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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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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.
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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
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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.
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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.
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Global Crude Oil Outlook 2013
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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.
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CRUDE DEMAND SUPPLY OUTLOOK
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.
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CRUDE DEMAND SUPPLY OUTLOOK
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
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CRUDE DEMAND SUPPLY OUTLOOK
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.
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CRUDE DEMAND SUPPLY OUTLOOK
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
YoY Growth net mb/d 0.1 0.4 0.9
North America 15.5 16.6 17.4
YoY Growth net mb/d 0.5 1.1 0.8
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
YoY Growth net mb/d 0.6 1.6 0.7
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%
ANALYST: CREDIT SUISSE
All figures in Mb/d
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CRUDE DEMAND SUPPLY OUTLOOK
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.
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CRUDE DEMAND SUPPLY OUTLOOK
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
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CRUDE DEMAND SUPPLY OUTLOOK
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
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Metals And Minerals Global Outlook 2013
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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.
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Steel: Global Outlook 2013
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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
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STEEL DEMAND SUPPLY OUTLOOK
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.
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STEEL DEMAND SUPPLY OUTLOOK
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.
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STEEL DEMAND SUPPLY OUTLOOK
ANALYST: CREDIT SUISSE
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.
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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%
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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
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Copper-Global Outlook 2013
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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
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COPPER DEMAND SUPPLY OUTLOOK
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
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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
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COPPER DEMAND SUPPLY OUTLOOK
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.
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COPPER DEMAND SUPPLY OUTLOOK
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
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ICSG GLOBAL COPPER DEMAND
SUPPLY OUTLOOK FOR 2013
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