price forecasts

7/28/2019 Price Forecasts

1/76

Frederick R. Demler, Ph.D.Global Head, LME Metals

Metals Market Outlook, 2012-2013Supply, Demand, Inventories, Institutional Demand, Prices

INTL FCStone Inc. | www.intlfcstone.com1


2/76

Disclaimer

This presentation is issued by FCStone LLC. FCStone LLC is an affiliate of INTLFCStone (Europe) Limited IFEL, a company registered under the laws of England &Wales with its head office at Moor House, 1st Floor, 120 London Wall, EC2Y 5ET,

United Kingdom and which is authorised and regulated by the Financial ServicesAuthority. FCStone LLC and IFEL are subsidiaries of INTL FCStone Inc. IFEL is aCategory 1 ring dealing member of the London Metal Exchange LME and offersLME products through its affiliate FCStone LLC, from its New York office, pursuantto Part 30.10 of the rulebook of the Commodities Futures Trading Commission(CFTC), relating to the offer and sale of foreign futures and options contracts to

customers located in the United States by firms located in the UnitedKingdom. Commodity trading involves risks, and you should fully understand thoserisks prior to trading. Neither the information, nor any representation shall beconstrued as an investment advice or an offer to buy or sell futures, options onfutures, or any OTC products. The presentation also contains information providedto us by third parties such as the World Bureau of Metal Statistics, ConsensusEconomics, ILZSG, IAI, LME, CME, SHFE, and Barclay Hedge. Whilst we havetaken all reasonable steps to ensure the information is in this presentation is correct,neither FCStone LLC or IFEL offers any warranty as to the accuracy orcompleteness of the information, nor is any liability assumed by us for the use ofany information contained herein.

2


3/76

Summary

Industrial metals, after going through a period of high volatility,have consolidated in largely sideways to downward trending trading

ranges. The underlying macro-economic fundamentals showdivergent regional trends-- China remains an important net buyer of

copper and to a lesser extent nickel, but overall Chinese

consumption has slowed.

Primary capacity is building, but planned and unplannedproduction cuts have limited output for copper (involuntary),

aluminum (voluntary) and tin, but for zinc, lead, and nickel, overall

throughput is surging. Inventories are falling in copper, nickel, and

tin, but rising in aluminum, lead, and zinc. Institutional investing,

which eased in 2011, has since recovered and is approaching a

record high.3


4/76

Summary

Overall, we project a modest economic recovery with industrialproduction rising 2% to 3% over the next two years. Chinese

industrial production will slow to 10% to 12%, but will still be strongcompared to other countries. The US will lead Western economies,

Europe will slip into recession and then recover, while Japan will

rebound from the Tsunami curtailed slowdown last year.

Metals consumption growth will accelerate from the 2011 pace,with reasonable gains in 2013. Primary capacity builds, already in

the pipeline, will add to supply, but cutbacks and unanticipatedlosses will limit growth. Chinese imports will remain at high levels in

copper, as well as in nickel and tin, contributing to tighter global

supply-demand balances that will persist in both 2012 and 2013.

4

*INTL FCStone estimates/projections


5/76

Summary

Institutional demand (fund buying) will continue to grow over theforeseeable future as investors diversify their portfolios with

alternative investments and as advisors make the case for holdingreal assets amid what they will profess to be a continuation of the

commodity super-cycle.

The projected fundamental balances, combined with growinginstitutional demand, favor copper and tin, followed by lead;

aluminum is neutral, while zinc and nickel could struggle.

5



6/76

This section of the page should be blank except when footnotes are present.

Economic Outlook

6


7/76

7

G-3 Industrial Production

-35%

-30%

-25%

-20%

-15%

-10%

-5%0%

5%

10%

15%

20%

25%

30%

'08 '09 '10 '11 '12

US

WE

JP

G-3

China


8/76

8

Global IP/Economic Outlook

Global Economy (G-3)

Global industrial economy IP forecast: +2.1% 12 & +2.9% 13 vs +2% in 2011

United States

Recovery shows some momentum with jobless rate improving, GDP expanding, and consumer

spending rising. Although business investment has slowed, the PMI and new orders are firming andunderpin moderate industrial production growth. IP forecast: +3.1% 12 & +3.1% 13

Japan

Post-earthquake rebuild should support the industrial sectors but exports have slowed raising broader

questions of economic expansion. That said, the PMI is above 50, consumer confidence and spending

has improved, and the labor markets are firming : IP forecast: +3.7% 12 & +3.8% 13

Eurozone

Sovereign debt concerns, social unrest, a lack in confidence that austerity measures will be

implemented, debt downgrades, fiscal tightening, a weak labor market and slowing domestic growth

makes recession likely and threaten the broader American and Asian economies. The ECB injecting

liquidity and refraining from rate hikes has provided support

GR: mg and cap goods production and retail sales dn, but PMI over 50 and labor market improving

UK: labor market, retail sales weak, PMI improving, quantitative easing planned

Eurozone IP forecast: -0.4% 12 & +1.9% 13

China

Economic growth slowing with weakness in the West and a softening in real estate, but PMI >50,

monetary easing (lower reserve ratio) & fiscal stimulus expected; underlying buying in the metalssectors has slowed considerably (partly seasonal) ; IP Forecast :slows from 12%/13% to 11%/12%



