Commodity prices continued to trend lower in December 2011. Swedbank's Total Commodity Price Index fell by 1.4% for the month, driven by a 1.3% drop in crude oil prices. Food prices saw the largest monthly decline, falling for the fourth consecutive month as higher production has increased inventories. However, commodity prices remain volatile and uncertain global economic conditions could lead to further declines in 2012 depending on developments in the Eurozone crisis and growth in emerging economies such as China.

1. Energy & Commodities
Monthly newsletter from Swedbank’s Economic Research Department
by Jörgen Kennemar No. 1 • 19 January 2012
The price decline for commodities continues
 The weaker global economy and debt crisis in the EMU countries are
contributing to a continued decline in global commodity prices. In December
Swedbank’s Total Commodity Price Index excluding energy commodities fell
to the lowest level in over a year. Growing geopolitical uncertainty in the
Middle East in connection with Iran’s threats to disrupt oil deliveries in the
Strait of Hormuz, where 20-30% of the world’s crude is shipped, drove
already high oil prices even higher in January, creating a burden for the
shaky global economy.
 Food prices noted for the largest price decline in December. This marked the
fourth consecutive month that prices fell, driven by higher food production but
also by reduced investor interest in commodities. Instead, investors are
returning to the dollar and treasury bills. This has also placed downward price
pressure on gold, which was previously considered one of the financial
market’s few safe harbours.
 The staying power of emerging economies, which account for the large part
of global commodity consumption, will be critical to commodity prices in
2012, when the OECD countries are in recession. A greater slowdown if the
Chinese economy than we anticipate would have a marked effect on global
commodity markets.
Swedbank’s Total Commodity Price Index, USD
Commodity prices continue to trend lower in the by 1.4% in USD compared with the previous month.
wake of the weaker global economy. In December Crude oil fell for the first time since October by a
2011 Swedbank’s Total Commodity Price Index fell monthly average of 1.3%, perhaps partly because
Economic Research Department. Swedbank AB. SE-105 34 Stockholm. Phone +46-8-5859 1000.
E-mail: ek.sekr@swedbank.se www.swedbank.se
Legally responsible publisher: Cecilia Hermansson. +46-8-5859 7720.
Magnus Alvesson. +46-8-5859 3341. Jörgen Kennemar. +46-8-5859 7730.

2. Energy & Commodities
Monthly newsletter from Swedbank’s Economic Research Department, continued
No. 1 • 19 January 2012
of OPEC’s decision at its December summit to raise Industrial metal inventories, millions of tons
the official production quota for the first time since
2008, to 30 million barrels per day from 26 million.
Actual production has been significantly higher than
previous targets, however, due to which the revised
target in December is more in line with actual
production. Our forecast is that the average oil price
will fall to USD 102 per barrel in 2012 from USD
112 last year as the global economy weakens,
Ton (metric)
Ton (metric)
mainly in OECD countries, where oil consumption is
expected to decrease. In emerging economies, on
the other hand, consumption will rise, though at a
slightly slower pace. China is currently the world’s
second largest oil consumer after the US. An
anticipated appreciation of the dollar would also
slow the price of oil.
The forecast risks are high on both the up- and
downside, however. The Iranian threat to stop oil
shipments in the Strait of Hormuz due to the EU Inventories for a number of industrial metals
embargo on Iranian oil has led to a higher risk trended in the opposite direction at the end of the
premium in January 2012. Rapidly growing public year, which may indicate that underlying demand
spending in several oil-producing countries to tame has been underestimated at the same time that
the risk of social tension in the wake of the Arab lower price levels could create a greater incentive to
Spring will require higher crude prices if public build up inventory. Copper inventories have fallen
finances are going to reach a balance. Saudi Arabia since last September to the lowest levels in over a
plans to raise its public spending by 19% in 2012. A year, a decline of 118 000 tons. This was at the
more severe recession in EMU countries, with a same time that Chinese copper imports rose
greater negative effect on emerging economies and substantially in December. Shrinking inventories are
global financial markets, could, however, lead to a also being driven by lower metal goods
significantly larger decline for crude than we are manufacturing as demand weakens, but also by
forecasting. During the financial crisis in 2008/2009 unfavourable weather conditions. Copper
crude fell to below USD 40 at the same time that oil production rose a modest 0.3% in the first nine
consumption dropped to just over 5 million barrels. months of 2011, while consumption climbed 1%.
