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1. Energy & Commodities
Monthly newsletter from Swedbank’s Economic Research Department
by Jörgen Kennemar No. 9 • 8 October 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 7720.
Magnus Alvesson. +46-8-5859 3341. Jörgen Kennemar. +46-8-5859 7730.
Rising commodity prices – economic risks persist
• Swedbank’s Total Commodity Price Index rose by 1.2% in US dollars in
September compared with the previous month. The increase was mainly
driven by higher metal and food prices. At the same time supply conditions
have tightened, especially for copper and nickel, which is also an indication
of how little capacity is being added.
• The weakening of the dollar during the summer and fall is another factor
driving commodity prices higher on a broad front. Measured in Swedish
kronor and euro, prices have trended lower in the last 3-4 months, which is
easing inflation impulses from commodity markets.
• Demand for precious metals continued to rise in September, not least due to
expectations that the US Federal Reserve will resort to additional monetary
stimulus measures to strengthen the economy. A further decline in the dollar
and uncertainty about the strength of the global economy would indicate that
the price of gold could increase further in the short term, which is also
expected to push the price of silver higher.
Swedbanks total Commodity Price Index in USD, 2000=100
Källa: Swedbank
05 06 07 08 09 10
Index
100
150
200
250
300
350
400
450
500
Total Index excl Energy
commodities
Total index
Energy
commodities
Food
Swedbank’s Total Commodity Price Index rose by
1.2% in USD in September compared with the
previous month. This marks the third consecutive
month that the index has moved higher, which
indicates that global growth is continuing to rise.
The price outlook is being affected by major swings
in the currency market. Weaker growth prospects
for the US economy and expectations of a further
monetary stimulus are pushing the dollar lower.
The weakening of the dollar this past summer has
clearly had an effect on commodity markets, since
the majority of global commodity trading is priced in
dollars. Since the beginning of June the US
currency has depreciated by just over 15% against
the euro and Swedish krona. For European
companies this means cheaper commodity imports
and probably more demand.

2. Energy & Commodities
Monthly newsletter from Swedbank’s Economic Research Department, continued
No. 9 • 8 October 2010
2 (4)
Swedbanks total Commodity Price Index in USD and SEK,
December 2009=100
90
95
100
105
110
115
120
2009m12 2010m1 2010m2 2010m3 2010m4 2010m5 2010m6 2010m7 2010m8 2010m9
SEK
USD
In September Swedbank’s Total Commodity Price
Index fell by 2.2% in SEK compared with August.
Looked at over the last three months, the index has
fallen by 5.6%, against an increase of 5% in USD.
Tighter supply conditions for metals
Higher food and metal prices contributed to the
increase in the Total Commodity Price Index in
USD in September.
Stock levels for non-ferrous metals, million tons
Source: LME, Reuters EcoWin
00 01 02 03 04 05 06 07 08 09 10
Ton(metric)
-25000
0
25000
50000
75000
100000
125000
150000
175000
200000
225000
Ton(metric)(millions)
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
Copper
Zink
Lead
Nickel, right scal
Among metal prices, nickel, copper and lead noted
the biggest increases, an indication that global
industry is continuing to expand at a decent rate.
Besides the fact that metal consumption has grown,
supply has tightened for several metals, notably
copper, where inventories have dropped to their
lowest levels since last winter. This trend is
expected to continue for the next year, according to
the latest forecast from the Copper Study Group.
Too little capacity expansion and lower copper
concentrates would seem to point to further price
hikes, as long as the economic slowdown
anticipated in 2011 isn’t weaker than projected. At
the time of writing the price of copper had reached
USD 8 000 per ton, the highest level in two years.
Tin is another case where inventories have fallen at
the same time that prices have soared. Nickel has
posted the biggest price gain among industrial
metals in Swedbank’s Commodity Price Index since
the start of the year, climbing over 30% in USD.