9/76

9

G-3, China Industrial Prod Outlook

-40%

-35%

-30%

-25%

-20%

-15%

-10%-5%

0%

5%

10%15%

20%

25%

30%

'08 '09 '10 '11 '12 '13

US WEJP G-3China

US WE JA W World

2008 -2.6% -0.6% -1.5% -1.7%

2009 -11.6% -14.7% -22.9% -16.1%

2010 4.4% 5.8% 16.6% 8.8%2011 4.4% 4.1% -2.6% 2.0%

2012 3.1% -0.4% 3.7% 2.1%

2013 3.1% 1.9% 3.8% 2.9%

China

13.0%

11.2%

15.6%13.8%

12.0%

11.0%



10/76


Price, Spread Review

10


11/76

LME Price Review

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000

$1,200

$1,400

$1,600

$1,800

$2,000

$2,200

$2,400

$2,600

$2,800

$3,000

$3,200

copper aluminum

11


12/76

LME Price Review

zinc

tin

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

$300

$600

$900

$1,200

$1,500

$1,800

$2,100$2,400

$2,700

$3,000

$3,300

$3,600

$3,900

'00'01

'02'03

'04'05

'06'07

'08'09

'10'11

'12

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

$50,000

$55,000

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12

$3,000

$8,000

$13,000

$18,000

$23,000

$28,000

$33,000

$38,000

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12

nickel

lead

12


13/76

LME Spread Review

copper aluminum

-$1,100

-$900

-$700

-$500

-$300

-$100

$100

Cash-3M 3M-15M

-$250

-$200

-$150

-$100

-$50

$0

$50

$100

$150

$200

Cash-3M 3M-15M

13


14/76

LME Spread Review

zinc

tinnickel

lead

-$700

-$600

-$500

-$400

-$300

-$200

-$100

$0

$100

Cash-3M 3M-15M

-$350

-$300

-$250

-$200

-$150

-$100

-$50

$0

$50

$100

'99

'00

'01

'02

'03

'04

'05

'06

'07

'08

'09

'10

'11

'12

Cash-3M 3M-15M

-$10,000

-$8,000

-$6,000

-$4,000

-$2,000

$0

'99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12

Cash-3M 3M-15M

-$1,200

-$1,000

-$800

-$600

-$400

-$200

$0

$200

'99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12

Cash-3M 3M-15M

14


15/76

Price Seasonals

aluminum nickel

lead

97

98

99

100

101

102

103

104

J F M A M J J A S O N D J

Average Trend Adj

95

97

99

101


95

97

99

101

103

105


95

97

99

101

103

105

107


93

95

97

99

101

103

105

107


zinccopper

15 *Average of 1973-2009


16/76


Consumption Trends

16


17/76

Consumption Trends

copper

aluminum-50%

-30%

-10%

10%

30%

50%

US WE JP RoW China

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

120%

US WE

JP RoW

China

17


18/76

Consumption Trends

zinc

tinnickel

lead

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

WW China

-25%

-15%

-5%

5%

15%

25%

35%

45%

2006'07 '08 '09 '10 '11 '12

China WW

-50%

-30%

-10%

10%

30%

50%

70%

90%

110%

130%

2006 2007 2008 2009 2010 2011

US

WE

JP

RoW

China

-60%

-40%

-20%

0%

20%

40%

60%

80%

2006 2007 2008 2009 2010 2011

United States West EuropeJapan Rest WorldChina

18


19/76

Consumption Forecasts

copper

aluminum

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

DD - IP Consumption

-20%

-10%

0%

10%

20%

30%

'98 '01 '04 '07 '10 '13

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

DD - IP Consumption Ind Prod

19

* DD = Demand/ConsumptionIP = Industrial Production


20/76

Consumption Forecasts

zinc

tinnickel

lead

-5%

5%

15%

25%

35%

45%

'03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13

-30%

-20%

-10%

0%

10%

20%

30%

DD - IP

Consumption

Ind Prod

-10%

-5%

0%

5%

10%

15%

20%

'03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

DD - IPConsumptionInd Prod

-10%

-5%

0%

5%

10%

15%

20%

'97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13

-32%

-22%

-12%

-2%

8%

18%

28%

-12%

-8%

-4%

0%

4%

8%

12%

16%

20%

'97

'98

'99

'00

'01

'02

'03

'04

'05

'06

'07

'08

'09

'10

'11

'12

'13

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

20


21/76


Production Trends

21


22/76

Production Trends

copper

aluminum

11,000

11,500

12,000

12,500

13,000

13,500

14,000Refined Mine

16000

17000

18000

19000

20000

21000

22000

23000

24000

25000

26000

Cap Prod

22


23/76

Production Trends

zinc

tinnickel

lead

5,750

6,000

6,250

6,500

6,750

7,000

7,250

7,500

7,750

8,000

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12

Mine

Refined

1,800

1,850

1,900

1,950

2,000

2,050

2,100

2,150

2,200

2,250

'04 '05 '06 '07 '08 '09 '10 '11

4,400

4,600

4,800

5,000

5,200

5,400

Mine

Refined

1150

1250

1350

1450

1550

1650

1750

1850

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Mine

Refined

120

140

160

180

200

220

240

'97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11

Mine

Refined

23


24/76

Capacity Builds

zinc

nickel

lead

aluminum

copper

-600

-400

-200

0

200

400

600

800

1,000

1,200