In addition to fundamental factors, the price decline Our projection is that metal prices will continue to
was reinforced by a flight by investors from oil to decline in 2012 as global growth slows. The decline
less risky alternatives. Similar financial flows could will be mitigated by limited supply, however, at the
occur if the EMU’s fiscal crisis has a greater impact same time that the expansion is expected to
on the global financial markets than we now continue in the commodity-intensive economies,
foresee. though at a slower rate. Expectations that Chinese
austerity will ease going forward have increased
The downward price trend for commodities is more
recently due to its lower inflation rate (4.1% in
evident when energy is excluded, as reflected in
December) at the same time that GDP is growing at
Swedbank’s Commodity Price Index, which has
a slower pace (8.9% at an annual rate in the fourth
fallen for five consecutive months. In December it
quarter of 2011). Looser economic policy in China
dropped by 2% in USD, reaching the lowest level
could push metal prices higher.
since August 2010. Even in euro terms, the index
has fallen broadly, by 16% since peaking in early The price decline for iron ore and scrap in USD was
2011. Economically sensitive metal prices fell in limited to 0.3% in December compared with the
December by an additional 1.2%. This means that previous month. This is clearly a slowdown after the
the index for non-ferrous metals has dropped nearly major decline in October and November, which
25% since April 2011, when prices began turning totalled nearly 20%. Global steel production rose by
downward in connection with weaker global 3.1% on an annual basis in the third quarter of last
industrial activity. Nickel is the metal with the largest year. This means that global production has
price decline last year, followed by copper, lead and reached a new record level, although the rate of
zinc. increase has slowed from 2010. Steel prices
continue to decline, however, and in December
were 15% lower than in May 2011.
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3. Energy & Commodities
Monthly newsletter from Swedbank’s Economic Research Department, continued
No. 1 • 19 January 2012
Price development for iron ore and steel in USD Price index for various food commodities in USD
Index
Higher production is lowering food prices Price volatility has remained high in recent years,
underscoring the impact of production disruptions,
Food fundamentals have changed significantly in as was certainly the case in 2010. At the same time
the last half-year. In December 2011 prices fell by global food demand is rising due to a growing
3.7% in USD compared with November, which population and increased purchasing power. This
means that the index is at the lowest level since places higher demands on food production and
October 2010. It also places downward pressure on improved trade in agricultural and food products.
inflation, primarily in countries where food Changes in energy prices are another factor
represents a large share of total household affecting food prices, where energy accounts for a
spending. Increased access to food, not least significant share of total production costs. Rising oil
through higher global food production, has meant prices also tend to increase competition between
that inventories, which were previously at critically food and ethanol production, driving up food prices.
low levels, have grown. Grain production is In 2011 global ethanol production grew significantly
estimated to have risen by 6.5% in 2011, which has slower than the previous year. Higher than
led to higher inventory levels. Production forecasts expected oil prices increase the economic incentive
for 2012 point to a further increase, although the to expand ethanol production, however. Among
rate is expected to slow partly because it will be agricultural commodities, cotton reported the
less economically profitable to raise production biggest monthly price increase in USD in December
volumes when food prices are lower. (7.4%), followed by pulp (4.7%) and oilseeds
(4.3%).
Uncertain global economic conditions, with the risk
of increased credit austerity if the sovereign debt
crisis in the EMU countries worsens, could lead to a
larger, longer-lasting decline in commodity prices
than we now expect.
