With fiscal cliff hitting Spain, Italy and GDP of emerging economy, GDP Greek continue to be markets expected to expected to grow at pain points for the grow @ 5.6% lead by 1.5 % annually. Eurozone. china. Long term view Economy expected to Inflation could be a remains positive with remain in recession problem to emerging projected growth of with slow recovery markets leaving little 2.8 % for FY 2014 towards the year end space for monitory with housing gaining easing to boost momentum growth.
EUROPE
IMF forecasted GDP growth to contract to 1.4 % for FY 2012 with further negative outlook for FY 2013 Europe is expected to witness stringent fiscal restrain at least for few years, resulting into sluggish infrastructure development and industrial activity
CHINA
Inspite of slowdown in global economy, domestic consumption, industrial acitivities and exports show traction. GDP growth of 8.2 % is expeted in FY 2013-14
INDIA
GDP expected to slowdown to 5.5 % in 2012-13 High inflation and limited ability of lowering interest rates implies lower room for monetary easing. A weak rupee is also likely to offset gains arising from lower global crude oil and commodity prices thus keeping the cost of imports high
Even if no fiscal cliff In absence of right policy Chinese GDP to grow by results in contraction of mix with a balance around 8 % in 2013 growth, increase home between growth and Chinese Renmimbi and reconstructions will austerity policy, the Indian Rupee are slightly boost the GDP to 2.1 % downward spiral of expected to gain against in FY 2013. negative growth in USD in 2013 due to Southern Europe will not increased exports and break, ensuring a domestic monitory policy worsening of the easing. solvency problems and a continuation of the crisis. Growth for the Eurozone as a whole will stay weak at approximately 0.5 percent.
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GDP growth Eurozone GDP Better Growth in Growth rate slows noticeably expected to 2013 forecast for 2013 in late 2012 and shrink by 0.5 % Expect GDP stands at a below early 2013 due to Timid growth in growth to reach potential rate of expiration of the 2H13 provides a 8.2%Y in 2013 4% payroll tax cut, a positive ramp into and 8.0%Y in The main drivers hike in the 2014, allowing 2014 of growth will Medicare tax rate the economy to likely be domestic and a phase-out expand by a demand on lower of extended modest 0.9% interest rates & a unemployment gradual benefits improvement in The US economy investment should begin to spending. expand at a slightly abovetrend pace starting in 2H13
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With global economic growth Production from Saudi Arabia expected to remain moderate, and Iran are expected to there will not be sharp increase in increase. demand. Geo-political tensions in Middle Increase in demand from China east are expected to settle down will be compensated by by Q42012 resulting in smoother slowdown in USA and Europe oil supply. hence capping the upside in demand.
Demand continues to be anemic In 2013, non-OPEC supply in Europe, while demand in the expected to grow at with supply US also remains weak. growth from the OECD Americas For 2013, we forecast continued offsetting declining production weakness in the OECD on weak around the world. economic growth. OPEC: Despite Iranian sanctions, Non-OECD demand expected to OPEC production remains at ~31 grow due to growth in economy mmb/d.
In 2013, slightly more oil demand About two-thirds of the expansion growth globally (+1.6%, yoy), can, we think, be met from nonmostly derived from zero demand OPEC producers. declines in the OECD economies. A relatively muted expansion of oil use in Emerging Market economies of some +3.4%
Demand for oil continues to Saudi Arabia may, if necessary, increase, driven up by demand adjust its production downwards from emerging markets, although to stabilise prices above the USD it is tending to stagnate or even 100/bbl mark drop back in OECD countries Temporary drops in production in overall some countries, such as Nigeria Demand for oil in emerging or Libya, for political reasons markets is likely for the first time such as the confrontation to exceed that of OECD countries between Iran and Western in 2013 PRICE: USD 110 PER governments, TARGET BARREL will continue to add to the volatility on the markets.
Mmb/d
45.27
44.8
World Demand
OECD Demand
Mmb/d
60.19
29.89
Non OPEC OPEC Supply Supply Sufficient supply with growth from NON OPEC
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World Supply
and over-capacity. USA recovering from Great Recession and will relatively be a bright spot in 2013 leading to improved demand. Outlook negative for Europe with 40% chance of recession. Soft Landing expected in china with GDP growth of 8 % in 2013. Emerging markets also to show increased demand.
Outlook negative for steel Supplies to be smoother in Asia demand in Europe region due to increase in capacity Outlook stable for Asia. Pick up in and gradual pick up in demand. china manufacturing activity will EBITDA of Asian steelmakers support demand. may improve. No update available on USA No supplies worries in Europe demand due to decreased demands but EBITDA of the steelmakers may take hit. No update available on USA supplies
USA housing sale to increase USA - Supplies from mini mills to 1.05 Million in 2013 against and integrated big players should 0.77 Million in 2012 and auto sale take are of increased demand. to increase to 15.4 Million in 2013 Europe No major concern from from 14.4 Million in 2012. supply side. Increased demand to take care of Asia: Overcapacity of Chinese overcapacity. mills and weak yen may cause Europe 2% contraction in prolonged overproduction annual demand is anticipated. resulting in oversupply.
Outlook remains positive globally Increased production capacity of but the pace for demand pick up china will make up for any will be slow. gradual increase in demand. Globally demand to pick up in No major issues from supplies infrastructure and auto sectors point of view. but not in residential construction. A sovereign debt meltdown in Europe and climatic calamities are the potential threats for steel.
Global steel demand to grow at Overcapacity to take care of 4.16% CAGR between 2012 to increased demand but to weigh 2016. on pricing power of steelmakers. This is too low to eliminate Globally, there is currently almost excess capacity very quickly. 1.9 Billion Ton/y of capacity, compared to the 1.5 Billion Ton to be produced in 2012, resulting in capacity utilization of about 80% . Production cut by Chinese and Korean steelmakers may be evident by second half of the year.
Imports demand from china (40% Supplies will remain tight during of worlds copper demand comes 2013 due to low stock levels. from china) may increase. However after 2013 new copper Boost in construction activities in projects will boost output and USA and demand from supply will be growing stronger healthcare, aquaculture and than demand and this ease the transportation to continue in tightness and price will ease, but 2013. it will remain at elevated levels Some volatility will remain in copper market till 2014 due to uncertainty around EU debt crisis. However, long term demand remains solid.
Global demand growth to remain Supply deficit in copper in 2012 moderate over next three years along with declining ore grades @ 3%. and continuing labour issues. Demand in China is expected to Supply growth will be supposedly remain moderate whereas at similar levels of demand with demand in Europe and US is refined copper capacity to expected to increase only increase by around 4 per cent marginally CAGR over the next 3 years
Demand is expected to recover Supply is improving and an led by China as infrastructure increasing share of copper supply projects are fast-tracked to will come from new projects support growth. (Greenfields) especially in 2014 leaving the likelihood for demand supply disruptions high. Copper prices are expected to remain high and firmly above USD 6,500 per tonne.
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