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Christoph Eibl: Outlook for commodity prices (Day 1 - Session 1: Strategic metals and the clean-tech revolution)


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Day 1 - Session 1: Strategic metals and the clean-tech revolution

Outlook for commodity prices

Objective Capital Global Mining Investment Conference 2010
Stationers' Hall, City of London
28-29 September 2010
Christoph Eibl - Tiberius Asset Management

Published in: Investor Relations
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Christoph Eibl: Outlook for commodity prices (Day 1 - Session 1: Strategic metals and the clean-tech revolution)

  1. 1. day 1 - session 2: SPECIALITY METALS<br />Outlook for commodity prices <br />ChristophEibl– Managing Partner,Tiberius Asset Management<br />
  2. 2. GLOBAL MININGINVESTMENT CONFERENCE 2010<br />Lead sponsors:<br />Media partners:<br />Other sponsors & participating organisations:<br />
  3. 3. CommoditiesMarket Outlook<br />Global Mining Investment Conference <br />2010<br />
  4. 4. I. Tiberius Group<br />Introduction<br />Tiberius Group<br /><ul><li>A Swiss firm specialized in commodity management, with its headquarters in Zug as well asoffices in Geneva and Stuttgart.
  5. 5. Expertise in fixed-income management on the basis of institutional funds.
  6. 6. 33 employees with wide-ranging experience in commodity trading, portfolio management and research.
  7. 7. A model-supported, quantitative investment philosophy with a structured and transparent investment process.
  8. 8. The firm’s core competence lies in the active management of long- only and long/shortportfolios.
  9. 9. Total assets currently under management by the Tiberius Group: 2.2 billion USD
  10. 10. Tiberius is regulated by FINMA (Swiss Banking Supervisory Authority)</li></ul>4<br />
  11. 11. Tiberius Leading Indicator Index - despite slight decline at a very high level<br />5<br />Market Outlook<br />Cyclical trend<br />
  12. 12. Market Outlook<br />Evaluation of forward curves <br />Forward curves have improved steadily since Q2 2009<br />6<br />
  13. 13. Speculative sentiment has improved again<br />7<br />Market Outlook<br />Short term capital flows<br />
  14. 14. Continued buying interest of institutional market participants<br />8<br />Market Outlook<br />Long term capital flows<br />
  15. 15. Market Outlook<br />Conclusion<br />9<br />The Lights for commodity investments mainly give positive signals<br />1. Ecomomic Cycle- Uptrend in industrial production is intact<br />2. Forward Curves- Gradual improvement<br />3. Spot Price Level- After correction many markets at attractive entry level<br />4. Short Term Speculative Capital Flows- Sentiment has turned especially in the agricultural sector<br />5. Long Term Insitutional Capital Flows- Sustained Interest in Commodities<br />6. Market Technicals- Lately first technical buy signals<br />Conclusion: Outlook has recently improved significantly<br />
  16. 16. Our yearend forecast is still the same<br />10<br />Market Outlook<br />Long term market analysis<br />
  17. 17. Market Outlook<br />Crude oil<br />Cruide Oil globally attractive; in the US, especially in Cushing, still high excess inventories<br />11<br />
  18. 18. Market Outlook<br />Crude Oil<br />Despite constant demand high increasing excess inventories<br />12<br />
  19. 19. Market Outlook<br />Gasoline<br />US Gasoline consumption is now at the level of 2008<br />13<br />
  20. 20. Market Outlook<br />Natural Gas<br />Enhanced storage capacity and high short-exposure argue against a price decline; <br />like in 2009 sudden price reversal is expected in 2010<br />14<br />
  21. 21. Market Outlook<br />Distillates<br />US distillate consumption is disappointing given the economic upswing<br />15<br />
  22. 22. Market Outlook<br />Industrial Metals<br />High correlation of industrialmetalsbased on a constant demand;<br />average of the six at the LME trated metals approximantely +0.69 in 2010 <br />16<br />
  23. 23. Market Outlook<br />Base Metals<br />Rolling correlation of base metals and stock market currently near top<br />17<br />
  24. 24. Market Outlook<br />Base Metals<br />Tin and copper - the only base metals showing market deficit in 2011<br />18<br />
  25. 25. Market Outlook<br />Copper<br />Structural deficit of copper since turn of the millennium<br />19<br />
  26. 26. Market Outlook<br />Precious metal<br />Price ratio between platinum and palladium again on a long-term average<br />20<br />
  27. 27. Market Outlook<br />Gold<br />Gold benefited by the end of Q2 2010 from excessive risk aversion <br />21<br />
  28. 28. Market Outlook<br />Gold<br />The original selling points for gold have disappeared<br />In the year of 2000<br />Gold market in comparison<br />In the year of 2010<br />1. Physical market balance<br />High surplus<br />Market deficit<br />2. Strategic positions<br />30% of production hedged<br />Mines are unhedged<br />Extreme net-long<br />3. Spekulative positions<br />Net-short<br />Excessively positive<br />4. Sentiment/Market penetration <br />Extremely negative<br />Too high<br />5. Relative Value (CPI, Commod.)<br />Too low<br />6. Macro-environment<br />- Inflation risks<br />Low/middle<br />Low/middle<br />- Deflation/systemic-risk<br />Middle<br />High<br />22<br />
  29. 29. Market Outlook<br />Gold<br />Seasonal tendence of gold purchase at the futures market and ETFs in the last years<br />23<br />
  30. 30. Market Outlook<br />Softs<br />Increasing Net-Long volume of the Non-Commercials in grain sector<br />24<br />
  31. 31. Market Outlook<br />Wheat<br />Significant production losses compared to previous year caused by extreme weather events <br />25<br /> USDA: expected declines in wheat production and exports<br />in million tonnes<br />Exports<br />Production<br />
  32. 32. Market Outlook<br />Wheat<br />Wheat stocks are still well above critically low level of 2007/08<br />26<br />
  33. 33. Market Outlook<br />Soybeans/ Corn<br />Expected decline in the spread soybean vs. corn<br />27<br /> Soybeans vs. CornDifference nearby-contracts in US cents per bushel<br /><ul><li>Substitution of wheat by corn as </li></ul> animal feed<br /><ul><li> Expected acreage shift in the U.S.: Growth of double-cropping (wheat followed by soybeans)
  34. 34. Potential for higher U.S. corn exports
  35. 35. Global corn market tighter than </li></ul> soybeans<br />
  36. 36. Market Outlook<br />Cotton<br />Continuous improvement of the fundamental data due to rising demand<br />28<br />
  37. 37. 29<br />Market Outlook<br />Conclusion<br />Metals will stay in contango in the course of the next 12 months<br />Backwardation<br />Contango<br />Market surplus<br />High inventories<br />Market deficit<br />Low inventories<br />
  38. 38. Contact<br />Tiberius Asset Management AG<br />Baarerstr. 53<br />CH-6300 Zug <br />Schweiz<br />+41 41 560 00 81 (Phone)<br />+41 41 560 00 82 (Fax)<br /><br /><br />
  39. 39.
  40. 40. GLOBAL MININGINVESTMENT CONFERENCE 2010<br />Lead sponsors:<br />Media partners:<br />Other sponsors & participating organisations:<br />