3Our commodities business operates globally across a broad range of asset classes EnergyCrude OilRefined ProductsEuropean Power & GasUS Power & GasCoalOther Speciality MarketsForest ProductsWeatherEnvironmental productsAgricultural productsSoftsFreightIndustrial MaterialsBase MetalsPrecious MetalsPlasticsInvestor ProductsSwapsCommodity BondsFunds
4Introductions Kevin Norrish, Director, Commodities Research - Commodity market investment outlook- Results of conference audience survey- Comparison with 2007 resultsBharath Manium, Director, Commodities Investor Solutions- Latest evolution in investor products
5Kevin Norrish, Director, Commodities Research Commodity market investment outlookSurvey findings
6In the wake of the credit crisis, commodity investments have outperformed
7Demand for commodity investments continues to gather pace Commodity market investments hit $178bnin 2007Launch of new commodity investor products has soared in early 2008
9Depletion of the resource base Steep decline in mature non-OPEC oil output continuesCopper reserves relative to demand are very low
10Costs escalation is rampant Oil project capital costs rising as fast as prices- tar sands capital costs +300% since 2001Costs of aluminium smelters are more than double the previous decade
11Commodity market trends are increasingly interlinked Climate change/carbon costsRising Asian living standards& industrialisationHigher gold pricesInflation concerns & weaker dollarInflationconcernsInflationconcernsRising energy pricesHigher grain pricesHigher livestock pricesBoost demandfor biofuels & raiseproduction costsHigher animal feed costsHigher food prices raise labour costsHigher food prices raise labour costsHigher industrial metals pricesProducer policyResource scarcity
12It’s not too late!The prices of many commodities have set new records in nominal terms in recent months. But relative to inflation-adjusted benchmarks, price rises look more modest. Many commodities are still trading a long way below their 1970/80s “real” price highs.
13Carbon: New opportunities for Investors Analysis of the relative economics of different emissions-cutting measures is still in its infancy and cost curves like that shown below come in many different shapes and sizes. But one way or another the incorporation of carbon emission costs will be an important factor impacting future energy costs and prices.