Growing demand for metals is also evident in recent
projections from the World Steel Association
(WST), which sees steel consumption rising by 13%
in volume in 2010, following last year's decline of
7%. A significant share of higher steel consumption
was back in the first half of the year, however, when
the global industrial climate improved and
companies began building up inventory. Mature
industrial countries account for the biggest increase
in steel consumption – 23% after the severe
downturn in 2009. For emerging economies, led by
China, growth is expected to slow for 2010 as a
whole, although they still represent slightly over
70% of global consumption. As a whole, steel
consumption will remain at a higher level in 2010
before the global economy eventually slows.
Next year steel consumption is expected to grow at
a significantly slower pace as economic policies are
tightened and the inventory built up by industry
starts to shrink. Low capacity utilisation and
uncertainty about the strength of the economy are
limiting or delaying investment by OECD countries.
The industrialisation of emerging economies and
growth in urban populations will mean higher
demand for steel and other metals for the
foreseeable future. Forecasts for 2011 point to a
further slowdown in consumption, however, partly
due to austerity measures, particularly in China, to
avoid a future overheating in the housing market,
among other areas.
Despite that demand is expected to grow at a
slower pace next year, the steel market faces
supply restrictions. Tighter requirements on energy
efficiency have forced a number of small Chinese
steel manufacturers to shut down in 2010 when
they could not meet the demands authorities have
made.
Stable energy prices
Energy prices have been the most stable element in
Swedbank’s Commodity Price Index in recent
months. The index for energy products, which
includes coal and crude oil, rose by a marginal
0.3% in September from the previous month. Crude
prices, which weigh heavily in the index, have
fluctuated in range of 75-80 dollars a barrel in 2010.
The decline in the dollar in recent weeks means,
however, that the price of oil in USD tends to rise at
the same time, which could lead to higher demand
in countries where oil consumption is increasing
rapidly. We do not expect OPEC countries to
change their production quotas at the summit in
October, partly because of the economic
uncertainty.

3. Energy & Commodities
Monthly newsletter from Swedbank’s Economic Research Department, continued
No. 9 • 8 October 2010
3 (4)
Poor harvests are driving up food prices
The price index for foods continues to rise rapidly,
climbing 15% since June in USD.
Food prices in USD, December 2008=100
Source: Reuters EcoWin
jan mar maj jul sep nov jan mar maj jul sep nov jan mar maj jul
08 09 10
Index
90
100
110
120
130
140
150
160
170
180
Sugar, beverages
Food prices, total
2008-12-31=100
Cereals
Within a short span, lower grain supplies have
driven up grain prices to the highest levels since the
fall of 2008, even though supply restrictions are less
extensive than compared with the food crisis two
years ago. Unfavourable weather conditions have
affected the supply of other foods such as rice,
which is likely to further rise in price in the next half
year. Countries where food consumption is high will
be hardest hit by the global food price increase.
Over time this tends to drive up inflation. For
agricultural products, including pulp and cotton,
prices rose by 2.5% in September, which means
that the price level is about 26% higher than at the
same time last year. There are major variations
between products, however. Tight supply conditions
for cotton and pulp have led to the largest price
increases in the last year.
Gold prices reach new record levels
Demand for precious metals continued to
accelerate during the fall, driving up the price of
gold to over 1 300 dollars a troy ounce.
The gold price and the USD
Source: Reuters EcoWin
00 01 02 03 04 05 06 07 08 09 10
0.0070
0.0075
0.0080
0.0085
0.0090
0.0095
0.0100
0.0105
0.0110
0.0115
0.0120
0.0125
0.0130
USD/Ounce(troy)
200
300
400
500
600
700
800
900
1000
1100
1200
1300
1400
Gold price, left scale
USD, real effective
exchange rate, right scale
The rise in the price of gold has also contributed to
higher demand for silver in financial markets, at the
same time that industrial consumption of silver is on
the rise. So far this year silver prices have risen by
around 25%, compared with 18% for gold. Growing
capital inflows from investors are an important
reason for the strong demand for gold. Data from
the World Gold Council show that the capital inflows
from financial players rose by slightly over 400%
during the second quarter of 2010 compared with a
year earlier. As a result, demand is increasing
considerably faster than supply. Low interest rates
and expectations of additional monetary stimulus
measures, especially in the US, have strengthened
investors’ interest in gold in recent weeks at the
same time that the dollar has been under pressure.
