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1. Energy & Commodities
Monthly newsletter from Swedbank’s Economic Research Department
by Jörgen Kennemar No. 3 • 12 March 2010
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 1588.
Magnus Alvesson. +46-8-5859 3341. Jörgen Kennemar. +46-8-5859 1478.
Price drop in the commodity market
• Swedbank’s total commodity price index fell by 3.6% in US dollars in
February. Metal prices posted the largest decline, followed by food and
energy.
• Growing uncertainty about the strength of the global economy and the effects
of China’s austerity package have led to volatile commodity prices.
• Metal inventories continue to grow. The largest imbalances are in aluminium
and nickel, where stocks are at historically high levels. Copper inventories
have also risen, but the earthquake in Chile in late February has increased
the risk of lower copper supplies.
Swedbanks Commodity price index, USD
Source: Swedbank
00 01 02 03 04 05 06 07 08 09 10
Index
50
100
150
200
250
300
350
400
450
500
Total index exclusive energy commodities
Total index
Food
Energy raw materials
2000=100
Global commodity prices fell on a broad front in
February, which contributed to a 3.6% decline
Swedbank’s total commodity price index in USD
compared with the previous month. In SEK prices
dropped nearly 2%. Measured in euro, commodity
prices rose by 0.6% due to the decline in the euro
against the dollar.
Industrial metals posted the weakest trend, with
prices falling by an average of 7.3% in USD. This
was the first time since September 2009 that the
price index for metals fell. The largest declines were
for zinc and lead, by 11.5% and 10%, respectively,
compared with January. A long period of price gains
for copper came to an end, as was the case with
aluminium as well. The price of nickel rose, partly
due to production disruptions in connection with
strikes at the largest mines in Brazil. At the same
time there are expectations that nickel consumption
will increase due to strong steel production in
China.
Prices of energy resources (oil and coal) dropped in
February after posting a strong gain in January.
Prices fell by an average of 3.5% in USD and have
returned to the levels from December last year. The
price of oil and coal also declined measured in
SEK. From a 12-month perspective, however,
Sweden's oil bill has grown considerably more
expensive, climbing nearly 50%. As a result,
transport costs have risen significantly in the
Swedish economy in recent months after previously
contributing negatively to the inflation rate. In

2. Energy & Commodities
Monthly newsletter from Swedbank’s Economic Research Department, continued
No. 3 • 12 March 2010
2 (4)
January and February transport prices rose by an
average of 7% on an annual basis.
The improved global economy has not had as clear
an impact on food prices. Since February of last
year food prices have risen by 17% in Swedbank’s
commodity price index. This is significantly weaker
than economically sensitive metal prices, which
have more than doubled in the last year.
Food prices have been bifurcated. Grain prices are
still under pressure from large inventories after last
year's record harvests, and in February fell by 5%
in USD. In SEK the price trend has been even more
unfavourable for Swedish grain producers. Other
foods such as sugar, tea and cocoa prices have
trended in the opposite direction. Unfavourable
weather conditions have led to lower production,
which has pushed prices to historically high levels.
Because of expectations that production will
increase this spring in several major food-producing
countries, including Brazil, sugar prices have
dropped this month.
Increased volatility in commodity markets
Although commodity prices fell on average in
February, the market reported relatively large
fluctuations. This is particularly true of metals and
oil, where prices have been volatile. This may be
partly due to increased uncertainty about the global
economy, especially how China's austerity
measures will affect demand for raw materials and
input goods. The diminishing impact from the
infrastructure investments China introduced on a
wide scale in 2009 could lead to weaker raw
material demand in 2010. Since the Chinese
economy accounts for a significant share of global
commodity consumption, notably metals, there
would be a sizable impact on the market if its
demand for raw materials were to grow slower than
expected. Economic data from China will be
especially important to monitor in the months ahead
to see how effective austerity measures are. There
are as yet no clear signs from trade data that
China's growth rate has slowed. Its exports and
imports both rose by slightly over 40% in February
compared with a year earlier. This has eased the
financial market’s concerns about lower Chinese
commodity demand, and instead prices turned
higher in the second half of February and early
March.
