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COMMODITY NEWSBRIEFS: 1 JUNE 2016

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Natasha.Havenga@transnet.net

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AUTOMOTIVE VEHICLE EXPORTS KEEP TRADE SURPLUS ON TRACK IN APRIL (Business Day, 1/6/2016) Strong vehicle exports contributed significantly to better-than-expected monthly trade figures, driving the country’s second trade surplus in as many months. The South African Revenue Service (SARS) reported on Tuesday a trade surplus of R430m. This was down from the R2.03bn surplus in March, though. The rand edged up 0.39% to R15.75/$ on the release of the data on Tuesday afternoon. It closed yesterday at R15.69. Trade figures tend to be volatile from month to month, but the latest figures appear to confirm a gradually improving trend. SA’s export performance has started to improve in response to a weaker rand, and imports have fallen in response to a weaker economy. The cumulative deficit for the year to date stands at R18.67bn, down almost 42% compared with the same period last year. The improvement in the trade deficit should help to narrow the deficit on the current account of the balance of payments for the first quarter. These will be published in the Reserve Bank’s Quarterly Bulletin on June 14. The trade deficit tends to be the biggest swing factor in the current account and SA’s persistent current account deficit is regarded as one of its major vulnerabilities and one of the factors that exert downward pressure on the rand exchange rate. SARS reports that cumulative exports of R347.4bn for the first four months of the year were up 8% on the same period last year, with exports of "transport equipment" up almost 18% to R45.6bn. Imports of R366bn for the first four months were up only 3.5% compared with last year, with "mineral products", which include oil, showing a significant decline. Monthly figures show April’s exports decreased 3.2% compared with March, with a 13% jump in vehicle and transport equipment exports helping to counter a decline in exports of precious metals and stones. April imports declined 1.5% on the March figure on a sharp decline in "vegetable products" imports. These are largely agricultural exports and could be expected to increase because of the drought. Economists expect SA to post a lower trade deficit for the year as a whole, but warn that strikes or electricity shortages could derail this. Investec economist Kamilla Kaplan notes that the platinum mining industry and the automotive production sector are scheduled to renegotiate wage agreements. Nedbank’s economists said the performance of exports during 2016 "will remain largely dependent on the recovery of commodity prices as well as the improved competitiveness of manufactured exports following significant currency weakness, although soft global demand will constrain economic growth. “However, any disruptions to domestic production, from power shortages, to labour instability, would inhibit the recovery."

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FAST MOVING CONSUMER GOODS AB INBEV / SABMILLER MERGER CONDITIONAL ON DISTELL SALE (Moneyweb, 1/6/2016) South Africa’s Competition Commission recommended Anheuser-Busch InBev NV’s $106 billion takeover of fellow brewer SABMiller with conditions that include the sale of a stake in local wine, cider and spirits producer Distell Group. AB InBev must sell SABMiller’s 26% stake in Distell within three years of closing the deal, the Pretoria-based antitrust regulator said in an e-mailed statement on Tuesday. Retaining the stake could hurt competition and lead to “the exchange of commercially sensitive information between AB InBev and Distell,” it said. Other conditions include protecting jobs and setting up a R1 billion fund to support local farmers. The Competition Commission missed at least four deadlines to complete its probe into the takeover of SABMiller, which traces its roots to Johannesburg. The matter will now pass to the Competition Tribunal for a final decision. AB InBev is seeking regulatory approval around the world to combine with SABMiller, creating the world’s largest brewer. The maker of Budweiser and Stella Artois won support from the European Union last week after agreeing to offload SABMiller brands including Peroni and Grolsch. Remgro, the investment company that jointly owns a majority stake in Distell, said last year that it and its partner may be interested in buying the SABMiller shareholding. Distell’s brands include Savanna cider and Klipdrift brandy. The Competition Commission’s conditions also included separating the combined company’s bottling operations with soft-drink makers Coca-Cola Co. and PepsiCo, as well as a commitment to maintain black economic participation in SABMiller following the maturity of the Zenzele empowerment program in 2020. IRON FROM AWESOME IN APRIL TO GUTTED IN MAY, IRON ORE COMES BACK DOWN (Mineweb, 1/6/2016) For iron ore, if April was a party then May’s been the aftermath. Benchmark prices are headed for the biggest monthly loss since 2012 as a rally driven by a speculative frenzy in China segued straight into a back-to-reality slump when the fervour faded. Ore with 62% content has lost 24.1% in May to unwind April’s 23% rally, when prices posted a third monthly gain, according to data from Metal Bulletin. The raw material has collapsed 29% since peaking at more than $70 on April 21, and last week dipped below the $50 level. The commodity’s boom turned to a bust as regulators in China moved to prevent the frenzy from getting out of hand and signs emerged of increased supply, including higher port stockpiles. Steel-product prices that soared in April, lifting mills’ margins and encouraging output, have since retraced, denting iron ore demand. Goldman Sachs Group warned last week iron ore will probably extend its drop in the second half amid a rising global surplus. The ore price sank 1.7% to $50.27 a ton on Monday after dropping for four of the past five weeks, according to Metal Bulletin. Goldman Sachs predicted that prices may retreat from $55 a ton this quarter to $45 in the July-to-September period and $38 in the final three months. The Metal Bulletin benchmark bottomed at $38.30 last year. Brazil’s Vale, the largest producer, warned at a conference in May there was a need to prepare for tougher times, and that the company was set to compete at any price as it brought on additional low-cost output from its S11D project. Citigroup said in a report it remained bearish, forecasting persistent oversupply on rising production from the top miners as well as Gina Rinehart’s Roy Hill project in Australia’s Pilbara. MINERAL MINING BRUTAL MAY FOR METALS AND MINERS (Mining, 1/6/2016) Against expectations and in some instances in defiance of fundamentals, commodities managed to climb a wall of worry over the first four months of 2016 giving mining companies a welcome boost after three years of declines. Sell in May and go away is one of the oldest adages on the equities market and it was especially true for the mining sector in 2016. While broader US share markets moved sideways and crude oil continued to rally, mining stocks, metals and mineral prices were hammered during the month. Iron ore was trading back below $50 a tonne on Tuesday after a speculative bubble in Chinese derivatives in the steelmaking raw material popped during the month. After peaking near $70 mid-April, iron ore has managed to hold onto 16% gains for the year however. Coking coal came close to triple digits in April, but fell back to the early $80s by the end of the month and is now flat for 2016. Copper's dismal performance in May wiped out year-to-date gains for the red metal. The 2016 rally in other industrial metals also stalled with the exception of little-traded molybdenum which continues to climb from historic lows just above $10,000 struck last year. Zinc is holding up the best and still sports a more than 18% rise year-to-date. Tin lost more than a $1,000 in May, but technically remains in a bull market after rising 21.6% from its January lows. Ever volatile nickel is now also back in negative territory for the year despite a jump this week

