- Swedbank's Total Commodity Price Index rose in March to its highest level since August 2008, driven by a substantial increase in oil prices. Excluding energy, the price index fell for the first time in over half a year. - Investments in precious metals like gold and silver have seen renewed interest due to high oil prices and inflation concerns. Gold prices have risen to new record levels. - Metal prices slowed in March, with nickel, zinc and copper declining the most, though prices remain high. Slower Chinese commodity imports and Japanese production cuts contributed to the decline.

1. Energy & Commodities
Monthly newsletter from Swedbank’s Economic Research Department
by Jörgen Kennemar No. 4 • 15 April 2011
Inflation concerns and austerity – challenges for the commodity
market
• Swedbank’s Total Commodity Price Index in USD rose in March to the
highest level since August 2008 driven by a substantial increase in oil prices.
Excluding energy commodities, the price index fell by 1.4%, marking the first
decline in over a half-year. In SEK and euro, which rose against the dollar,
the price drop was greater for both metals and food commodities.
• Investments in precious metals have seen renewed interest in the wake of
high oil prices and increased inflation concerns. The weakening of the dollar
in 2011 and expansive US economic policies are another factor that could
drive up the price of gold and silver to new record levels in nominal terms.
The pricing picture could change quickly, however, if US monetary policy
becomes less expansive and the central bank’s liquidity stimulating
measures are phased out.
• The rise in metal prices slowed in March, with nickel, zinc and copper
accounting for the largest decline, though from high levels. The slowdown in
Chinese commodity imports and production cutbacks in Japan following the
earthquake in March are contributing reasons, at the same time that
investment capital is turning to precious metals rather than economically
sensitive industrial metals due to increased inflation concerns.
Swedbank’s Total Commodity Price Index, USD
250
Total index Food
225
Total excl energy commodities
200
175
Index
150
125
100 Metals
75
05 06 07 08 09 10 11
Source: Swedbank
I dessa två spalter klistras tabellerna in från Arabia is clearly having an impact on the global
Råvaruprisindex The political unrest in North commodity market. This is especially true of
Africa and the countries bordering Saudi the price of Brent oil, which at the time of
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. 4 • 14 April 2011
writing was fluctuating around USD 120-125 crisis remains unresolved in several EMU
per barrel. On average, the price of oil in USD countries. A move by the EMU countries to
rose by 11.3% in March, which was one speed up monetary austerity at the same time
reason why energy accounted for the large that the US central bank, the Federal Reserve
part of the increase in Swedbank’s Total (Fed), puts off any rate hikes is contributing to
Commodity Price Index. In total, the index rose the weaker dollar. The risk of a further decline
by 7.2% in March compared with the previous in the dollar increases if expansive fiscal policy
month, reaching its highest level since August in the US continues at the same time that the
2008. The increase was 5.4% in euro and Fed waits to raise interest rates, while rates
5.7% in SEK. Concerns about future oil are expected to rise in Europe. This would
supplies have led to skyrocketing oil prices at push commodity prices – including oil – higher.
the same time that global demand is expected
to rise by 1.5 million barrels a day in 2011 after The other important energy commodity, coal,
last year's increase of 2.5 million barrels. In which rose substantially in price last year in
Japan, the world's second largest oil importer, connection with the major floods in Australia,
fossil fuel consumption will rise as long as the has trended slightly lower in recent months.
nuclear power problem persists, which could Against the backdrop of high oil prices and the
take several years. As a whole, this means that risk of supply disruptions, it is likely that coal
supply conditions in the oil market are prices will rise in the months ahead as demand
tightening, because of which oil inventories in for coal grows as a replacement for crude oil.
OECD countries will fall from today's relatively Coal is the most commonly used energy
high levels. resource in energy-intensive emerging
economies led by China and India. There is
Swedbank’s Commodity Price Index in various currencies also a clear connection between the prices of
160
oil and coal, where higher oil prices drives up
the price of coal. But since coal prices are
150
EUR negotiated between coal and steel producers
140
rather than set by daily listings on financial
130 markets, the substantial recent rise in oil prices
120
is not yet reflected in coal prices.
SEK
110
USD
100
90
Metal price increase slows
12
10
11
12
1
2
3
4
5
6
7
8
9
1
2
3
The major increase in oil prices in March
m
m
m
m
m
m
m
m
m
m
m
m
m
m
m
m
10
10
10
10
10
10
10
10
10
11
11
11
09
10
10
10
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
contrasts with other commodities in
Swedbank’s Total Commodity Price Index.
