle

Transcription

1 : Daily Gold physical demand response merely muted 14 November 2013 Gold dropped below $1,300 last week, but gold physical demand has been even more lacklustre than it has been since April this year. However, we maintain that physical demand alone cannot push gold substantially higher while monetary policy in especially the US is normalising. However, we believe that physical demand should match especially ETF liquidation which would keep gold relatively steady between $1,300 and $1,350; it has occupied this range since August. ETF liquidation of gold holdings is ongoing but the pace is slowing. Until such time as physical demand improves, gold will likely be sold into rallies on approach of $1,300. Precious metals have seen some short-covering after the Fed s Janet Yellen s speech was released yesterday. The TSI Fe 62% China CFR price index rose 50 cents to $136.60/t (MTD: $136.23/t). The Platts Fe 62% index fell 50 cents to $135.75/t, while the TSI Fe 58% index fell 80 cents to $123.80/t (MTD: $123.65/t). The Metal Bulletin Fe 62% index rose $1.12/t to $137.86/t, while its Fe 58% index rose 58 cents to $120.45/t. Mysteel s Fe 62% index rose 75 cents to $136/t, while its Fe 58% index rose 75 cents to $123.75/t. Base xxxxxxxxx Research Strategists Walter de Wet, CFA* Walter.DeWet@standardbank.com Leon Westgate* Leon.Westgate@standardbank.com Melinda Moore* Melinda.Moore@standardbank.com Commodity price data (13 November 2013) Base metals LME 3-month Open High Close Low Daily change Change (%) Cash Settle Change in cash settle Cash - 3m Aluminium 1,803 1,795 1,803 1, % 1, Copper 7,098 6,980 7,098 6, % 7, Lead 2,101 2,098 2,107 2, % 2, Nickel 13,745 13,675 13,830 13, % 13, Tin 22,746 22,825 22,900 22, % 22, Zinc 1,885 1,886 1,890 1, % 1, Energy Open Close High Low day/day Change (%) ATM 1m vol ATM 6m vol ATM 1y vol ICE Brent % NYMEX WTI % ICE Gasoil % API2 Q4' Sources: LME; BBG AM Fix PM Fix High bid Low offer Closing bid Change (d/d) EFP's Gold 1, , , , , /-.1 Silver - 1, /+1.0 Platinum 1, , , , , /+3.5 Palladium /+1.0 Please refer to the disclaimer at the end of this document *This document is not investment research, as it has not been prepared in accordance with the requirements designed to promote the independence of research. It therefore constitutes a marketing communication as defined by the UK FCA Handbook, and must not be considered a Research Report under US or any other regulatory regime. U.S. Disclosure: Standard Bank Group Limited does and seeks to do business with companies covered in its reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

2 Daily 13 November 2013 Focus: Gold physical demand muted as price drops Gold dropped below $1,300 last week, but unlike during previous periods when gold traded below $1,300 this year, physical demand has been quite lacklustre. Our Standard Bank Gold Physical Flow Index, compared to 2011 and 2012, shows that gold volumes have been substantially higher YTD (see Figure 1). This is in line with today s WGC figures which indicate that demand for jewellery, bars and coin from Asia has strengthened YTD. However, although YTD physical demand (from Asia especially) has been robust, the pace of buying has slowed in recent weeks. The recent subdued appetite for gold is also evident in our Standard Bank Gold Physical Flow Index (GPFI) which shows that gold demand failed to respond to a gold price below $1,300. Previously, when gold moved below $1,300 (end of June, mid- August, mid-october), the GPFI rose quickly as gold physical demand in Asia responded positively to a lower gold price. But though gold has been below $1,300 since late last week, there s been no positive demand response (see Figure 2). Figure 1: Gold physical demand y/y comparison Index Trading days Source: Standard Bank Research Figure 2: Standard Bank Gold Physical Flow Index 1,600 $/oz Index 400 1, A muted demand response is also evident from the SGE premium in China where the premium for gold has dropped from well above $20 a month ago to just $7 this morning (Figure 3). Conclusion 1,350 1, Should we see a pick-up in physical demand, through a rise in either the SGE premium or the GPFI, we would expect gold to rise above $1,300 because (1) ETF liquidation is likely to be better matched by demand from Asia and (2) the futures market is likely to short-cover. Looking at COMEX gold, open interest has increased sharply since November as the gold price moved went down which is consistent with short positions being added. We maintain that physical demand alone cannot push gold substantially higher while monetary policy in especially the US is normalising. However, we believe that physical demand should match especially ETF liquidation which would keep gold relatively steady between $1,300 and $1,350; it has occupied this range since August. ETF liquidation of gold holdings is ongoing but the pace is slowing. Until such time as physical demand improves, gold will likely be sold into rallies on approach of $1,300. By Walter de Wet 1,100 1-Apr 1-May 31-May 30-Jun GPFI Source: Standard Bank Research 30-Jul Figure 3: SGE premium vs. spot gold 1,360 1,340 1,320 1,300 1,280 1,260 1,240 Spot gold ($/oz) 29-Aug Spot gold 28-Sep 1, Oct 17-Oct 24-Oct 31-Oct 07-Nov 28-Oct SGE prem ($/oz) SGE prem Spot gold Sources: SGE; Standard Bank Research Base metals The base metals came under heavy selling pressure over the course of Wednesday afternoon, with copper coming under particular pressure during US trade. Most of the base metals managed to stage a bounce into the close, with Janet Yellen s comments for her nomination hearing before the Senate Banking Committee, that asset purchases will continue until there is a 2