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following news of a possible strike at South32's Cerro Matoso mine in Colombia, the world's second largest ferro-nickel mine. Weakening metals prices caused a broad-based sell-off with the top five diversified mining companies by output – BHP, Rio Tinto, Vale, Glencore and Anglo-American – losing a collective $41 billion in market value. GENERAL RAND SET FOR WORST MONTH SINCE 2013 AS DOWNGRADE THREAT LOOMS (Mineweb, 1/6/2016) The rand has weakened almost 10% this month as increased expectations that the Federal Reserve will raise rates boost the dollar and the threat of a downgrade of South Africa’s credit rating weighs on the currency. The rand, the worst performer among major and emerging-market currencies in May, is set for its first monthly decline against the dollar since January and the biggest monthly drop since May 2013. Investors betting on South African government bonds have taken the largest loss among 31 emerging markets this month. S&P Global ratings is due to publish its assessment of the country’s BBB- ranking on Friday, with four out of 13 analysts in a Bloomberg survey predicting that the country will be cut to sub-investment grade. The rest expect a downgrade in December. The rand is likely to bear the brunt of investor fallout from a rating cut, according to Standard Bank analysts Walter de Wet, Shireen Darmalingam and Penny Byrne. “Concerns over a Fed hike, combined with local events such as South Africa’s credit reviews, may lead to renewed pressure on the rand,” the Standard Bank analysts said in a note on Monday. “The most depreciating pressure may well come from offshore investors hedging their rand exposure as uncertainty rises, resulting in rand depreciation, as was seen in December and January.” CURRENCIES AND PRICES

JSE AS AT 17:00PM 31 MAY 2016

All Share Index

31/05 53,905 - 1.04%

Industrials Index

31/05 44,175 - 1.03%

Financials Index

31/05 41,543 - 1.18%

Top 40 Index

31/05 47,974 - 0.98%

Industrial 25 Index

31/05 73,978 - 0.48%

Financial 15 Index

31/05 15,138 - 1.41%

Resources 10 Index

31/05 31,350 - 2.58%

Alt-X Index

31/05 1,488 + 0.07%

WORLD INDICATORS

FOREX

Rand/Dollar 06:13 15.6942 - 0.70%

Rand/Pound 06:25 22.6964

- 1.72%

Rand/Euro 06:25 17.4499 - 0.88%

COMMODITIES

Gold (usd/oz) 06:25 1,212.80 + 0.57%

Platinum (usd/oz) 06:07 974.00

+ 1.09%

Brent (usd/barrel) 06:10 49.69 + 0.75%

WORLD MARKETS

Wall St (DJIA) 31/05 17,787 - 0.48%

Germany (DAX) 31/05 10,263

- 0.23%

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Japan (Nikkei) 06:09 17,115 - 0.70%