Excluding energy, the index rose in USD by
As long as geopolitical uncertainty continues in 1.4% in March compared with February. This is
the Middle East, the prospects of a major the first time since June 2010 that the index
decline in oil prices are less likely, because of has fallen and the second month in a row in
which the risk that oil prices will average more SEK. The decline was driven by lower metal
than USD 105, as we forecast this year in our and food prices, though from high levels.
latest economic outlook, is high. This is also Among metals, nickel had the largest price
reflected in oil futures, which have risen in the decline, at 5.1% in USD, followed by zinc (-
past month from USD 112 dollar per barrel to 4.7%) and copper (-3.4%). Slightly lower metal
USD 118 for delivery in December 2011. Like prices have been followed by rising
many other commodities, oil is also affected by inventories, which raises the question of how
exchange rates and the fact that the dollar has much Chinese metal consumption will weaken
trended lower against the euro in 2011 – due to the economic austerity measures
despite that the US economy is experiencing a authorities there have taken to avoid an
faster growth rate while the sovereign debt overheating. In March copper inventories
reached their highest level since July 2010,
2 (6)

3. Energy & Commodities
Monthly newsletter from Swedbank’s Economic Research Department, continued
No. 4 • 14 April 2011
contrary to the market's expectations of a metal prices higher, not least aluminium, where
copper shortage, which probably drove up the energy consumption is high, accounting for
price to a record-high USD 10 000 per ton in slightly over one third of the total production
early February. Iron ore prices were largely cost. Since 2009 the covariation between
unchanged in March in Swedbank’s Total metal prices and oil has been clear. During the
Commodity Price Index in USD, but fell slightly first months of the year this pattern has
in SEK. In the short term iron ore prices are changed, however, as oil prices have risen
under pressure from reduced Japanese steel significantly faster than metal prices.
production in the wake of the disaster, at the
same time that the supply of Indian steel is
rising. When reconstruction in Japan begins,
however, demand for iron ore will increase, Inflation concerns are driving up the price
which should also drive up the prices of iron of gold
ore and steel. Investor interest in gold rose again in February
and March after a slight decline in January.
Metal and oil price trends in USD, Index
Geopolitical developments in the Middle East,
200
with the risk of persistently high oil prices and
175
higher future inflation, have driven up the price
150
of gold to new record levels in nominal terms.
125
At the time of writing, the price of gold is USD
Index
100
1 456 per ounce, an increase of slightly over
75
10% since the end of January. Gold has also
50
risen in SEK and euro, but is still lower than at
25
05 06 07 08 09 10 11 the start of the year.
Non-ferrous metals Crude oil, brent
Source: Reuters EcoWin
Price development for gold and silver in USD, Index
250
Index, 1 january
2010=100
225
The fact that copper prices again rose in April
200
when major producers predicted a lower
175
supply at the World Copper Conference in
Index
150
Santiago is a sign of the volatility affecting the
125
economically sensitive metals market, where
100
developments in China are of major
75
importance. Although Chinese commodity jan feb mar apr maj jun jul aug sep okt nov dec jan feb mar apr
10 11
imports also rose substantially in March Gold Silver
Source: Reuters EcoWin
compared with the previous month, the annual
growth rate is slower, in line with the lower
GDP growth we predict for the Chinese
Despite the recovery, the price of gold has still
economy in the year ahead. We expect that
the increase in metal prices in USD, which risen considerably less than silver, which is
averaged slightly over 40% in 2010, will be increasingly regarded by investors as an
significantly lower this year (5-10%), when last alternative to gold. At the same time silver
year's global inventory build-up slows at the consumption in industrial production is growing
in everything from electronics to textiles. The
same time that economic policies are tightened
in emerging economies and the majority of 50% price rise in just two months should serve
OECD countries. Metal prices should also as a warning signal for a future silver bubble,
come under pressure from a growing however. High oil prices, rising inflation, the
investment inflow to precious metals (gold and sovereign debt crisis in southern Europe and
silver), especially industrial metals due to continued though modest monetary austerity
increased inflation concerns. Rising production suggest that gold and silver prices will remain
costs owing to the high price of oil are a high going forward. On the other hand, a US
counterbalance, however, which could push
3 (6)

4. Energy & Commodities
Monthly newsletter from Swedbank’s Economic Research Department, continued
No. 4 • 14 April 2011
interest rate hike significantly higher than rising purchasing power. According to a
1.50% in late 2012 and a considerably stronger forecast by the US Department of Agriculture
dollar could hold precious metal prices in (USDA), the increase in global agricultural
check in the longer term. production in 2011 is not expected to
sufficiently compensate for the inventory
Gold price trend in various currencies, 1 January 2010=100 drawdown last year. Higher oil prices also tend
145
1 January 2010=100
to drive up food prices owing to rising
140
135
EUR production costs. At the same time the
130 incentive to increase production of non-fossil
125
USD fuels such as ethanol rises in pace with oil
120
115
prices. Growing competition between food
110 production and fuel production tends to drive
105 SEK
up food prices, which was also what happened
100
95
in 2008, when oil prices reached record-high
jan feb mar apr maj jun
10
jul aug sep okt nov dec jan feb
11
mar apr
Source: Reuters EcoWin
levels.