3 Daily 13 November 2013 strong US recovery, also helping give commodities a boost overnight, however, a stronger dollar and negative sentiment has dragged much of the base metal complex back towards Wednesday afternoon s lows. Copper has managed to dig its heels in following yesterday s selling pressure. Over 33,493 lots traded on LME Select as participants looked to trade on a technical break lower. Copper has traded down to the lowest level since early August, however given the amount of ammunition expended, the metal still seems pretty resilient all in all, with prices grinding lower rather than looking in danger of capitulating. Inventory-wise, LME on-warrant stocks fell 10,975 mt following a large jump in cancelled warrants in Asian warehouses. Johor saw a 7,700 mt jump in cancelled warrants, while the South Korean locations of Busan and Gwangyang saw cancellations jump by 1,475 mt and 1,175 mt respectively. Whether the cancellations are in relation to the Typhoon-related problems at Pasar remain to be seen, however in that regard its worth highlighting that on-warrant stocks of copper in Asian LME warehouse locations are now only 10,425 mt, with cancelled warrants in Asia accounting for 93% of total LME inventory in the region. In other news, an interesting side-effect and unintended consequence of Indonesia's proposed ban on ore exports has been PT Smelting s warning that it may be forced to close its Gresik smelter owing to the inability to sell anode slimes. The knock-on effect would be to close a useful outlet for concentrates from Grasberg and Batu Hijau. Although such an outcome seems unlikely in our view, its nevertheless still interesting to see the secondary effects that such a blanket ban on ore exports might have on Indonesia's mining and mineral industry. Precious metals By Leon Westgate Precious metals have seen some short-covering after the Fed s Janet Yellen s speech was released yesterday. She said that although an economic recovery is underway in the US, unemployment remains too high. Yellen will go before the Senate Banking Committee today to seek approval for her nomination as Fed Chair (scheduled to begin 17:00 GMT +2). Obtaining the Committee s approval should go relatively smoothly, although she will most likely have to face some tough questions her answers to which will likely have an impact on markets. Her views on when the Fed should start to taper are sure to come under scrutiny. After today s hearing, the Committee will vote at a later date on whether to advance Yellen s nomination to a full Senate vote. As mentioned in the Focus section, we would look for gold rallies to be sold into until such time that there is a reasonable pick-up in gold physical demand. In the PGM space, wage negotiations continue in South Africa, with little change from yesterday. AMCU and Impala remain in negotiations, while AMCU aims to launch a legal strike at Angloplats. Gold support is at $1,275 and $1,268. Resistance is at $1,290 and $1,300. Silver support is at $20.64 and $20.40, resistance is at $21.00 and $ Bulks By Walter de Wet Responding to investor disappointment, post-plenary, President Xi has said that China s reform process could not be achieved overnight. Shanghai Equities rose 0.6% to 2,101 points, rallying off lows of 2,080 early in the morning session, with only energy and financials lower. Shanghai 7-day interbank rates climbed back to 4.27% after the PBOC refrained from conducting further reverse repos today, effectively draining a net RMB 15bln from the system. China will cut petrol and diesel prices by RMB /t tomorrow. Shanghai Rebar Futures Jan-14 contract closed down RMB RMB 3,521/t, while the May-14 active contract closed off RMB RMB 3,620/t. Dazong HRC Jan-14 futures shifted RMB 20/t lower to RMB 3,502/t. Among physical steels, Tangshan billet prices fell RMB 20/t to RMB 2,990/t. Rebar prices weakened by RMB 20/t in Beijing, while remaining flat again in Shanghai, given shortages of certain grades. HRC prices fell RMB 10/t in Shanghai and Beijing. Dalian Commodity Exchange IO active May-14 contract prices traded off RMB 6/t at RMB 937/t, with 28,878 lots traded. Among physical iron ore, RioT tendered a Fe 61.4% PB fines cargo at $137.50/dmt CFR China, loading late Nov. The Rizhao platform traded a number of cargoes, including a PB lump at RMB 1,085/t, a CSN fines at RMB 910/t; an FMG super spe- 3

