Oil,Steel & Copper Price Forecast 2013

7/27/2019 Oil,Steel & Copper Price Forecast 2013

1/31

GAD ABP 2013-14

ANALYST OUTLOOK

PREPARED BY VAIBHAV BARDE

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2/31

GLOBAL MACROECONOMIC SCENARIO

ANALYST : BOfA MERRILL LYNCH

USA EUROPE CHINA & BRIC

With fiscal cliff hitting

economy, GDP

expected to grow at

1.5 % annually. Long term view

remains positive with

projected growth of

2.8 % for FY 2014

with housing gaining

momentum

Spain, Italy and

Greek continue to be

pain points for the

Eurozone. Economy expected to

remain in recession

with slow recovery

towards the year end

GDP of emerging

markets expected to

grow @ 5.6% lead by

china. Inflation could be a

problem to emerging

markets leaving little

space for monitory

easing to boost

growth.



3/31

GLOBAL MACRO ECONOMIC SCENARIO

ANALYST : Crisil

USA EUROPE CHINA INDIA

Government

expected to take

steps to control

fiscal deficit by

reducing tax cuts

and governmentspending

GDP forecast for

year 2013 is 2.1 %

IMF forecasted

GDP growth to

contract to 1.4 %

for FY 2012 with

further negative

outlook for FY 2013 Europe is expected

to witness stringent

fiscal restrain at

least for few years,

resulting into

sluggish

infrastructure

development andindustrial activity

Inspite of slowdown

in global economy,

domestic

consumption,

industrial acitivities

and exports showtraction.

GDP growth of 8.2

% is expeted in FY

2013-14

GDP expected to

slowdown to 5.5 %

in 2012-13

High inflation and

limited ability of

lowering interestrates implies lower

room for monetary

easing.

A weak rupee is

also likely to offset

gains arising from

lower global crude

oil and commodityprices thus keeping

the cost of imports

high



4/31

GLOBAL MACRO ECONOMIC SCENARIO

ANALYST : Russell Investment

USA EUROPE CHINA & Emerging

Markets

Even if no fiscal cliff

results in contraction of

growth, increase home

reconstructions will

boost the GDP to 2.1 %

in FY 2013.

In absence of right policy

mix with a balance

between growth and

austerity policy, the

downward spiral of

negative growth in

Southern Europe will not

break, ensuring a

worsening of the

solvency problems and a

continuation of the crisis. Growth for the Eurozone

as a whole will stay

weak at approximately -

0.5 percent.

Chinese GDP to grow by

around 8 % in 2013

Chinese Renmimbi and

Indian Rupee are slightly

expected to gain against

USD in 2013 due to

increased exports and

domestic monitory policy

easing.



5/31

GLOBAL MACRO ECONOMIC SCENARIO ANALYST : Morgan Stanley

USA EUROPE CHINA India

GDP growth

slows noticeably

in late 2012 and

early 2013 due to

expiration of the

payroll tax cut, ahike in the

Medicare tax rate

and a phase-out

of extended

unemployment

benefits

The US economy

should begin to

expand at a

slightly above-

trend pace

startin in 2H13

Eurozone GDP

expected to

shrink by 0.5 %

Timid growth in

2H13 provides a

positive ramp into2014, allowing

the economy to

expand by a

modest 0.9%

Better Growth in

2013

Expect GDP

growth to reach

8.2%Y in 2013

and 8.0%Y in2014

Growth rate

forecast for 2013

stands at a below

potential rate of

4%

The main driversof growth will

likely be domestic

demand on lower

interest rates & a

gradual

improvement in

investment

spending.



6/31

Global Crude Oil Outlook 2013



7/31

CRUDE DEMAND SUPPLY OUTLOOK

ANALYST: ABN AMRO

DEMAND SUPPLY

With global economic growth

expected to remain moderate,

there will not be sharp increase in

demand.

