26th International Aluminium Conference Moscow Christoph Eibl Chief Executive September 2012
Preferences Aluminium form a Fund Manager s point of view As a strategic investor (i.e. long only) fundamentals rule Deficit and expected deficit Inverted yield, i.e. backwardation Low stock/inventory (LME/non-LME) As a tactical investor sentiment, technical indicators and momentum rule Trend following concepts Algorithmic strategies Investors love backwardation, physical players contango Current contangos frighten investors Backwardation incentive for roll yields Aluminium competes with other base metals/commodities/asset classes 2
Metals & Equities Industrial Metals and Western equity markets seem to be trading 2 different worlds 115 110 105 100 95 90 35% 85 80 75 S&P 500 Index MDAX LMEX Metals Index Shanghai Composite 70 3
Industrial Metals From a market balance perspective, tin and copper have the best fundamental outlook 10% Market balance for industrial metals (as % of total annual demand) 8% Surplus 6% 4% 2% 0% -2% -4% -6% 2009 2010 2011 2012 (f'cast) Deficit Zinc Nickel Aluminium Lead Copper Tin 4
Aluminium creeping costs Another year of surplus in 2012, but looking into the next three years it looks like the beginning of a period of more balanced aluminium market 3.000 2.500 2.000 Aluminium Market Balance Primary aluminium balance (Kt) Total metal stocks (Kt) - RHS 16.000 14.000 12.000 10.000 1.500 8.000 1.000 500 6.000 4.000 2.000 0 2008 2009 2010 2011 2012 0 5
Short term capital flows Investors have pulled out of Aluminium lately 1.5 Estimated flows into aluminium by product ($bn) and prices $3,500 1.0 $3,000 0.5 $2,500 0.0 $2,000 $1,500-0.5 $1,000-1.0 Estimated flows into aluminium ETPs Estimated flows into aluminium indices $500 Estimated flows into aluminium Aluminium LME cash price $/t - RHS -1.5 Jan-08 Jun-08 Nov-08 Apr-09 Sep-09 Feb-10 Jul-10 Dec-10 May-11 Oct-11 Mar-12 $0 6
Short term capital flows Market is largely cleaned up from a technical view after liquidation of long positions $120.000 $100.000 $80.000 Net Long Position Non Commercials in Mio. USD (nom.) Net Long Position Non Commercials, 52-week Average Net Long Position Non Commercials in Mio. USD 2001 prices (real) Net Long Position Non Commercials 2001 prices, 52-week Average Oil speculation $60.000 $40.000 $20.000 $0 -$20.000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 7
Overview Individual Commodity Forecasts Sector Overweight Slight Overweight Neutral Slight Underweight Underweight Energy Crude Oil WTI Heating Oil Gasoline Brent Industrial Metals Nickel Copper Aluminium Lead Zinc Tin Precious Metals Platinum Palladium Silver Live Cattle Livestock Feeder Cattle Lean Hogs Grains Soybeans Corn Wheat Cotton Softs Sugar Coffee Cocoa Natural Gas Gold 8
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