4 Daily 13 November 2013 cial fines at RMB 795/t and a Fe 60.5% cargo at RMB 1,020/t. On globalore, a BHPB Yandi Fe 57.7% cargo sold at $124/t, while a Fe 64.2% Brazilian fines sold on an index-linked basis (+$8/t). PB fines port stocks were trading at RMB 920/t. The TSI Fe 62% China CFR price index rose 50 cents to $136.60/t (MTD: $136.23/t). The Platts Fe 62% index fell 50 cents to $135.75/t, while the TSI Fe 58% index fell 80 cents to $123.80/t (MTD: $123.65/t). The Metal Bulletin Fe 62% index rose $1.12/t to $137.86/t, while its Fe 58% index rose 58 cents to $120.45/t. Mysteel s Fe 62% index rose 75 cents to $136/t, while its Fe 58% index rose 75 cents to $123.75/t. In IO supply news, CSN shipped 8.3mt through its expanded 45mtpa Itaguai Tecar terminal in Q3:13, although officially sold 7.7mt, of which 2.9mt came from Namisa. New Millennium-Tata Iron expects to ship 1.5mt of DSO materials in The Baltic Exchange Cape index shifted 2.1% lower to $18,146/day, with $21.23/t and $8.76/t. The Eurozone saw Q3 GDP rise by a paltry 0.1% q/q, with annual growth at -0.3% y/y. For Q1:14 thermal coal prices, API 2 is trading at $80.10/t; API 4 is trading at $82.90/t; while Newcastle is trading at $85.10/t. A NEWC Feb cargo traded at $84.75/t yesterday. Zhengzhou Futures Jan-14 contract price rose RMB 3/t to RMB 557.6/t; while the May-14 price lifted RMB 1.8/t to RMB 565/t. Coal stocks fell 2.8% to 12.61mt, with GZ off 7.7% at 2.36mt. China coal burn is up 5.01% w/w at 0.63mt per day. Coking coal spot prices are trading in the $ /t Qld FOB range. Other mills have followed Hebei s lead in raising their coke purchase prices by RMB 30/t. On the Dalian Exchange, Jan-14 coke price traded up RMB 3/t to RMB 1,538/t, while HCC prices closed up RMB 1/t to RMB 1,083/t. By Melinda Moore 4

5 Daily 13 November 2013 Base metals Daily LME Stock Movement (mt) Metal Today Yesterday In Out Energy One day YTD change change (mt) Cancelled warrants (mt) Cancelled warrants (%) Contract turnover Aluminium 5,320,550 5,327,325-6,775-6, ,500 2,138, ,621 Copper 457, , ,950-1, , , ,090 Lead 236, ,000 3,675 #N/A N.A. 3,675-83,650 54, ,089 Nickel 241, , ,688 89, ,811 Tin 11,760 11, #N/A N.A. 0-1,065 4, ,328 Zinc 1,007,700 1,011,325 1,400 5,025-3, , , ,642 Shanghai 3-month forward prices COMEX active month future prices Metal Open Last 1d Chnge Open Close Change Change (%) Aluminium 14,210 14, Ali Dec' Copper 50,420 50, Cu Dec' % Zinc 14,790 14, ZAR metal prices Aluminium Copper Lead Nickel Tin Zinc ZAR/USD fix Cash 18,062 72,637 21, , ,607 19, month 18,812 73,150 21, , ,206 19, Energy futures pricing Price Change Price Change Price Change Price Change Price Change 1 month 2 month 3 month 6 month 1 year Sing Gasoil ($/bbbl) Gasoil 0.1% Rdam ($/mt) NWE CIF jet ($/mt) Singapore Kero ($/bbl) % Rdam barges ($/mt) % Fuel Oil FOB ($/mt) Sing FO180 Cargo ($/mt) Thermal coal Q4 13 Q1 14 Q2 14 Cal 14 Cal 15 API2 (CIF ARA) API4 (FOB RBCT) Precious metals Forwards (%) 1 month 2 months 3 months 6 months 12 months Gold Silver USD Libor Technical Indicators 30-day RSI 10-day MA 20-day MA 100-day MA 200-day MA Support Resistance Gold , , , , , , Silver Platinum , , , , , , Palladium Active Month Future COMEX GLD COMEX SLV NYMEX PAL NYMEX PLAT DGCX GLD TOCOM GLD CBOT GLD Settlement 1, , , , , Open Interest 403, ,525 41,464 59,048 1,611 99, Change in Open Interest 2,061 4, Sources: Standard Bank; LME; Bloomberg 5