Increase in demand from China

will be compensated by

slowdown in USA and Europe

hence capping the upside in

demand.

Production from Saudi Arabia

and Iran are expected to

increase.

Geo-political tensions in Middle

east are expected to settle down

by Q42012 resulting in smoother

oil supply.



8/31


ANALYST: MORGAN STANLEY

DEMAND SUPPLY

Demand continues to be anemic

in Europe, while demand in theUS also remains weak.

For 2013, we forecast continued

weakness in the OECD on weak

economic growth.

Non-OECD demand expected to

grow due to growth in economy

In 2013, non-OPEC supply

expected to grow at with supplygrowth from the OECD Americas

offsetting declining production

around the world.

OPEC: Despite Iranian sanctions,

OPEC production remains at ~31

mmb/d.



9/31


DEMAND

2011 2012 2013 E

OECD Americas 24065 23812 23665

OECD Europe 14366 14031 13926

OECD Asia Oceania 8129 8490 8506

OECD Demand 46560 46333 46097

CHINA 9243 9495 9874

INDIA 3511 3613 3700OTHER ASIA 7526 7655 7835

AFRICA 3318 3404 3495

NON OECD EUROPE 693 709 711

FSU 4430 4566 4737

LATIN AMERICA 6291 6468 6643

MIDDLE EAST 7366 7546 7693

NON OECD DEMAND 42378 43456 44688

Total Demand 88938 89789 90785

SUPPLY

NON OPEC SUPPLY 52781 53292 54102

OPEC NGS + UNCONVEN 5776 6196 6495

OPEC CRUDE PRODUCTIO 29877 31418 31581

OPEC SPARE CAPACITY 4583 3822 4373

TOTAL SUPPLY 88434 90907 92178

mmb/d

MMB/D

ANALYST: MORGAN STANLEY



10/31


ANALYST: CREDIT SUISSE

DEMAND SUPPLY

In 2013, slightly more oil demand

growth globally (+1.6%, yoy),

mostly derived from zero demand

declines in the OECD economies.

A relatively muted expansion of

oil use in Emerging Market

economies of some +3.4%

About two-thirds of the expansion

can, we think, be met from non-

OPEC producers.



11/31


Demand 2011 2012 2013Global 89.6 90.7 92.2

YoY Growth % 1.20% 1.20% 1.60%

OECD 46.6 46.4 46.4

YoY Growth % -0.80% -0.40% 0.00%

NON OECD 43.0 44.3 45.8

YoY Growth % 3.30% 2.90% 3.40%

SUPPLY 2011 2012 2013

Global 88.6 90.6 92.2

YoY Growth net mb/d 0.8 2.0 1.6

NON OPEC 50.5 50.9 51.8


North America 15.5 16.6 17.4


NON OPEC less NA 35.0 34.3 34.4

YoY Growth net mb/d -0.5 -0.7 0.0

Processing Gain 2.4 2.5 2.5

OPEC 35.7 37.2 37.9


OPEC Crude Oil 30.3 31.6 32.4YoY Growth net mb/d 0.3 1.4 0.7

Balance Stocks

Implied Inventory Change -0.1 -0.1 0.0

Spare Capacity

(All Saudi Arabia) 2.4 1.9 1.9

% of Total Supply 2.7% 2.1% 2.1%


All figures in Mb/d



12/31


ANALYST: SOCIETE GENERALE

TARGET PRICE: USD 110 PER BARREL

DEMAND SUPPLY

Demand for oil continues to

increase, driven up by demand

from emerging markets, although

it is tending to stagnate or evendrop back in OECD countries

overall

Demand for oil in emerging

markets is likely for the first time

to exceed that of OECD countries

in 2013

Saudi Arabia may, if necessary,

adjust its production downwards

to stabilise prices above the USD

100/bbl mark Temporary drops in production in

some countries, such as Nigeria

or Libya, for political reasons

such as the confrontation

between Iran and Western

governments, will continue to add

to the volatility on the markets.