Grain prices and crude oil in USD
200
High food prices are taking a bite
175
The substantial price increase in food 150 Grains
commodities since June of last year was 125
Index
broken in March. The subindex fell by 3.1% in 100
USD compared with February, but still remains
75
at a significantly higher level than the same Price for Crude oil, Brent
50
period last year. Among grain products, wheat
fell the most in price, by nearly 9%, while corn 25
05 06 07 08 09 10 11
prices were relatively stable in March. Sugar Källa: Reuters EcoWin
and beverages also reported falling prices after
Jörgen Kennemar
a continuous increase since May of last year.
We expect food prices to trend higher in the
year ahead due to increased global growth and
4 (6)

5. Energy & Commodities
Monthly newsletter from Swedbank’s Economic Research Department
by Jörgen Kennemar No. 4 • 15 April 2011
Swedbank Commodity Index - US$ - Swedbank Commodity Index - SKr -
Basis 2000 = 1oo 15-04-11 Basis 2000 = 1oo 15-04-11
1.2011 2.2011 3.2011 1.2011 2.2011 3.2011
Total index 327,1 341,3 365,8 Total index 237,1 238,6 252,1
Per cent change month ago 4,1 4,4 7,2 Per cent change month ago 1,5 0,6 5,7
Per cent change year ago 25,5 35,8 38,3 Per cent change year ago 17,2 20,3 22,4
Total index exclusive energy 308,7 318,9 314,5 Total index exclusive energy 223,8 222,9 216,7
Per cent change month ago 5,5 3,3 -1,4 Per cent change month ago 2,8 -0,4 -2,8
Per cent change year ago 37,5 47,6 40,8 Per cent change year ago 28,4 30,7 24,7
Food, tropical beverages 302,5 317,6 307,9 Food, tropical beverages 219,3 222,0 212,2
Per cent change month ago 5,7 5,0 -3,1 Per cent change month ago 3,1 1,2 -4,4
Per cent change year ago 32,2 45,6 48,0 Per cent change year ago 23,5 29,0 31,0
Cereals 294,7 314,5 313,8 Cereals 213,7 219,8 216,2
Per cent change month ago 5,7 6,7 -0,2 Per cent change month ago 3,0 2,9 -1,6
Per cent change year ago 49,4 67,6 69,1 Per cent change year ago 39,5 48,4 49,7
Tropical beverages and tobacco 317,0 337,8 326,3 Tropical beverages and tobacco 229,8 236,1 224,9
Per cent change month ago 5,1 6,6 -3,4 Per cent change month ago 2,5 2,7 -4,8
Per cent change year ago 24,0 38,8 44,6 Per cent change year ago 15,8 23,0 28,1
Coffee 196,8 215,2 223,6 Coffee 142,7 150,4 154,1
Per cent change month ago 7,1 9,3 3,9 Per cent change month ago 4,4 5,4 2,4
Per cent change year ago 55,1 74,4 78,5 Per cent change year ago 44,9 54,5 58,0
Oilseeds and oil 276,4 276,1 264,1 Oilseeds and oil 200,4 193,0 182,0
Per cent change month ago 7,1 -0,1 -4,3 Per cent change month ago 4,5 -3,7 -5,7
Per cent change year ago 44,4 50,2 42,8 Per cent change year ago 34,9 33,0 26,5
Industrial raw materials 310,5 319,3 316,4 Industrial raw materials 225,1 223,2 218,0
Per cent change month ago 5,4 2,8 -0,9 Per cent change month ago 2,8 -0,9 -2,3
Per cent change year ago 39,0 48,2 39,0 Per cent change year ago 29,9 31,2 23,0
Agricultural raw materials 200,8 207,0 202,9 Agricultural raw materials 145,6 144,7 139,8
Per cent change month ago 3,9 3,1 -2,0 Per cent change month ago 1,4 -0,6 -3,4