We expect that the low interest rates and uncertain
economic outlook, with the inherent risk of deflation,
could push gold prices beyond today's already high
levels. At the same time there are concerns in the
financial market that expansive economic policies
will eventually lead to higher inflation, which is also
driving up the price of gold.
Jörgen Kennemar

4. Energy & Commodities
Monthly newsletter from Swedbank’s Economic Research Department, continued
No. 9 • 8 October 2010
4 (4)
Swedbank Commodity Index - US$ -
Basis 2000 = 1oo 04-10-10
7.2010 8.2010 9.2010
Total index 264,8 270,0 273,1
Per cent change month ago 1,9 1,9 1,2
Per cent change year ago 22,3 13,6 19,3
Total index exclusive energy 256,3 265,6 273,8
Per cent change month ago 7,1 3,6 3,1
Per cent change year ago 38,6 32,5 36,7
Food, tropical beverages 225,8 234,1 245,9
Per cent change month ago 6,3 3,7 5,0
Per cent change year ago 11,5 10,9 19,6
Cereals 193,4 215,5 240,1
Per cent change month ago 11,0 11,4 11,4
Per cent change year ago 3,1 19,3 39,4
Tropical beverages and tobacco 249,0 253,6 264,4
Per cent change month ago 5,9 1,8 4,3
Per cent change year ago 21,0 14,5 16,7
Coffee 153,4 157,5 163,6
Per cent change month ago 7,9 2,7 3,9
Per cent change year ago 35,9 34,0 40,5
Oilseeds and oil 196,8 204,2 209,7
Per cent change month ago 4,6 3,8 2,7
Per cent change year ago -4,0 -2,1 15,3
Industrial raw materials 265,1 274,7 281,8
Per cent change month ago 7,3 3,6 2,6
Per cent change year ago 47,5 39,1 41,8
Agricultural raw materials 166,8 170,7 175,0
Per cent change month ago 2,1 2,3 2,5
Per cent change year ago 36,1 29,8 26,4
Cotton 79,0 86,6 96,8
Per cent change month ago -2,9 9,6 11,8
Per cent change year ago 33,4 47,8 60,8
Softwood 149,1 150,0 149,2
Per cent change month ago 3,5 0,6 -0,5
Per cent change year ago 27,7 21,7 15,0
Woodpulp 978,6 976,6 972,2
Per cent change month ago 0,9 -0,2 -0,5
Per cent change year ago 53,4 46,3 37,6
Non-ferrous metals 214,8 232,5 243,9
Per cent change month ago 3,4 8,2 4,9
Per cent change year ago 23,6 14,1 22,1
Copper 6734,6 7283,2 7708,9
Per cent change month ago 3,6 8,1 5,8
Per cent change year ago 29,1 17,8 24,4
Aluminium 1987,8 2112,1 2162,0
Per cent change month ago 2,9 6,3 2,4
Per cent change year ago 19,2 9,4 17,9
Lead 1836,4 2071,8 2183,6
Per cent change month ago 7,8 12,8 5,4
Per cent change year ago 9,4 8,5 -0,9
Zinc 1843,4 2042,6 2151,0
Per cent change month ago 5,8 10,8 5,3
Per cent change year ago 16,8 12,2 14,2
Nickel 19512,8 21370,0 22640,6
Per cent change month ago 0,7 9,5 5,9
Per cent change year ago 22,1 8,8 29,6
Iron ore, steel scrap 658,0 659,3 661,9
Per cent change month ago 15,1 0,2 0,4
Per cent change year ago 92,1 89,3 89,2
Energy raw materials 268,6 271,9 272,8
Per cent change month ago -0,2 1,2 0,3
Per cent change year ago 16,4 7,0 12,9
Coking coal 362,5 341,9 354,8
Per cent change month ago -2,6 -5,7 3,8
Per cent change year ago 31,3 26,0 39,4
Crude oil 264,3 268,7 269,1
Per cent change month ago 0,0 1,7 0,1
Per cent change year ago 15,6 6,0 11,6