Currency fluctuations are another reason for price
swings in commodity markets. Growing concern
about the euro, in no small part due to the situation
in Greece and weak European economy, has driven
the US dollar higher since December 2009. A
stronger dollar means more expensive raw
materials for countries that buy them in other
currencies. This means less consumption and lower
prices. There is a co-variation between certain raw
materials such as gold and the dollar. A further
appreciation in the dollar would therefore pressure
gold prices downward from today's high levels. In
2010 this co-variation has been less evident.
Increased uncertainty about the fiscal strength of
the EMU zone is certainly a factor why the price of
gold remains high despite a stronger dollar.
Increased supply of metals
Metal inventories continue to rise, which could
eventually lead to lower prices, provided the global
economy doesn't grow more than expected.
Though global conditions have improved in recent
months, it was from low levels. At the same time
investment needs are limited, primarily in OECD
countries. The largest imbalances are in aluminium.
Still, aluminium prices have risen by slightly over
50% since February 2009. Copper inventories are
also rising, and reached their highest level since
February 2009, before China began building up its
metal inventories.
Aluminium price and stock level
Source: Reuters EcoWin
00 01 02 03 04 05 06 07 08 09 10
USD
750
1000
1250
1500
1750
2000
2250
2500
2750
3000
3250
Ton(metric)(millions)
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
Aluminium price, right scale
Stock level aluminium, left scale
Chile is the world's largest copper producer,
accounting for over one third of global production.
The devastating earthquake on February 27 has
increased uncertainty about future supplies. The
earthquake has not devastated the country's mining
industry as feared, however. Instead, disruptions to
electricity distribution and damaged infrastructure
(roads, railroads and ports) are what could lead to a
lower supply of copper, thereby affecting prices.
Fears of limited copper supplies would presumably
mean higher copper prices. Strong trade numbers
from China further support the assumption that
copper demand will remain strong.
Strong oil consumption growth in Asia
The fundamentals in the oil market have improved
in recent quarters, but there is still a bifurcated
picture: steadily growing oil consumption in
emerging economies and continued weakness in
OECD countries. US oil inventories remain at

3. Energy & Commodities
Monthly newsletter from Swedbank’s Economic Research Department, continued
No. 3 • 12 March 2010
3 (4)
historically high levels. Besides the fragile recovery
in the US and Europe, oil consumption is being held
in check by energy efficiency improvements and
advances in alternative energy sources. In
emerging economies, consumption of oil and oil
products will continue to steadily rose, and oil
consumption per capita remains far from current
levels in OECD countries.
Global oil consumption growth, 2000=100
China OECD World
Source: IEA
00 01 02 03 04 05 06 07 08 09 10 11
Index
90
100
110
120
130
140
150
160
170
180
190
200
2000=100
What will happen to the price of oil in the short
term? The sluggish recovery in OECD countries
and production rates that exceed oil consumption
are holding down the price of oil. The OPEC
meeting on March 17 could provide guidance on
production volumes. OPEC countries are struggling
with production levels above their targets, so we
can expect pressure on members to turn down the
taps. At the same time the global economy rests on
shaky ground, so higher oil prices could jeopardise
the recovery. Domestic political goals could also
thwart production cutbacks, especially among oil
producers that have been hard hit by the global
slowdown. The dollar is yet another uncertainty, at
least partly due to the fiscal challenges in the US
and EMU countries. A further increase in the dollar
would limit the rise in oil prices. To date the
stronger dollar has had limited impact on the price
of oil. This is an indication that global demand has
grown, especially in Asia.
