|
1
|
- Fred Demler
212-589-6439
fdemler@mfglobal.com
- June 2008
|
|
2
|
- This presentation is issued by MF Global UK Limited, which is authorised
and regulated by the Financial Services Authority. References to “MFG” in this
presentation shall mean MF Global UK Limited unless otherwise stated.
The presentation was prepared and distributed by MFG for information
purposes only. The presentation contains information and opinions, which
may be used as the basis for trading undertaken by MFG and its officers,
employees and associated companies. The presentation should not be
construed as solicitation nor as offering advice for the purposes of the
purchase or sale of any security, investment, or derivative. The
information and opinions contained in the presentation were considered
by MFG to be valid when published. The presentation also contains
information provided to MFG by third parties. The source of such
information will usually be disclosed in the presentation. Whilst MFG
has taken all reasonable steps to ensure this information is correct,
MFG does not offer any warranty as to the accuracy or completeness of
such information. Any person placing reliance on the presentation to
undertake trading does so entirely at their own risk and MFG does not
accept any liability as a result. Securities and derivatives markets may
be subject to rapid and unexpected price movements and past performance
is not necessarily a guide to future performance.
- MF Global UK Limited, Sugar Quay, Lower Thames Street, London, EC3R 6DU.
|
|
3
|
|
|
4
|
|
|
5
|
- LME
- Futures and Options
- and Clearing
- COMEX
- OTC / Swap
- FX and Bullion
|
|
6
|
|
|
7
|
|
|
8
|
|
|
9
|
|
|
10
|
|
|
11
|
|
|
12
|
|
|
13
|
|
|
14
|
- Fundamentals Constructive
- Global Economic Expansion
- Chinese and Indian Demand
- Production Losses
- & Critically Low Stocks
|
|
15
|
- Fundamentals
- Don’t Fully Explain
- Current High Prices
|
|
16
|
|
|
17
|
|
|
18
|
|
|
19
|
|
|
20
|
|
|
21
|
- Fundamentals Are Mixed
- economy slowing in 2008 but rebound in 2009
- continued strength in China & India demand
- high prices lead to production builds but losses expected
- stocks still low, moving into surpluses, but still tight conditions
- Price vs Stocks/Physical Demand Nexus
- structurally altered by fund buying
- Speculative Demand Will Only Grow
- diversification theme, commodity super cycle
|
|
22
|
|
|
23
|
|
|
24
|
|
|
25
|
|
|
26
|
|
|
27
|
|
|
28
|
|
|
29
|
|
|
30
|
|
|
31
|
|
|
32
|
|
|
33
|
|
|
34
|
- Current:
- $8,200/tonne
- c-3m: $150b
- 3m-15m: $400b
- 3m equilibrium:
|
|
35
|
|
|
36
|
|
|
37
|
|
|
38
|
- Chile Projects
- (Escondida, Chuquicamata, Pelambres, Collahausi, Abra, Radomiro,
Teniene, Candelaria)
- United States Projects
- Indonesian Projects
- Future Chile, Zambia & Mongolia Startups
|
|
39
|
|
|
40
|
- FSU exports decrease
- Chinese rebound
- Net East
- to West
- trade improves after weak 2006
|
|
41
|
- exchange stocks increase since 2005 and in 2008
- producer, consumer well managed
|
|
42
|
- exchange stocks still critically low
- producer, consumer well managed
|
|
43
|
|
|
44
|
|
|
45
|
|
|
46
|
- current ratio:
- current price
- copper overvalued
- slight surplus expected
|
|
47
|
|
|
48
|
|
|
49
|
|
|
50
|
- Copper consumption continues to weaken, rebounds 2009
- Significant mine capacity builds in 08 & 09, but output restrained
w/ likely losses
- China imports recover with econ growing, strategic sales down
- Inventories up but still critically low, slight surplus markets in 2008
and 2009
- Funds (and weak dollar) account for about $4,000 or 50% of current
pricing, further growth in fund investment expected
- Technical trend up but evidence of topping out, seasonal weakness
expected.
- Prices expected to weaken near term, fundamentals suggest further
easing, but prices to remain high w/ speculative demand.