6 Daily 13 November 2013 Bulks Percentage change Latest Price Steel Physical 1-day 1-week 1-month 3-month 6-month 1-year Turkish Scrap 80:20 (Iskinderun CFR) $/t % 4.04% 3.03% 5.30% -5.52% China Tangshan Steel Billet $/t % 1.22% -4.59% -1.38% -2.54% China HRC export (Shanghai FOB) $/t % -1.70% -2.62% -1.70% -5.44% North Europe HRC domestic (ex-works) $/t % -3.37% -6.52% -2.27% North America HRC domestic (Midwest FOB) $/t % 4.02% 3.38% 15.07% 8.91% Steel Futures LME Billet Cash $/t % 63.99% 52.82% % LME Billet Futures (1-mth) $/t % 62.96% 45.74% % LME Steel Billet Stocks change Shanghai Rebar Futures (Active contract) $/t % 0.69% 1.02% 0.04% -8.28% Shanghai Rebar Futures O/W Stocks change SHFE Rebar - Open Interest SHFE Rebar - Total Volume China Steel Inventory (million tonnes) % -9.57% % % 6.21% Iron ore China Iron Ore Fines (62% Fe; CFR Tianjin) $/t % 1.87% -4.69% 6.25% 11.19% China Iron Ore Fines (58% Fe; CFR Tianjin) $/t % 1.38% -4.15% 6.40% 11.55% SGX AsiaClear IO Swaps 62% Fe $/t (1-mth) % 1.84% -0.72% 5.62% 12.19% SGX AsiaClear IO Swaps 62% Fe Open interest 39, China Iron Ore Inventory (million tonnes) % 5.38% 7.95% 9.07% % Coking coal Premium Hard Coking Coal (Qld FOB) $/t % -0.17% -5.22% Capesize freight Tubarao Brazil-Beilun China (C3) Pilbara Australia-Qingdao China (C5) Saldanha South Africa-Beilun China % 17.71% 33.46% 5.94% Tubarao Brazil to Rotterdam Europe Saldanha South Africa-Rotterdam Europe Financials pricing RMB Currency % -0.00% -0.33% -0.46% -0.84% -2.15% China 7-day repo % 10.3% 12.6% 11.5% 56.4% 28.4% Shanghai Equities Composite 2, % -1.76% -6.52% -0.39% -5.64% 1.77% Sources: Standard Bank; LME; Bloomberg 6