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11

Oceana

Europe

Asia

LAmer

NAmer

Africa

-300

-200

-100

0

100

200

300

400

500

600

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11

Oceana

Europe

Asia

LAmer

NAmer

Africa

-200

-150

-100

-50

0

50

100

150

200

'01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14

Column 12

Oceana

Europe

Asia

LAmer

NAmer

Africa

24


25/76

Copper Costs, and Prices

70th percentile

-2000

0

2000

4000

6000

8000

10000

Costs 2010

Costs 2009

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000

current price

25


26/76

Cost Pressures

zinc

nickel

1000

1500

2000

2500

3000

3500

Percentile

Costs 2011

Costs 2010

Costs 2009

aluminum

0

500

1000

1500

2000

2500

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Percentile

Costs 2010

Costs 2009

-10000

-5000

0

5000

10000

15000

20000

25000

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Percentile

Costs 2010

Costs 2009

26


27/76


China,

East-West Trade

27


28/76

Chinas Net Metal Trade

(Exports Imports)

28

-400,000

-350,000

-300,000

-250,000

-200,000

-150,000

-100,000

-50,000

0

50,000

100,000

2006 2007 2008 2009 2010 2011 2012

Tons Aluminum

-120,000-100,000

-80,000-60,000-40,000-20,0000

20,00040,00060,000

2006 2007 2008 2009 2010 2011 2012

Tons Zinc

-40,000

-30,000

-20,000

-10,000

0

10,00020,000

30,000

40,000

50,000

60,000

2006 2007 2008 2009 2010 2011 2012

Tons Lead

-50,000

-40,000

-30,000

-20,000

-10,000

0

2006 2007 2008 2009 2010 2011 2012

Tons Nickel

-3,000

-1,000

1,000

3,000

2006 2007 2008 2009 2010 2011 2012

Tin

-400,000-350,000-300,000

-250,000-200,000-150,000-100,000-50,000

050,000

2006 2007 2008 2009 2010 2011 2012

Copper


29/76

China, Production-Consumption

copper

aluminum

0

250

500

750

1,000

1,250

1,500

1,750

2,000

2,250

2,500

2,750

3,000

3,250

3,500

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Net Ref Trade

Consumption

Refined Prod

Mine Prod

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Production

Consumption

29


30/76

East to West Trade

zinc

lead

-4,000

-3,000

-2,000

-1,000

0

1,000

2,000

East X (Russia)

East M (China)

Net Trade

copper

nickel

aluminum

-2000

-1000

0

1000

2000

3000

4000

5000

6000

'90'91'92'93'94'95'96'97'98'99'00'01'02'03'04'05'06'07'08'09'10'11'1213

Russia

Others

China

Net Sales

-60

-40

-20

0

20

40

60

80

100

'95'96

'97'98

'99'00

'01'02

'03'04

'05'06

'07'08

'09'10

'11'12

-100

0

100

200

300

400

500

600

700

800

'90'92

'94'96

'98'00

'02'04

'06'08

'10'12

-300

-200

-100

0

100

200

300

400

'89'90'91'92'93'94'95'96'97'98'99'00'01'02'03'04'05'06'07'08'09'10'11'12

East Exports to West (Russia)

East Imports from West (China)

Net Trade (Exports from East)

30


31/76


Inventory Balances

31


32/76

Inventory Trends, Weeks Usage

copper

aluminum

0

100

200

300

400

500Producer

Consumer

Comex

LME

SHFE

0

1,000

2,000

3,000

4,000

5,000

6,000

LME

Comex

IPAI

Shang

-4

1

6

11

16

0

500

1000

1500

2000

2500

3000

3500

weeks

use

Ktonn

es

Stocks

Weeks Use

-3

2

7

12

17

22

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

Stocks,k

t

Stocks

Weeks

32


33/76


lead

lead

-

200

400

600

800

1,000

1,200

1,400Producer

Consumer

LME

Mrchnt

SHFE

-50

0

50

100

150

200

250

300

350

400

450

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12

Producer

Consumer

Merchant

LME

SHFE

0

500

1,000

1,500

2,000

2,500

'88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '100

2

4

6

8

10

12

14

16

Stocks

Weeks Use

200

300

400

500

600

700

800

900

1,000

'82'84

'86'88

'90'92

'94'96

'98'00

'02'04

'06'08

'10'12

1

2

3

4

5

6

7

8

9

10

11

StocksWeeks Use

zinc

33


34/76


tin

nickel0

20

40

60

80

100

120

140

160

180

'91

'92

'93

'94

'95

'96

'97

'98

'99

'00

'01

'02

'03

'04

'05

'06

'07

'08

'09

'10

'11

'12

LME

Prod

Cons

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

'90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12

0

100

200

300

400

500

600

'71 '74 '77 '80 '83 '86 '89 '92 '95 '98 '01 '04 '07 '10

Stocks,ktonne

0

5

10

15

20

25

30

35

WeeksUsag

0

10

20

30

40

50

60

70

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

0

2

4

6

8

10

12

14

16Total

LME

Weekstin

34


35/76


Supply-Demand Outlook

35


36/76

Copper Market Outlook2009 2010 2011 2012 2013

United States -18.5% 6.9% 1.1%Europe -19.5% 11.4% -8.5%Japan -26.1% 21.1% -8.8%Other (West) -4.4% -2.0% -5.4%Refined Consumption 10,141 10,662 10,071 9,990 10,379