|
|
51
|
|
|
52
|
|
|
53
|
|
|
54
|
|
|
55
|
|
|
56
|
|
|
57
|
|
|
58
|
- Alba Project in Bahrain
- BHP/Billiton Projects (Hillside & Mozal)
- Australia Comalco’s Projects (Boyne Island, Portland & Tomago)
- Canada Projects (Baie Comeau, Alma & Alouette)
- Latin America Projects (Venezuela
– San Felix, Brazil- Belem & San Luis, Argentina Puerto Madryn)
|
|
59
|
|
|
60
|
|
|
61
|
|
|
62
|
- LME and Shanghai stock builds in ’07 and ‘08
- IAI stocks decline
|
|
63
|
|
|
64
|
|
|
65
|
|
|
66
|
- current: 6.3 wks
- price: $2,950
- equil: 7 to 9 wks
- Forecast: 6-7 weeks
|
|
67
|
- current: 6.3 wks
- price: $2,950
- equil: 7 to 9 wks
- Forecast: 6-7 weeks
|
|
68
|
|
|
69
|
|
|
70
|
|
|
71
|
|
|
72
|
- aluminum consumption steady but to slow with economy, rebound in 2009
- significant primary capacity builds in 2008 to 2010
- China consumption firm, offsetting production builds
- inventories up but still critically low, surplus in ‘08 & ‘09; but
still low
- prices expected to consolidate, then soften late 2008/early 2009 but
remain relatively high with speculative buying and inventories low
|
|
73
|
|
|
74
|
|
|
75
|
|
|
76
|
|
|
77
|
|
|
78
|
|
|
79
|
|
|
80
|
|
|
81
|
- Australian Projects (Century, George Fisher, MacArthur River,
Cannington, Alura, Blendavale & Scuddles)
- North American Projects (Red Dog, Brunswick, & Kidd Creek)
- Ireland Projects (Tara & Lisheen)
- Peru Projects (Antamina & Iscaycruz)
|
|
82
|
- Chinese export slowdown in 2000s,
- rebound in 2006,
- reduction last few quarters
|
|
83
|
- after sharp declines, LME stocks start to build
- producer, consumer stocks little changed
|
|
84
|
- both stocks and weeks use rise from mid 2006 lows
- stocks ratio at: 4,4 wks use
|
|
85
|
|
|
86
|
|
|
87
|
- Current:
- Equilibrium
- Forecast
|
|
88
|
|
|
89
|
|
|
90
|
|
|
91
|
|
|
92
|
- Zinc consumption weakening in West, further softness expected, recovery
in 2009; China firm
- Mine production surging, large but moderating primary capacity builds in
08 & 09
- Chinese exports rebound in 2006, to grow in 2007 & 2008 despite
strong internal demand
- Inventories critically low, surpluses in 2008 and 2009,
- Prices fundamentally in balance; with spec demand, undervalued
- Prices expected to continue to soften
|
|
93
|
|
|
94
|
|
|
95
|
|
|
96
|
|
|
97
|
|
|
98
|
|
|
99
|
|
|
100
|
- Australian Projects (Broken Hill, Cannington, Mt Isa, Magellan, George
Fisher, Century)
- Cominico Alaska’s Red Dog Project
- Canadian Projects (Caribou, Brunswick & Faro)
|
|
101
|
- surge in 1990s,
- slowdown in 2000s,
- steady
|
|
102
|
- LME stocks fall
- producer declines, consumer well managed
|
|
103
|
- stocks-use ratio drops to 2.9 weeks
- stocks critically low
|
|
104
|
|
|
105
|
|
|
106
|
- Current:
- Equilibrium
- Forecast
|
|
107
|
|
|
108
|
|
|
109
|
|
|
110
|
|
|
111
|
- Lead consumption slows with economy, further weakness nearby, rebound in
late 2009 expected
- Primary capacity builds in 2008 and 2009
- Chinese exports high in 2006 -2007, ease last few months, further easing
expected with tax changes and internal demand
- Inventories critically low, but surplus expected
- Prices overbought, market in relative balance, but inventories low. Prices expected to weaken, then
stabilize in 2009
|
|
112
|
|
|
113
|
|
|
114
|
|
|
115
|
|
|
116
|
|
|
117
|
|
|
118
|
|
|
119
|
- Australian Projects (Honeymoon Well, Mt Keith, Murrin, Leinster)
- Vale’s Indonesian Project (Soroako)
- Billton’s Columbian Project (Doniambo)
- Canada Projects (Voisey Bay, Sheritt, Sudbury, Manitoba, Raglan)
- New Caledonia Projects (Eramet-SLN, Goro-Vale)
|
|
120
|
|
|
121
|
|
|
122
|
- global stocks critically low
- stock - shipments at 8 weeks use
|
|
123
|
|
|
124
|
- Current Ratio
- Prices:
- Equil: 9/10 wks
- Forecasts:
- ~ 8 to 9 wks
|
|
125
|
|
|
126
|
|
|
127
|
|
|
128
|
|
|
129
|
- Nickel consumption to firm with economy expanding
- Significant primary capacity builds in 08 & 09 & 10
- China consumption firm, imports expanding
- Inventories critically low, but surplus in ’08/09
- Prices expected to ease in 2008 but not collapse with inventories low;
further weakness in 2009 with production builds
|
|
130
|
|
|
131
|
|
|
132
|
|
|
133
|
|
|
134
|
|
|
135
|
|
|
136
|
|
|
137
|
|
|
138
|
|
|
139
|
|
|
140
|
|
|
141
|
|
|
142
|
|
|
143
|
|
|
144
|
- Tin consumption to rebound in
2009, after 2007 correction
- Moderate primary capacity builds in 08 & 09, prod gains with high
prices
- China consumption firm, offsetting production builds, imports to
increase into China
- Inventories low, balanced markets in ’08 & ‘09
- Prices overbought, correction, but expected to remain firm in 2009 with
inventories low but below 2008 highs
|
|
145
|
|
Notes