Source : SWEDBANK and HWWA-Institute for Economic Research Hamburg
Swedbank Commodity Index - SKr -
Basis 2000 = 1oo 04-10-10
7.2010 8.2010 9.2010
Total index 213,3 213,9 209,3
Per cent change month ago -3,7 0,3 -2,2
Per cent change year ago 18,0 15,8 20,3
Total index exclusive energy 206,4 210,4 209,8
Per cent change month ago 1,2 2,0 -0,3
Per cent change year ago 33,8 35,1 37,9
Food, tropical beverages 181,8 185,5 188,4
Per cent change month ago 0,5 2,0 1,6
Per cent change year ago 7,6 13,1 20,7
Cereals 155,8 170,8 184,0
Per cent change month ago 4,9 9,6 7,7
Per cent change year ago -0,5 21,7 40,6
Tropical beverages and tobacco 200,6 201,0 202,6
Per cent change month ago 0,1 0,2 0,8
Per cent change year ago 16,7 16,7 17,7
Coffee 123,6 124,8 125,4
Per cent change month ago 2,0 1,0 0,5
Per cent change year ago 31,1 36,7 41,8
Oilseeds and oil 158,5 161,8 160,7
Per cent change month ago -1,2 2,1 -0,7
Per cent change year ago -7,4 -0,1 16,3
Industrial raw materials 213,5 217,6 216,0
Per cent change month ago 1,4 1,9 -0,8
Per cent change year ago 42,3 41,8 43,1
Agricultural raw materials 134,3 135,3 134,1
Per cent change month ago -3,5 0,7 -0,9
Per cent change year ago 31,3 32,4 27,5
Cotton 63,6 68,6 74,2
Per cent change month ago -8,3 7,8 8,1
Per cent change year ago 28,8 50,7 62,2
Softwood 120,1 118,9 114,3
Per cent change month ago -2,2 -1,0 -3,8
Per cent change year ago 23,2 24,0 16,0
Woodpulp 788,2 773,8 745,0
Per cent change month ago -4,6 -1,8 -3,7
Per cent change year ago 48,0 49,2 38,8
Non-ferrous metals 173,0 184,2 186,9
Per cent change month ago -2,3 6,5 1,4
Per cent change year ago 19,2 16,4 23,1
Copper 5424,3 5771,1 5907,4
Per cent change month ago -2,1 6,4 2,4
Per cent change year ago 24,6 20,2 25,5
Aluminium 1601,0 1673,6 1656,8
Per cent change month ago -2,7 4,5 -1,0
Per cent change year ago 15,0 11,5 18,9
Lead 1479,1 1641,7 1673,3
Per cent change month ago 1,9 11,0 1,9
Per cent change year ago 5,6 10,6 -0,1
Zinc 1484,7 1618,5 1648,3
Per cent change month ago 0,0 9,0 1,8
Per cent change year ago 12,7 14,4 15,2
Nickel 15716,3 16933,4 17349,6
Per cent change month ago -4,9 7,7 2,5
Per cent change year ago 17,8 11,0 30,7
Iron ore, steel scrap 530,0 522,4 507,2
Per cent change month ago 8,8 -1,4 -2,9
Per cent change year ago 85,4 93,0 90,8
Energy raw materials 216,3 215,5 209,1
Per cent change month ago -5,6 -0,4 -3,0
Per cent change year ago 12,3 9,1 13,9
Coking coal 292,0 270,9 271,9
Per cent change month ago -7,9 -7,2 0,4
Per cent change year ago 26,7 28,4 40,6
Crude oil 212,9 212,9 206,2
Per cent change month ago -5,5 0,0 -3,1
Per cent change year ago 11,6 8,1 12,6
Source : SWEDBANK and HWWA-Institute for Economic Research Hamburg
Swedbank
Economic Research Department
SE-105 34 Stockholm, Sweden
Phone +46-8-5859 7740
ek.sekr@swedbank.se
www.swedbank.se
Legally responsible publisher
Cecilia Hermansson, +46-88-5859 7720
Magnus Alvesson, +46-8-5859 3341
Jörgen Kennemar, +46-8-5859 7730
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.