Jörgen Kennemar
3

4. Energy & Commodities
Monthly newsletter from Swedbank’s Economic Research Department, continued
No. 1 • 19 January 2012
Swedbank Commodity Index - US$ - Swedbank Commodity Index - SKr -
Basis 2000 = 1oo 25-01-12 Basis 2000 = 1oo 25-01-12
10.2011 11.2011 12.2011 10.2011 11.2011 12.2011
T otal index 356.1 365.0 359.7 T otal index 257.4 267.4 267.8
Per cent change month ago -3.2 2.5 -1.4 Per cent change month ago -3.1 3.9 0.2
Per cent change year ago 23.5 22.8 14.5 Per cent change year ago 23.2 21.4 14.6
T otal index exclusive energy 282.5 269.5 264.1 T otal index exclusive energy 204.2 197.4 196.6
Per cent change month ago -8.4 -4.6 -2.0 Per cent change month ago -8.3 -3.3 -0.4
Per cent change year ago 1.1 -5.0 -9.8 Per cent change year ago 0.8 -6.2 -9.6
Food, tropical beverages 275.0 268.6 258.7 Food, tropical beverages 198.8 196.8 192.6
Per cent change month ago -7.8 -2.3 -3.7 Per cent change month ago -7.7 -1.0 -2.1
Per cent change year ago 7.1 -0.6 -9.6 Per cent change year ago 6.8 -1.7 -9.5
Cereals 281.8 277.2 269.0 Cereals 203.7 203.1 200.3
Per cent change month ago -7.9 -1.6 -3.0 Per cent change month ago -7.8 -0.3 -1.4
Per cent change year ago 11.6 7.8 -3.5 Per cent change year ago 11.3 6.6 -3.4
T ropical beverages and tobacco 293.8 286.5 274.0 T ropical beverages and tobacco 212.4 209.9 204.0
Per cent change month ago -7.4 -2.5 -4.4 Per cent change month ago -7.3 -1.2 -2.8
Per cent change year ago 8.5 0.5 -9.1 Per cent change year ago 8.1 -0.7 -9.0
Coffee 194.1 193.7 189.1 Coffee 140.3 141.9 140.8
Per cent change month ago -8.9 -0.2 -2.4 Per cent change month ago -8.7 1.1 -0.8
Per cent change year ago 20.1 11.4 2.9 Per cent change year ago 19.8 10.1 3.0
Oilseeds and oil 229.8 224.2 218.8 Oilseeds and oil 166.1 164.3 162.9
Per cent change month ago -8.8 -2.4 -2.4 Per cent change month ago -8.6 -1.1 -0.8
Per cent change year ago 0.5 -8.9 -15.2 Per cent change year ago 0.2 -10.0 -15.1
Industrial raw materials 284.6 269.8 265.7 Industrial raw materials 205.7 197.6 197.8
Per cent change month ago -8.6 -5.2 -1.5 Per cent change month ago -8.4 -3.9 0.1
Per cent change year ago -0.5 -6.3 -9.8 Per cent change year ago -0.8 -7.4 -9.7
Agricultural raw materials 186.9 173.7 167.1 Agricultural raw materials 135.1 127.3 124.4
Per cent change month ago -4.4 -7.1 -3.8 Per cent change month ago -4.3 -5.8 -2.2
Per cent change year ago 0.6 -8.9 -13.5 Per cent change year ago 0.3 -10.0 -13.4
Cotton 101.2 96.2 89.1 Cotton 73.2 70.5 66.3
Per cent change month ago -3.9 -4.9 -7.4 Per cent change month ago -3.7 -3.7 -5.9
Per cent change year ago -10.0 -27.1 -36.7 Per cent change year ago -10.3 -28.0 -36.6
Softwood 144.7 138.3 132.3 Softwood 104.6 101.3 98.5
Per cent change month ago -2.5 -3.1 -2.8
Per cent change month ago -2.6 -4.4 -4.3
Per cent change year ago -6.0 -8.5 -8.4
Per cent change year ago -5.7 -7.4 -8.5
W oodpulp 672.4 650.0 629.9
W oodpulp 930.3 887.3 846.0
Per cent change month ago -3.7 -3.3 -3.1
Per cent change month ago -3.8 -4.6 -4.7
Per cent change year ago -4.0 -8.4 -10.8
Per cent change year ago -3.7 -7.3 -10.9
Non-ferrous metals 171.1 170.2 171.0
Non-ferrous metals 236.7 232.3 229.6
Per cent change month ago -7.8 -0.5 0.5