7 Daily 13 November 2013 Disclaimer THIS COMMUNICATION MAY CONTAIN RESEARCH. SUCH RESEARCH IS A MARKETING COMMUNICATION: It is not investment research as it is not the result of financial analysis and has not been prepared in accordance with legal requirements designed to promote investment research independence. Additional information with respect to any security referred to herein may be made available on request. This material is for the general information of institutional and market professionals clients of Standard Bank Group (SBG) only. Recipients who are not market professionals or institutional investor customers of SBG should seek advice of their independent financial advisor prior to taking any investment decision based on this communication or for any necessary explanation of its content. It does not take into account the particular investment objectives, financial situation or needs of individual clients. Before acting on any advice or recommendations in this material, clients should consider whether it is suitable for their particular circumstances and, if necessary, seek professional advice. The information, tools and material presented in this marketing communication are provided to you for information purposes only and are not to be used or considered as an offer or the solicitation of an offer to sell or to buy or subscribe for securities or other financial instruments, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. This material is based on information that we consider reliable, but SBG does not warrant or represent (expressly or impliedly) that it is accurate, complete, not misleading or as to its fitness for the purpose intended and it should not be relied upon as such. The information and opinions contained in this document were produced by SBG as per the date stated and may be subject to change without prior notification Opinions expressed are our current opinions as of the date appearing on this material only. We endeavour to update the material in this report on a timely basis, but regulatory compliance or other reasons may prevent us from doing so. SBG or its employees may from time to time have long or short positions in securities, warrants, futures, options, derivatives or other financial instruments referred to in this material. Where SBG designates research material to be a marketing communication, that term is used in SBG s Research Policy. This policy is available from the Research Compliance Office at SBG. SBG does and seeks to do business with companies covered in its research reports including Research Communications. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. SBG has published a Conflicts of Interest Policy that is available upon request which describes the organisational and administrative arrangements for the prevention and avoidance of conflicts of interest. Further disclosures required under the FCA Conduct of Business Sourcebook and other regulatory bodies are available on request from the Research Compliance Department and or Global Conflicts Control Room, unless otherwise stated, share prices provided within this material are as at the close of business on the day prior to the date of the material. None of the material, nor its content, nor any copy of it, may be altered in any way, transmitted to, copied or distributed to any other party, without the prior express written permission of SBG. All trademarks, service marks and logos used in this report are trademarks or service marks or registered trademarks or service marks of SBG or its affiliates. SBG believes the information and opinions in the Disclosure Appendix of this report are accurate and complete. Information and opinions presented in the other sections of this communication were obtained or derived from sources SBG believes are reliable, but SBG makes no representations as to their accuracy or completeness. Additional information is available upon request. SBG accepts no liability for loss arising from the use of the material presented in this report, except that this exclusion of liability does not apply to the extent that liability arises under specific statutes or regulations applicable to SBG. The services, securities and investments discussed in this material may not be available to nor suitable for all investors. Investors should make their own investment decisions based upon their own financial objectives and financial resources and it should be noted that investment involves risk, including the risk of capital loss. Past performance is no guide to future performance. In relation to securities denominated in foreign currency, movements in exchange rates will have an effect on the value, either favourable or unfavourable. Some investments discussed in this marketing communication have a high level of volatility. High volatility investments may experience sudden and large falls in their value causing losses when that investment is realised. Those losses may equal your original investment. Indeed, in the case of some investments the potential losses may exceed the amount of initial investment, in such circumstances you may be required to pay more money to support those losses. Income yields from investments may fluctuate and, in consequence, initial capital paid to make them investment may be used as part of that income yield. Some investments may not be readily realisable and it may be difficult to sell or realize those investments, similarly it may prove difficult for you to obtain reliable information about the value, or risks, to which such an investment is exposed. 7

8 Daily 13 November 2013 This report is issued and distributed in Europe Standard Bank PLC. 20 Gresham Street, London EC2V 7JE which is authorised by the Prudential Regulation Authority ( PRA ) and regulated by the Prudential Regulation Authority (PRA ) and the Financial Conduct Authority ( FCA ). This report is being distributed in the United States by Standard New York Securities (USA) LLC; in Kenya by CfC Stanbic Financial Services Ltd; in Nigeria by Stanbic IBTC; in Angola by Standard Bank de Angola S.A.; in Brazil by Banco Standard de Investimentos S.A.; in China by Standard Resources (China) Limited;; in Botswana by Stanbic Bank Botswana Limited; in Democratic Republic of Congo by Stanbic Bank Congo s.a.r.l.; in Ghana by Stanbic Bank Ghana Limited;in Isle of Man by Standard Bank Isle of Man Limited; in Jersey by Standard Bank Jersey Limited; in Madagascar by Union Commercial Bank S.A.; in Mozambique by Standard Bank s.a.r.l.; in Malawi by Standard Bank Limited; in Namibia by Standard Bank Namibia Limited; in Mauritius by Standard Bank (Mauritius) Limited; in Taiwan by The Standard Bank of South Africa; in Tanzania by Stanbic Bank Tanzania Limited; in Singapore by Standard Merchant Bank (Asia) Limited; in Swaziland by Standard Bank Swaziland Limited; in Zambia by Stanbic Bank Zambia Limited; in Zimbabwe by Stanbic Bank Zimbabwe Limited; in UAE by Standard Bank Plc Dubai branch In jurisdictions where SBG is not already registered or licensed to trade in securities, transactions will only be effected in accordance with applicable securities legislation, which will vary from jurisdiction to jurisdiction and may require that the trade be made in accordance with applicable exemptions from registration or licensing requirements. Please note that this report was originally prepared by SBG for distribution to SBG market professionals and institutional investor customers. Recipients who are not market professionals or institutional investor customers of these firms should seek the advice of their independent financial advisor prior to taking any investment decision based on this report or for any necessary explanation of its contents. This research may relate to investments or services of a person outside of the UK or to other matters which are not regulated by the PRA or in respect of which the protections of the PRA for private customers and/or the UK compensation scheme may not be available, and further details as to where this may be the case are available upon request in respect of this report. Standard Bank Group Ltd Reg.No. 1969/017128/06 is listed on the JSE Limited. Copyright 2013 SBG. All rights reserved. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Standard Bank Group Ltd. 8