-13.5% 5.1% -5.5% -0.8% 3.9% IP -16.1% 8.8% 2.0% 2.1% 2.9%DD - IP 2.6% -3.6% -7.6% -2.9% 1.0%

Mine Production 12,866 13,062 12,996 13,548 14,238

East to West Trade -2,051 -1,862 -1,708 -2,324 -2,347Total Supply 10,399 10,672 10,470 10,086 10,377

-14.0% 2.6% -1.9% -3.7% 2.9%

Reported Balance 278 -111 -18 3 -164

Stocks 1,067 956 938 941 777Stocks Usage Ratio 5.5 4.7 4.9 4.9 3.9

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

Stocks/Consumption (weeks)

2000s

1990s

1980s

1970s

current ratio: 5.1 wks

price: $8,360

36


37/76

Aluminum Market Outlook2009 2010 2011 2012 2013

Total Consumption 18,847 22,016 22,824 23,341 24,529

% Chg -15.9% 16.8% 3.7% 2.3% 5.1%

IP -16.1% 8.8% 2.0% 2.1% 2.9%

DD-IP 0.3% 8.1% 1.6% 0.2% 2.2%

Total Production 19,281 20,037 21,282 21,469 22,647

-8.2% 3.9% 6.2% 0.9% 5.5%

Net E-W Balance 3,141 4,892 5,273 5,384 5,350

Total Supply 22,422 24,929 26,555 26,853 27,997

Reported Balance 1,777 17 648 330 431

Reported Stocks 6,485 6,502 7,150 7,480 7,911

Weeks Use 17.7 15.3 16.3 16.7 16.9

$800

$1,000

$1,200

$1,400

$1,600

$1,800

$2,000

$2,200

$2,400

$2,600

$2,800

$3,000

5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22(Stocks/Shipments) Weeks

2000s

1990s

1980s

1970s


price: $2,175

37


38/76

38

Zinc Market Outlook

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

3 4 5 6 7 8 9 10 11 12 13 14 15 16

2000s

1990s

1980s

2009 2010 2011 2012 2013

Consumption 5,783 6,678 6,746 6,964 7,272

% Chg -16.2% 15.5% 1.0% 3.2% 4.4% IP -16.1% 8.8% 2.0% 2.1% 2.9%

DD - IP -0.1% 6.7% -1.0% 1.1% 1.5%

Mine Production 7,370 7,678 7,855 7,882 7,998-3.0% 4.2% 2.3% 0.4% 1.5%

Refined Prod 6,144 6,770 6,971 7,011 7,219-8.0% 10.2% 3.0% 0.6% 3.0%

E/W Trade (215) 137 162 145 163Supply 5,929 6,907 7,133 7,156 7,382

Reported Balance 270 376 311 195 24

Stocks 1,097 1,473 1,784 1,980 2,004Weeks Use 9.9 11.5 13.8 14.8 14.4


price: $2,080


39/76

39

Lead Market Outlook

$300

$800

$1,300

$1,800

$2,300

$2,800

$3,300

$3,800

2 3 4 5 6 7 8 9

2000s

1990s

1980s

2009 2010 2011 2012 2013

Consumption 4,699 4,987 4,948 4,985 5,075

% Chg -10.4% 6.1% -0.8% 0.7% 1.8%

IP -16.1% 8.8% 2.0% 2.1% 2.9%

DD-IP 5.7% -2.6% -2.8% -1.3% -1.1%

Mine 2,011 2,040 2,088 2,123 2,142

Refined 4,790 4,948 4,845 4,864 4,916

E-W Trade 5 85 86 84 82

Supply 4,795 5,033 4,931 4,948 4,999

-9.3% 5.0% -2.0% 0.3% 1.0%

Balance 83 60 193 97 12

Stocks 389 449 642 739 750

Weeks Use 4.3 4.7 6.8 7.7 7.7


price: $2,125


40/76


41/76

41

Tin Market Outlook

2009 2010 2011 2012 2013

Consumption 167 209 184 181 188% Chg -15% 25% -12% -1% 4% IP -16% 9% 2% 2% 3%

DD-IP 1% 17% -14% -4% 1%

Mine 174 170 167 164 163Refined 191 202 211 215 214East to West Trade -15 -9 -29 -28 -28Government Sales 0 0 0 0 0

Total Supply 176 194 182 187 187

Reported Balance 14 -11 -4 -4 -2Total Stocks 46 35 31 28 25Weeks Usage 14.4 8.8 8.9 8.2 7.0