Jörgen Kennemar

4. Energy & Commodities
Monthly newsletter from Swedbank’s Economic Research Department, continued
No. 3 • 12 March 2010
4 (4)
Swedbank Commodity Index - US$ -
Basis 2000 = 1oo 12-03-10
12.2009 1.2010 2.2010
Total index 251,5 260,6 251,3
Per cent change month ago -1,4 3,6 -3,6
Per cent change year ago 60,4 63,3 62,7
Total index exclusive energy 219,7 224,6 216,1
Per cent change month ago 3,9 2,2 -3,8
Per cent change year ago 33,2 41,3 38,8
Food, tropical beverages 227,0 228,8 218,2
Per cent change month ago 3,7 0,8 -4,7
Per cent change year ago 30,6 20,8 17,2
Cereals 204,7 197,3 187,7
Per cent change month ago 3,2 -3,6 -4,9
Per cent change year ago 7,2 -4,4 -4,4
Tropical beverages and tobacco 246,1 255,7 243,3
Per cent change month ago 4,5 3,9 -4,8
Per cent change year ago 42,7 39,3 31,2
Coffee 125,0 126,9 123,4
Per cent change month ago 4,4 1,5 -2,8
Per cent change year ago 21,2 17,1 14,7
Oilseeds and oil 200,5 191,4 183,8
Per cent change month ago 2,0 -4,5 -4,0
Per cent change year ago 21,2 0,2 1,5
Industrial raw materials 217,6 223,4 215,5
Per cent change month ago 4,0 2,7 -3,5
Per cent change year ago 33,9 48,8 46,7
Agricultural raw materials 156,9 158,7 157,7
Per cent change month ago 2,7 1,1 -0,6
Per cent change year ago 42,2 44,5 50,8
Cotton 74,7 71,9 74,5
Per cent change month ago 8,7 -3,7 3,6
Per cent change year ago 66,0 46,4 63,0
Softwood 139,8 138,6 136,4
Per cent change month ago -0,3 -0,9 -1,6
Per cent change year ago 24,3 28,3 33,2
Woodpulp 796,1 814,4 840,2
Per cent change month ago 3,0 2,3 3,2
Per cent change year ago 18,6 31,7 42,3
Non-ferrous metals 225,6 237,0 219,7
Per cent change month ago 6,3 5,1 -7,3
Per cent change year ago 83,9 89,8 80,7
Copper 6962,6 7385,6 6835,4
Per cent change month ago 4,3 6,1 -7,4
Per cent change year ago 124,9 129,3 106,3
Aluminium 2178,4 2236,2 2043,9
Per cent change month ago 11,8 2,7 -8,6
Per cent change year ago 46,2 57,6 54,1
Lead 2324,5 2367,7 2131,4
Per cent change month ago 0,7 1,9 -10,0
Per cent change year ago 140,7 109,2 92,2
Zinc 2366,0 2434,1 2155,2
Per cent change month ago 7,9 2,9 -11,5
Per cent change year ago 115,3 105,0 93,9
Nickel 16989,9 18434,6 18872,4
Per cent change month ago 0,0 8,5 2,4
Per cent change year ago 76,4 63,1 81,4
Iron ore, steel scrap 350,0 350,1 351,5
Per cent change month ago 1,6 0,0 0,4
Per cent change year ago -14,2 8,1 7,8
Energy raw materials 265,6 276,6 266,9
Per cent change month ago -3,3 4,1 -3,5
Per cent change year ago 73,4 72,9 73,4
Coking coal 306,1 365,4 347,9
Per cent change month ago 4,3 19,4 -4,8
Per cent change year ago 2,4 16,5 23,3
Crude oil 263,7 272,5 263,2
Per cent change month ago -3,7 3,3 -3,4
Per cent change year ago 80,0 78,2 77,7
Swedbank Commodity Index - SKr -
Basis 2000 = 1oo 12-03-10
12.2009 1.2010 2.2010
Total index 195,2 202,2 198,3
Per cent change month ago 1,7 3,6 -1,9
Per cent change year ago 43,5 44,3 38,4
Total index exclusive energy 170,5 174,3 170,5
Per cent change month ago 7,2 2,2 -2,2
Per cent change year ago 19,1 24,9 18,2