13/31


ANALYST: PRISM GROUP

0

10

20

30

40

50

6070

80

90

100

WorldDemand

OECDDemand

Non OECDDemand

90.08

45.27 44.8

Mmb/d

Moderate Economic Growth But

downside risks remain



14/31


ANALYST: PRISM GROUP

01020

30

40506070

8090

100

World Supply Non OPECSupply

OPECSupply

90.08

60.19

29.89Mmb/d

Sufficient supply with growth from NON

OPEC



15/31

Metals And Minerals Global Outlook 2013



16/31

METALS AND MINERALS GLOBAL

MACRO OUTLOOK 2013 S&P

Global markets are over supplied due to sluggish demand

and over-capacity.

USA recovering from Great Recession and will relatively

be a bright spot in 2013 leading to improved demand.

Outlook negative for Europe with 40% chance of

recession.

Soft Landing expected in china with GDP growth of 8 %

in 2013.

Emerging markets also to show increased demand.



17/31

Steel: Global Outlook 2013



18/31

STEEL DEMAND SUPPLY OUTLOOK

ANALYST: MOODYS

DEMAND SUPPLY

Outlook negative for steel

demand in Europe

Outlook stable for Asia. Pick up in

china manufacturing activity will

support demand.

No update available on USA

demand

Supplies to be smoother in Asia

region due to increase in capacity

and gradual pick up in demand.

EBITDA of Asian steelmakers

may improve.

No supplies worries in Europe

due to decreased demands but

EBITDA of the steelmakers may

take hit.

No update available on USAsupplies



19/31


ANALYST: S&P

DEMAND SUPPLY

USA housing sale to increase

to 1.05 Million in 2013 against

0.77 Million in 2012 and auto sale

to increase to 15.4 Million in 2013from 14.4 Million in 2012.

Increased demand to take care of

overcapacity.

Europe 2% contraction in

annual demand is anticipated.

USA - Supplies from mini mills

and integrated big players should

take are of increased demand.

Europe No major concern fromsupply side.

Asia: Overcapacity of Chinese

mills and weak yen may cause

prolonged overproduction

resulting in oversupply.



20/31


ANALYST: WORLD STEEL ASSOCIATE

DEMAND SUPPLY

Outlook remains positive globally

but the pace for demand pick up

will be slow.

Globally demand to pick up ininfrastructure and auto sectors

but not in residential construction.

A sovereign debt meltdown in

Europe and climatic calamities

are the potential threats for steel.

Increased production capacity of

china will make up for any

gradual increase in demand.

No major issues from suppliespoint of view.



21/31



DEMAND SUPPLY

Global steel demand to grow at

4.16% CAGR between 2012 to

2016.

This is too low to eliminateexcess capacity very quickly.

Overcapacity to take care of

increased demand but to weigh

on pricing power of steelmakers.

Globally, there is currently almost1.9 Billion Ton/y of capacity,

compared to the 1.5 Billion Ton to

be produced in 2012, resulting in

capacity utilization of about 80% .

Production cut by Chinese and

Korean steelmakers may be

evident by second half of theyear.



22/31

STEEL - Global Demand Supply Statistics Morgan Stanley

Morgan Stanley Global Steel Supply/Demand Model (in mmt)