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

5 7 8 10 11 13 14 16


price: $24,250


42/76


Funds and LME Volumes

42

LME Client Volumes: Funds vs Trade


43/76

43

LME Client Volumes: Funds vs Tradeexcludes broker crosses

0

10

20

30

40

50

60

70

80

90

'90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12e

Funds

Trade/Other

funds account for 60+% of client volumes


44/76

$0

$20

$40

$60

$80

$100

$120

$140

'90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000Macro

Hedge

44

Global Hedge/Macro Funds, $b AUM

Hedge Funds: hedge equity/bond exposures, long or short

CTA A


45/76

45

CTA Assets,$b AUM

$0

$50

$100

$150

$200

$250

$300

$350

90 91 92 9394 9596979899'00'01'02'03'04'05'06'07'08'09'10'11

Commodity Trading Advisors: registered, trend following, F&O

0%

31%14%

5%

45%

5%

Agricultural Traders Currency TradersDiversified Traders Financial/Metal Traders

Discretionary Traders Systematic Traders


46/76

46

Index Funds, $b AUM

$0

$50

$100

$150

$200

$250

9091 929394 9596979899'00'01'02'03'04'05'06'07'08'09'10'11'12e

Index of Commodities, Commodity Super Cycle, diversification

Energy Agric PrecM IndusMGSCI 67% 22% 3% 8%

DJ-UBS 28% 39% 14% 18%Rodgers 44% 35% 7% 14%Merrill Lynch 60% 24% 4% 13%

Average 50% 30% 7% wtd avg 13%

Copper Alum Zinc Nickel LeadGSCI 48.2% 28.9% 7.2% 9.6% 6.0%

DJ-UBS 42.5% 29.1% 13.5% 15.0% 0.0%

Rodgers 4.0% 4.0% 2.0% 1.0% 2.0%

Oppenheimer 2.4% 2.6% 0.1% 0.6% 0.5%

Average 24.3% 16.2% 5.7% 6.6% 2.1%

ETF/ETN A t


47/76

47

ETF/ETN Assets, $b AUM

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

$200

Q106

Q206

Q306

Q406

Q107

Q207

Q307

Q407

Q108

Q208

Q307

Q408

Q109

Q209

Q309

Q409

Q110

Q210

Q310

Q410

Q111

Q211

Q311

Q411

Q112

-$0.25

$0.25

$0.75

$1.25

$1.75

$2.25ETF/ETN Assets ($b)

Industrial Metals

ETF/ETN:

4%

82%

3%10%

1%

Energy Industrial Metals Precious Metals

Agriculture Global

Industrial Metals Fund Allocations $b


48/76

48

Industrial Metals, Fund Allocations, $b

$0

$10

$20

$30

$40

$50

$60

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12

Macro CTA Index ETF/ETN

F nds AUM $b


49/76

Funds, AUM $b

49

$1,000

$1,250

$1,500

$1,750

$2,000

$2,250

$2,500

2006 2007 2008 2009 2010 2011 2012

Hedge Funds

$125

$150

$175

$200$225

$250

$275

$300

$325

$350

2006 2007 2008 2009 2010 2011 2012

CTAs

$50

$75

$100

$125

$150

$175

2006 2007 2008 2009 2010 2011 2012

Macro Funds

$50

$75

$100

$125

$150

$175

$200

$225

$250

$275

2006 2007 2008 2009 2010 2011 2012

Index Funds


50/76


Funds and Metals Pricing

50

Copper Prices,


51/76

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

'94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12

-15

-12

-9

-6

-3

0

3

6

9

Copper Prices

Funds $ Index

Weeks Use

51

Fundamental & Fund Impact

copper prices, fund index ($AUM, metals) copper stocks, weeks use

Aluminum Prices,


52/76

52


1,000

1,500

2,000

2,500

3,000

3,500

'94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12

-1

2

5

8

Aluminum Prices

Funds $ Index

Weeks Use

aluminum prices, fund index ($AUM, metals) aluminum stocks, weeks use

Zinc Prices,


53/76

53


500

1,000

1,500

2,000

2,500

3,000

3,500

4,0004,500

5,000

5,500

'94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12

-4

-2

0

2

4

6

8

Zinc Prices

Funds $ Index

Weeks Use

zinc prices, fund index ($AUM, metals) zinc stocks, weeks use

Lead Prices,


54/76

54


0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

'94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12

-4

-3

-2

-1

0

1

2

3

4

5

6

Lead Prices

Funds $ Index

Weeks Use

lead prices, fund index ($AUM, metals) lead stocks, weeks use


55/76

Tin Prices,


56/76

56


0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

'94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12

-50,000

-40,000

-30,000

-20,000

-10,000

0

10,000

20,000

30,000

40,000

Tin Prices

Funds $ Index

LME Stocks

tin prices, fund index ($AUM, metals) tin stocks

Economic and Metals Summary


57/76

57

1. Moderate Economic Growth

2% to 3% in the West; China expands by 10% to 12%2. Metals consumption growth accelerates from 2011 pace