Food, tropical beverages 176,2 177,6 172,2
Per cent change month ago 7,0 0,8 -3,1
Per cent change year ago 16,9 6,7 -0,3
Cereals 158,9 153,1 148,1
Per cent change month ago 6,5 -3,6 -3,3
Per cent change year ago -4,1 -15,5 -18,6
Tropical beverages and tobacco 191,0 198,4 192,0
Per cent change month ago 7,8 3,9 -3,3
Per cent change year ago 27,6 23,1 11,7
Coffee 97,0 98,5 97,4
Per cent change month ago 7,7 1,5 -1,1
Per cent change year ago 8,5 3,4 -2,4
Oilseeds and oil 155,6 148,5 145,0
Per cent change month ago 5,3 -4,5 -2,4
Per cent change year ago 8,5 -11,5 -13,6
Industrial raw materials 168,9 173,3 170,1
Per cent change month ago 7,3 2,7 -1,9
Per cent change year ago 19,8 31,5 24,9
Agricultural raw materials 121,8 123,2 124,4
Per cent change month ago 5,9 1,1 1,0
Per cent change year ago 27,3 27,7 28,3
Cotton 58,0 55,8 58,8
Per cent change month ago 12,2 -3,7 5,4
Per cent change year ago 48,5 29,4 38,7
Softwood 108,5 107,6 107,6
Per cent change month ago 2,9 -0,9 0,1
Per cent change year ago 11,2 13,4 13,4
Woodpulp 617,8 632,0 663,0
Per cent change month ago 6,3 2,3 4,9
Per cent change year ago 6,1 16,4 21,1
Non-ferrous metals 175,1 183,9 173,4
Per cent change month ago 9,6 5,1 -5,7
Per cent change year ago 64,5 67,7 53,8
Copper 5403,6 5731,9 5394,0
Per cent change month ago 7,6 6,1 -5,9
Per cent change year ago 101,2 102,7 75,5
Aluminium 1690,6 1735,5 1612,9
Per cent change month ago 15,3 2,7 -7,1
Per cent change year ago 30,8 39,2 31,2
Lead 1804,0 1837,5 1682,0
Per cent change month ago 3,9 1,9 -8,5
Per cent change year ago 115,3 84,9 63,6
Zinc 1836,2 1889,1 1700,7
Per cent change month ago 11,3 2,9 -10,0
Per cent change year ago 92,6 81,2 65,0
Nickel 13185,6 14306,9 14892,8
Per cent change month ago 3,2 8,5 4,1
Per cent change year ago 57,8 44,1 54,4
Iron ore, steel scrap 271,6 271,7 277,4
Per cent change month ago 4,8 0,0 2,1
Per cent change year ago -23,2 -4,5 -8,3
Energy raw materials 206,1 214,6 210,6
Per cent change month ago -0,2 4,1 -1,9
Per cent change year ago 55,1 52,8 47,5
Coking coal 237,6 283,6 274,5
Per cent change month ago 7,6 19,4 -3,2
Per cent change year ago -8,3 2,9 5,0
Crude oil 204,7 211,5 207,7
Per cent change month ago -0,6 3,3 -1,8
Per cent change year ago 61,1 57,5 51,3
Swedbank
Economic Research Department
SE-105 34 Stockholm, Sweden
Phone +46-8-5859 1028
ek.sekr@swedbank.se
www.swedbank.se
Legally responsible publisher
Cecilia Hermansson, +46-88-5859 1588
Magnus Alvesson, +46-8-5859 3341
Jörgen Kennemar, +46-8-5859 1478
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
of the analyses reported in this publication. However, we cannot guarantee the accuracy or
completeness of the report and cannot be held responsible for any error or omission in the
underlying material or its use. Readers are encouraged to base any (investment) decisions
on other material as well. Neither Swedbank nor its employees may be held responsible for
losses or damages, direct or indirect, owing to any errors or omissions in Swedbank’s
monthly Energy & Commodities newsletter.