Per cent change year ago 26,5 31,3 23,5 Per cent change year ago 18,2 16,3 9,4
Cotton 151,6 185,8 201,0 Cotton 109,9 129,9 138,5
Per cent change month ago 7,7 22,6 8,2 Per cent change month ago 5,0 18,1 6,7
Per cent change year ago 110,8 149,4 147,2 Per cent change year ago 97,0 120,9 118,9
Softwood 144,2 144,6 146,8 Softwood 104,5 101,1 101,2
Per cent change month ago -0,3 0,3 1,5 Per cent change month ago -2,8 -3,3 0,1
Per cent change year ago 4,0 6,0 4,3 Per cent change year ago -2,8 -6,1 -7,7
Woodpulp 949,0 949,1 964,6 Woodpulp 688,0 663,3 664,7
Per cent change month ago -0,1 0,0 1,6 Per cent change month ago -2,6 -3,6 0,2
Per cent change year ago 16,5 13,0 9,9 Per cent change year ago 8,9 0,0 -2,7
Non-ferrous metals 288,3 300,3 296,4 Non-ferrous metals 209,0 209,9 204,3
Per cent change month ago 4,6 4,2 -1,3 Per cent change month ago 2,0 0,4 -2,7
Per cent change year ago 21,6 36,7 23,6 Per cent change year ago 13,6 21,1 9,4
Copper 9563,7 9867,2 9530,1 Copper 6933,7 6896,3 6567,5
Per cent change month ago 4,7 3,2 -3,4 Per cent change month ago 2,1 -0,5 -4,8
Per cent change year ago 29,5 44,4 27,7 Per cent change year ago 21,0 27,9 13,1
Aluminium 2440,2 2507,8 2552,2 Aluminium 1769,1 1752,7 1758,8
Per cent change month ago 4,0 2,8 1,8 Per cent change month ago 1,4 -0,9 0,3
Per cent change year ago 9,1 22,7 15,7 Per cent change year ago 1,9 8,7 2,5
Lead 2600,2 2586,2 2623,3 Lead 1885,1 1807,5 1807,8
Per cent change month ago 8,1 -0,5 1,4 Per cent change month ago 5,4 -4,1 0,0
Per cent change year ago 9,8 21,3 20,8 Per cent change year ago 2,6 7,5 7,0
Zinc 2373,9 2464,7 2348,9 Zinc 1721,1 1722,6 1618,7
Per cent change month ago 4,5 3,8 -4,7 Per cent change month ago 1,9 0,1 -6,0
Per cent change year ago -2,5 14,4 3,3 Per cent change year ago -8,9 1,3 -8,6
Nickel 25609,4 28250,1 26807,4 Nickel 18566,8 19744,4 18473,8
Per cent change month ago 6,5 10,3 -5,1 Per cent change month ago 3,8 6,3 -6,4
Per cent change year ago 38,9 49,7 19,4 Per cent change year ago 29,8 32,6 5,7
Iron ore, steel scrap 653,3 660,0 662,8 Iron ore, steel scrap 473,6 461,3 456,8
Per cent change month ago 7,6 1,0 0,4 Per cent change month ago 5,0 -2,6 -1,0
Per cent change year ago 86,6 87,8 86,4 Per cent change year ago 74,3 66,3 65,1
Energy raw materials 335,2 351,3 388,6 Energy raw materials 243,0 245,5 267,8
Per cent change month ago 3,5 4,8 10,6 Per cent change month ago 1,0 1,0 9,1
Per cent change year ago 21,2 31,6 37,3 Per cent change year ago 13,2 16,6 21,6
Coking coal 490,5 479,3 478,9 Coking coal 355,6 335,0 330,0
Per cent change month ago 7,9 -2,3 -0,1 Per cent change month ago 5,2 -5,8 -1,5
Per cent change year ago 34,2 37,8 36,0 Per cent change year ago 25,4 22,0 20,4
Crude oil 328,1 345,4 384,5 Crude oil 237,9 241,4 265,0
Per cent change month ago 3,2 5,3 11,3 Per cent change month ago 0,7 1,5 9,8
Per cent change year ago 20,4 31,2 37,4 Per cent change year ago 12,5 16,2 21,7
Source : SWEDBANK and HWWA-Institute for Economic Research Hamburg Source : SWEDBANK and HWWA-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
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.