3. Primary capacity builds globally, but productioncuts/losses limits supply build

4. Chinese imports remain at high levels

5. Supply-demand balances generally tighter for 2013

6. Institutional demand recovers bolstering prices

7. Copper and tin followed by lead expected to trade firm,nickel and zinc soft, and aluminum steady.

Economic and Metals Summary


Base Metals Price Outlooks


58/76

58

Base Metals,Price Outlooks

Copper Alum Zinc Lead Nickel Tin

2011 Q1 $9,651 $2,500 $2,395 $2,604 $26,903 $29,910

2011 Q2 $9,152 $2,603 $2,254 $2,558 $24,298 $28,923

2011 Q3 $8,992 $2,400 $2,226 $2,462 $22,069 $24,796

2011 Q4 $7,436 $2,087 $1,897 $1,984 $18,221 $20,805

2011 Avg $8,808 $2,398 $2,193 $2,402 $22,873 $26,109

2012 Q1 $8,367 $2,196 $2,047 $2,119 $19,984 $23,225

2012 Q2 $8,800 $2,350 $2,100 $2,150 $20,000 $25,000

2012 Q3 $8,250 $2,250 $2,000 $2,200 $17,500 $24,000

2012 Q4 $8,600 $2,300 $1,900 $2,300 $16,500 $25,0002012 Avg $8,504 $2,274 $2,012 $2,192 $18,496 $24,306

2013 Q1 $8,850 $2,400 $1,800 $2,300 $17,500 $26,000

2013 Q2 $9,350 $2,300 $1,900 $2,200 $18,000 $27,000

2013 Q3 $8,850 $2,200 $1,900 $2,250 $17,500 $26,0002013 Q4 $9,100 $2,300 $1,800 $2,250 $16,500 $27,000

2013 Avg $9,038 $2,300 $1,850 $2,250 $17,375 $26,500

Reuters Price Forecasts (January 2012)

2012 $8,262 $2,239 $2,062 $2,201 $19,956 $22,319

2013 $8,731 $2,458 $2,340 $2,492 $21,695 $24,427


59/76


Outlook Summaries

59

Copper Outlook


60/76

60

Copper Outlook

Copper consumption rebounds 2010, eases 2011; expected to holdsteady in 2012, firm in 2013

Significant mine capacity builds in 2012, 2013 but grade declines, labor

losses, phased startups, and output restraint w/ cutbacks; scrap tight

China imports surge (arb helps) but likely to slow, although remain highwith strong China consumption

LME inventories decline, Shanghai stocks up (overall, up), balancedmarket in 2011 and 2012, followed by deficit in 2013

Expansion in fund investment supports prices

Spreads steady, seasonals bullish, then bearish, bullish technical trend

Prices expected to hold steady near term, correct this summer, buteconomic rebound, improving supply demand fundamentals andspeculative demand support prices in late 2012 and 2013


New/Expanded Copper Capacity


61/76

61

p pp p y

Asia

Glogow Gleboki, Yangla, Duobaoshan, Ivanhoe, JabalSayid, Various Mines

North AmericaMorenci, Cananea, Andalcollo, Rosemont Ranch

South America

Los Pelambres, Cananea, Andina, Escondida, Toquepala,Salobo, Gaby Sur, Antamina

Europe

Aitik

AfricaLumwana, Chambishi, Konkola

Oceania

Ernest Henry, Cadia Hill East, Olympic Dam

Copper Quarterly Supply-Demand Outlook


62/76

62

11Q4 12Q1 12Q2 12Q3 12Q4 13Q1 13Q2 13Q3 13Q4

United States 6.7%

Europe -23.0%

Japan -22.1%

Other (West) -2.8%

Refined Consumption 2,353 2,542 2,625 2,428 2,395 2,617 2,717 2,537 2,508

-9.6% -3.2% -1.8% 0.4% 1.8% 2.9% 3.5% 4.5% 4.7%

IP 1.1% 2.0% 2.6% 1.7% 2.0% 2.6% 2.9% 3.0% 3.1%

DD - IP -10.7% -5.2% -4.5% -1.3% -0.2% 0.3% 0.6% 1.5% 1.5%

Mine Production 3,407 3,267 3,349 3,371 3,560 3,418 3,504 3,545 3,771

East to West Trade -770 -577 -547 -581 -619 -581 -582 -591 -593

Total Supply 2,327 2,477 2,535 2,514 2,560 2,536 2,573 2,583 2,685

-16.2% -9.6% -9.4% -3.5% 10.0% 2.4% 1.5% 2.7% 4.9%

Reported Balance -86 17 -103 40 50 -130 -199 9 155

Stocks 938 955 852 891 941 812 612 622 777

Stocks Usage Ratio 4.9 5.0 4.5 4.7 4.9 4.2 3.1 3.2 3.9

Aluminum Outlook


63/76

63

Aluminum Outlook

Aluminum consumption rebounds 2010 and 2011 with economy, moderategrowth expected in 2012, 2013

Primary capacity builds, but recent cutbacks globally (America, Europe,Australia, and Russia/China) with cost increases/pressures and prices soft

China consumption and production surge; Russian output high, trade balance(surplus) widens with Russian exports

Inventories grow to record levels (in tonnes and near a record in weeksusage); surplus markets forecast for 2012 and 2013

Funds investment recovers; further portfolio diversification expectedsupporting prices

Spreads wide, bearish seasonals, bullish technical trend

Prices expected to firm near term w cutbacks, but excess stocks keep a capon prices longer term; econ rebound & spec demand support provide a floor


New/Expanded Alum Capacity


64/76

64

p p y

Asia

Korba, Jharsuguda, Mahan

China

Liancheng, Pingguo, Tuoketuo Datang, Zhaqi,

Yinchuan/Ningdong, Zhongning, Qinghai Xinye, QinghaiXinheng, Xinyuan, Nanshan, Weiqiao, Chiping Xinjiang,Dongyuan Qujing