Per cent change month ago -8.0 -1.9 -1.2
Per cent change year ago -10.5 -13.0 -16.6
Per cent change year ago -10.2 -12.0 -16.7
Copper 5327.9 5532.2 5635.0
Copper 7370.9 7551.4 7568.2
Per cent change month ago -11.2 3.8 1.9
Per cent change month ago -11.3 2.4 0.2
Per cent change year ago -11.4 -11.9 -17.0
Per cent change year ago -11.1 -10.8 -17.1
Aluminium 1571.8 1518.8 1504.0
Aluminium 2174.5 2073.2 2020.0
Per cent change month ago -5.2 -3.4 -1.0
Per cent change month ago -5.3 -4.7 -2.6
Per cent change year ago -7.6 -12.2 -13.8
Per cent change year ago -7.3 -11.1 -13.9
Lead 1406.9 1451.7 1501.8
Lead 1946.4 1981.6 2017.0
Per cent change month ago -15.2 3.2 3.4
Per cent change month ago -15.3 1.8 1.8
Per cent change year ago -18.4 -17.6 -16.0
Per cent change year ago -18.2 -16.6 -16.1
Z inc 1344.2 1403.5 1424.0
Z inc 1859.6 1915.7 1912.5
Per cent change month ago -10.3 4.4 1.5
Per cent change month ago -10.4 3.0 -0.2
Per cent change year ago -21.8 -17.4 -15.7
Per cent change year ago -21.6 -16.4 -15.8
Nickel 13675.8 13098.6 13530.0
Nickel 18919.9 17879.4 18171.7
Per cent change month ago -7.1 -4.2 3.3
Per cent change month ago -7.2 -5.5 1.6
Per cent change year ago -20.7 -22.9 -24.3
Per cent change year ago -20.5 -21.9 -24.5
Iron ore, steel scrap 483.9 454.9 461.0
Iron ore, steel scrap 669.4 620.9 619.2
Per cent change month ago -11.8 -6.0 1.4
Per cent change month ago -11.9 -7.2 -0.3
Per cent change year ago 10.3 1.8 2.2
Per cent change year ago 10.6 3.0 2.0
Energy raw materials 281.0 298.4 299.4
Energy raw materials 388.7 407.4 402.1
Per cent change month ago -1.3 6.2 0.3
Per cent change month ago -1.4 4.8 -1.3
Per cent change year ago 32.7 32.8 24.4
Per cent change year ago 33.1 34.4 24.2
Coking coal 324.5 313.8 314.8
Coking coal 448.9 428.4 422.8
Per cent change month ago -3.5 -3.3 0.3
Per cent change month ago -3.6 -4.6 -1.3
Per cent change year ago 21.2 4.1 -6.9
Per cent change year ago 21.6 5.3 -7.0
Crude oil 279.0 297.7 298.7
Crude oil 386.0 406.4 401.2
Per cent change month ago -1.2 6.7 0.3
Per cent change month ago -1.3 5.3 -1.3
Per cent change year ago 33.3 34.6 26.4
Per cent change year ago 33.7 36.2 26.2
Source : SW EDBANK and HW W A-Institute for Economic Research Hamburg
Source : SW EDBANK and HW W A-Institute for Economic Research Hamburg
Swedbank
Economic Research Department Swedbank’s monthly Energy & Commodities newsletter is published as a service to our
customers. We believe that we have used reliable sources and methods in the preparation
SE-105 34 Stockholm, Sweden of the analyses reported in this publication. However, we cannot guarantee the accuracy or
Phone +46-8-5859 7740 completeness of the report and cannot be held responsible for any error or omission in the
ek.sekr@swedbank.se underlying material or its use. Readers are encouraged to base any (investment) decisions
www.swedbank.se on other material as well. Neither Swedbank nor its employees may be held responsible for
Legally responsible publisher losses or damages, direct or indirect, owing to any errors or omissions in Swedbank’s
Cecilia Hermansson, +46-88-5859 7720 monthly Energy & Commodities newsletter.
Magnus Alvesson, +46-8-5859 3341
Jörgen Kennemar, +46-8-5859 7730
4