2012 2013 E 2014 E

Global Demand Finished

Steel

1390 1435 1488

% change YoY 1.2% 3.2% 3.7%

Global Demand Crude

Steel

1527 1577 1635

% change YoY 1.2% 3.2% 3.7%

Global Production Crude

Steel

1523 1569 1622

% change YoY 0.6% 3.0% 3.4%

Global Operating Rate

Crude Steel

80% 79% 79%



23/31

Finished Steel Use - WSARegions 2011 2012 2013

EU 153.1 5.9% 144.5 -5.6% 148.1 2.4%

Other Europe 33.2 12.7% 34.4 3.8% 36.0 4.5%

CIS 54.8 13.8% 55.2 0.8% 57.4 3.9%

NAFTA 121.3 9.0% 130.4 7.5% 135.1 3.6%

Central & South America 45.7 2.6% 47.4 3.8% 50.4 6.3%

Africa 23.9 -3.4% 25.3 5.8% 27.3 7.7%

Middle east 48.2 2.9% 49.9 3.5% 52.8 5.9%

Asia 900.6 5.9% 922.2 2.4% 947.9 2.8%

World 1380.9 6.2% 1409.4 2.1% 1454.9 3.2%

Developed Economies 395.6 6.2% 394.6 -0.3% 402.1 1.9%

EM 985.2 6.3% 1014.8 3.0% 1052.8 3.7%

China 623.9 6.2% 639.5 2.5% 659.2 3.1%BRIC 759.7 6.4% 779.9 2.7% 806.0 3.3%

MENA 59.8 -2.0% 62.7 4.9% 66.9 6.7%

World exclusive China 757.0 6.3% 769.9 1.7% 795.6 3.3%

BT/

Year



24/31

Copper-Global Outlook 2013



25/31

COPPER DEMAND SUPPLY OUTLOOK

DEMAND SUPPLY

Imports demand from china (40%

of worlds copper demand comes

from china) may increase.

Boost in construction activities in

USA and demand from

healthcare, aquaculture and

transportation to continue in

2013.

Some volatility will remain in

copper market till 2014 due to

uncertainty around EU debt

crisis. However, long termdemand remains solid.

Supplies will remain tight during

2013 due to low stock levels.

However after 2013 new copper

projects will boost output and

supply will be growing stronger

than demand and this ease the

tightness and price will ease, but

it will remain at elevated levels



26/31


ANALYST: CRISIL

DEMAND SUPPLY

Global demand growth to remain

moderate over next three years

@ 3%.

Demand in China is expected to

remain moderate whereas

demand in Europe and US is

expected to increase only

marginally

Supply deficit in copper in 2012

along with declining ore grades

and continuing labour issues.

Supply growth will be supposedly

at similar levels of demand with

refined copper capacity to

increase by around 4 per cent

CAGR over the next 3 years



27/31

Global Demand-Capacity Outlook for Copper - CRISIL

0

5

10

15

20

25

30

35

2011 2012 2013 P 2014 P 2015 P

Demand Capacity

MNT



28/31


ANALYST: NORDEA

DEMAND SUPPLY

Demand is expected to recover

led by China as infrastructure

projects are fast-tracked to

support growth.

Supply is improving and an

increasing share of copper supply

will come from new projects

(Greenfields) especially in 2014leaving the likelihood for demand

supply disruptions high.

Copper prices are expected to

remain high and firmly above

USD 6,500 per tonne.



29/31


ANALYST: INTERNATIONAL COPPER STUDY GROUP

DEMAND SUPPLY

In 2013, increased output from new

and existing mines could reverse the

3-year trend, and refined copper

production could exceed demand by

4,00,000 mt the 2012 shortfall.

Chinese apparent usage growth of8% and a growth of 1.4% in the

United States will offset declines in

the European Union and Japan

Although industrial demand for

copper in China is expected to

increase by about 5% in 2013,

apparent usage in China, whichexceeded industrial demand in 2012,

is expected to decrease

Growth in mine output is expected to

mainly be from restoration of

production at existing operations

rather than from new projects.

With some expansions and project

start-ups occurring in 2013, mineproduction is expected to increase by

around 6.4% to 17.5 Mt and refined

copper production is expected to

grow by 6% to 21.2 Mt

Capacity utilization rates are

expected to improve from 79% in

2011 to an average of 81% in 2013



30/31

ICSG GLOBAL COPPER DEMAND

SUPPLY OUTLOOK FOR 2013



31/31

THANK YOU

Documents

Oil,Steel & Copper Price Forecast 2013