Middle East

Abu Dhabi, Qatar

Alum Supply-Demand Outlook


65/76

65

Shipments Production Inventories Wks

K Tons % Chg IP DD-IP Prod-kt % Chg Prod-kt Chg Use

2011 20,052 15.4% 8.8% 6.6% 20,037 3.9% 5,877 (15) 15.3

2011Q1 4,737 -0.9% 4.9% -5.8% 5,177 7.2% 6,318 440 15.9

2011Q2 5,654 12.2% 0.6% 11.6% 5,316 6.9% 5,979 (338) 15.12011Q3 5,548 10.4% 1.5% 8.9% 5,389 6.8% 5,820 (159) 14.7

2011Q4 4,765 -8.5% 1.1% -9.7% 5,400 4.0% 6,455 635 16.3

2011 20,704 3.3% 2.0% 1.2% 21,282 6.2% 6,455 578 16.3

2012Q1 4,976 5.0% 2.0% 3.0% 5,346 3.3% 6,825 370 16.8

2012Q2 5,569 -1.5% 2.6% -4.1% 5,362 0.9% 6,618 (207) 16.3

2012Q3 5,561 0.2% 1.7% -1.5% 5,374 -0.3% 6,431 (187) 15.9

2012Q4 5,034 5.6% 2.0% 3.7% 5,388 -0.2% 6,785 353 16.7

2012 21,139 2.1% 2.1% 0.0% 21,469 0.9% 6,785 330 16.7

2013Q1 5,177 4.0% 2.6% 1.4% 5,562 4.0% 7,170 385 16.8

2013Q2 5,810 4.3% 2.9% 1.4% 5,685 6.0% 7,045 (125) 16.5

2013Q3 5,881 5.8% 3.0% 2.7% 5,695 6.0% 6,859 (186) 16.1

2013Q4 5,348 6.2% 3.1% 3.1% 5,705 5.9% 7,216 357 16.9

2013 22,215 5.1% 2.9% 2.2% 22,647 5.5% 7,216 431 16.9

Zinc Outlook


66/76

66

Zinc consumption slows 2011, moderate increases in 2012 and 2013 witheconomic recovery (but concerns in Europe and China)

Mine capacity builds globally, refined production increases (cutbacks intime); but not enough in near term

China shifts from export to importer with consumption surging & productionflattens; trade balance shifts from net exports to net imports

Market oversupplied, recent LME and SHFE builds, surpluses forecast for2012; better balance in 2013

Funds investment recovers; further portfolio diversification into commoditiesexpected supporting prices

Spreads in contango, bearish seasonals, market oversold

Prices expected to correct near term, but surplus weighs on prices; marketfinds support from modest economic growth and institutional buying


New/Expanded Zinc Capacity


67/76

67

Europe

Neves-Corvo, Ozernoye, Almagrera

AfricaQued Amizour, Perkoa

Asia

Rampura-Agucha, Shaimerden, Duddar, Khandiza

North America

Bracemac-Macleod, Tennesee

South America

Penasquito, IscaycruzOceania

Century, Mt Isa/Hilton

Zinc Supply-Demand Outlook


68/76

68

11Q4 12Q1 12Q2 12Q3 12Q4 13Q1 13Q2 13Q3 13Q4

Consumption 1,720 1,760 1,794 1,652 1,757 1,823 1,871 1,732 1,845

% Chg 6.3% 3.9% 5.0% 1.8% 2.1% 3.6% 4.3% 4.8% 5.0%

IP 1.1% 2.0% 2.6% 1.7% 2.0% 2.6% 2.9% 3.0% 3.1%DD - IP 5.2% 1.9% 2.4% 0.1% 0.2% 0.9% 1.4% 1.8% 1.9%

Mine Production 1,965 1,961 1,984 1,971 1,966 1,992 2,014 1,999 1,994

2.5% 1.1% 0.1% 0.1% 0.1% 1.5% 1.5% 1.4% 1.4%

Refined Prod 1,780 1,769 1,726 1,735 1,782 1,821 1,747 1,820 1,831

2.9% 1.8% 0.2% 0.2% 0.1% 3.0% 1.2% 4.9% 2.7%

E/W Trade 75 37 34 35 38 38 39 43 43

Supply 1,855 1,806 1,760 1,771 1,820 1,860 1,786 1,863 1,873

ReportedBalance (20) 55 (31) 112 60 27 (97) 92 2

Stocks 1,784 1,839 1,807 1,920 1,980 2,007 1,910 2,002 2,004

Weeks Use 13.8 13.8 13.5 14.4 14.8 14.4 13.7 14.4 14.4

Lead Outlook


69/76

69

Lead consumption soft in 2010, 2011; modest growth in 2012, 2013

Moderate mine capacity, production builds 2010 and 2011; modestincreases in 2012, 2013

China shifts from export to importer with consumption surging &production cuts; balanced market last couple years

Inventories grow, surplus markets in 2010, 2011; oversupply expectedin 2012 shifting to better balance in 2013

Funds investment recovers; further portfolio diversification intocommodities expected supporting prices

Spreads in contango, neutral to bearish seasonals, nearby technical

trend down

Prices expected to correct (rise) short term, but longer term, surplussupply-demand balance weighs on pricing. Economic recovery andinstitutional buying supports prices


New/Expanded Lead Capacity


70/76

70

Europe

Qued Amizour

AfricaBlack Mountain

Asia

Sindesar Khurd, DuddarNorth America

Sweet Water

South America

San Cristobal, Penasquito

Oceania

Mt Isa, Century, Magellan, Endeavor, Rasp

Lead Supply-Demand Outlook


71/76

71

11Q4 12Q1 12Q2 12Q3 12Q4 13Q1 13Q2 13Q3 13Q4

Consumption 1,230 1,227 1,259 1,258 1,241 1,249 1,281 1,281 1,264

% Chg -5.3% 0.4% 1.7% 0.0% 0.9% 1.9% 1.7% 1.8% 1.8%

IP 1.1% 2.0% 2.6% 1.7% 2.0% 2.6% 2.9% 3.0% 3.1%DD-IP -6.4% -1.6% -1.0% -1.7% -1.1% -0.8% -1.2% -1.3% -1.3%

Mine 524 523 534 533 533 532 542 535 533

Refined 1,197 1,217 1,221 1,218 1,208 1,239 1,248 1,221 1,208

E-W Trade 18 21 21 21 21 21 20 20 21

Supply 1,215 1,239 1,242 1,239 1,229 1,261 1,268 1,241 1,229

-2.0% 2.0% 0.3% -0.3% -0.8% 2.6% 0.6% -2.1% -1.0%

Balance -36 54 26 9 7 38 11 -20 -17

Stocks 642 696 723 732 739 776 787 767 750

Weeks Use 6.8 7.3 7.6 7.7 7.7 8.0 8.1 7.9 7.7

Nickel Outlook


72/76

72

Nickel consumption rebounds 2010, slows 2011, moderate growthexpected in 2012, 2013 with economic recovery

Significant primary capacity builds in next couple years, but output

somewhat restrained w/ cutbacks/delays. China imports remain high with consumption surging; trade balance

shifts sharply

Inventories decline 2010 and 2011, surplus forecast for 2012 and 2013

Funds investment recovers; further portfolio diversification intocommodities expected supporting prices

Spreads easing, seasonals bullish, then weak, technical trend up

Prices expected to hold steady/firm near term, longer term supplyfundamentals negative, but moderate economic growth, steadyChinese demand, and institutional buying provide support


New/Expanded Nickel Capacity


73/76

73

Europe

Talvivaara, Pobuskoye

AfricaSelebi-Phikwe, Ambatovy, Nkomati

Asia

CaldagNorth America

Nickel Rim South, Vale-Inco Ontario, Voiseys Bay

South America

Barro-Alto, Onca Puma, Santa Rita

Oceania

Forrestania, Goro, Koniambo, SLN/Eramet, Ramu River

Nickel Supply-Demand Outlook


74/76

74

11Q4 12Q1 12Q2 12Q3 12Q4 12Q1 12Q2 12Q3 12Q4

WW Consumption 207 225 238 218 210 230 246 228 222

% Chg -9% -2% 2% 2% 1% 3% 3% 5% 6%

IP Growth 1% 2% 3% 2% 2% 3% 3% 3% 3%Consumption - IP -10% -4% -1% 0% 0% 0% 0% 2% 3%

WW Mine Production 341 342 350 359 364 372 378 392 393

WW Refined Production 229 228 233 240 242 247 251 262 260

FFS Trade 5 6 5 5 5 5 5 5 5

WW Total Supply 234 234 238 245 247 252 256 267 265

Apparent Balance 27 9 0 28 37 21 9 39 43

Unreported Balance -34 -5 -14 -19 -18 -14 -16 -17 -16

Reported Balance -7 4 -14 9 19 7 -7 22 26

Reported Stocks 167 171 157 166 185 192 186 208 234

Weeks Consumption 9.9 10.1 9.3 9.8 10.8 11.2 10.7 11.8 13.2

Weeks Deliveries 14.7 15.3 13.9 14.6 16.2 16.8 16.0 17.7 19.7

Tin Outlook


75/76

75

Tin consumption rebounds 2010, eases 2011; moderate growth expected2012 and 2013 with economic recovery

Despite primary production builds, output restrained w/ cutbacks

China shifts from export to importer with consumption surging & productionflattening; trade balance shifts

Inventories decline, deficit market expected in 2012 and 2013

Funds investment recovers; further portfolio diversification into commoditieswill support prices

Spreads tightening, bullish seasonals, bullish technical trend butoverbought

Prices expected to remain firm with tight market balance, supply restraint,economic recovery, and institutional buying


Tin Supply-Demand Outlook


76/76

76

11Q4 12Q1 12Q2 12Q3 12Q4 12Q1 12Q2 12Q3 12Q4

Consumption 45.3 45.2 45.7 44.6 45.6 46.5 47.1 46.4 47.7

% Chg -11.2% -5.1% -1.1% -0.1% 0.6% 2.8% 3.0% 4.0% 4.7% IP 1% 2% 3% 2% 2% 3% 3% 3% 3%

DD-IP -12% -7% -4% -2% -1% 0% 0% 1% 2%

Mine 42.2 40.3 40.9 40.7 41.7 40.3 40.2 40.7 41.7

Refined 56.8 52.3 54.2 53.4 54.6 53.1 53.1 53.6 54.6

East to West Trade -13.7 -7.3 -7.3 -7.0 -6.3 -6.5 -6.8 -7.1 -7.2

Government Sales 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Total Supply 43.2 45.0 46.9 46.4 48.3 46.6 46.3 46.5 47.4

Reported Balance -8.8 -2.8 0.0 -0.5 -0.4 -0.7 -1.1 -0.1 -0.4

Total Stocks 31.4 28.4 28.5 28.0 27.6 26.9 25.8 25.7 25.3

Weeks Usage 9.0 8.2 8.1 8.2 7.9 7.5 7.1 7.2 6.9

price forecasts

Documents