3months

(Business Report, 1/6/2016)

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Commodity Price ReportUPDATED 16 May 2016

Current (Spot)

Commodity Prices Feb-16 Mar-16 Apr-16 Q3 2015 Q4 2015 Q1 2016 2013 2014 2015

Manganese ore = (Mn 38% fob PE $/dmtu) 3.38 1.91 3.62 3.38 2.19 1.47 2.40 3.95 3.33 2.19

( 2010, 11, 12 Total average price for Manganese

source: Metalbulletin; New Sources = I - Net)

Iron Ore delivered to Qingdao China - 62%

Ferrous Content - USD/dry metric ton. Sources

= I - Net 66.24 49.62 53.75 66.24 55.31 45.46 48.36 136.17 94.39 54.65

Bituminous Coal : Rand/ton F.O.R. 310.0(e) 310.0(e) 310.0(e) 310.0(e) 309.67 333.67 310.0(e) 264.00 293.00 309.00

Source : South African Coal Report

Anthracite = R995/ton = January 2016 )

Coal Export Spot = $/ton FOB R/Bay

Sources: I-Net Richards Bay Coal Futures 52.80 51.70 53.15 52.80 53.60 50.92 51.80 80.5 71.68 56.75

China Chrome Ore 38 - 40% Cr CIF (ZA orig.)

(Source : Ryan's Notes) 113.44 92.50 92.50 113.44 171.00 155.00 97.83 181.33 182.99 169.00

FERRO-CHROME SPOT PRICE CIF ($/LB CR)

(FCRS) 0.82 0.92 0.92 0.82 1.08 1.00 0.92 1.16 1.19 1.06

(Source : I - Net)

Stainless Steel FOB NE $/Tonne 1 871.00 1 901.00 1 856.00 1 871.00 2 122.33 2 040.33 1 886.00 2 222.92 2342.00 2 213.08

Wheat (WEATN) R/TON 4 615.00 4 680.00 4 463.00 4 615.00 4 071.33 4 584.00 4 635.33 3 478.25 3775.00 4 092.67

White Maize (WMAZN) R/TON 4 408.00 5 035.00 4 720.00 4 408.00 3 145.67 3 728.33 4 920.00 2348.92 2212.00 3 044.33

Yellow Maize (YMAZN) R/TON 3 134.00 3 458.00 3 121.00 3 134.00 2 816.00 3 422.33 3 467.33 2 297.00 2215.00 2 751.08

Diesel - Gauteng (R/L) Litre 10.54 9.43 9.58 10.54 11.02 10.87 9.69 11.99 12.7 10.77

Petrol 95 ULP - Gauteng(R/L) Litre 12.62 12.43 11.74 12.62 13.20 12.47 12.18 12.92 13.84 12.41

Oil Brent Crude ($/Barrel) Litre 47.37 36.56 40.05 47.37 51.36 43.85 37.53 108.63 97.70 54.08

Steel:

HR coil (US $/ton) 435.00 355.00 390.00 435.00 386.67 335.00 365.00 590.63 593.33 403.92

CR coil (US $/ton) 560.00 475.00 530.00 560.00 465.00 432.50 475.00 689.38 668.33 488.75

HR coil (EU €/ton) 405.00 325.00 335.00 405.00 379.33 334.33 321.67 469.17 427.45 380.92

CR coil (EU €/ton) 510.00 430.00 443.00 510.00 472.67 446.67 432.67 557.08 514.64 472.33

Economic Indicators

CPI (Headline) 6.30 (e) 7.00 6.30 6.30 (e) 4.70 4.90 6.50 5.76 6.05 4.60

PPI (final manufactured goods) monthly = % 7.10 (e) 8.10 7.10 7.10 (e) 3.40 4.40 7.60 5.98 7.50 3.60

R/$ = 15.49 R/€ = 17.51, R/£ = 22.20

(commodity news, 16/05/2016) 14.57 15.77 15.33 14.57 13.00 14.21 15.80 9.64 10.84 12.75

TFR Commercial Management: Business Performance Department

Note: ( E = Estemate price - C = contract - Blue = acts)

Quarterly Yearly

(TFR Commercial Management: Business Performance Dept)

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Petrol/ Diesel Price

YR2016 06-Jan-16

03-Feb-16

02-Mar-16

06-Apr-16

04-May-16

01-Jun-16

06-Jul-16

03-Aug-16

07-Sep-16

05-Oct-16

02-Nov-16

07-Dec-16

COASTAL

95 LRP (c/l) 1194.00 1200.00 1131.00 1214.00 1226.00

95 ULP (c/l) 1194.00 1200.00 1131.00 1214.00 1226.00

Diesel 0.05% (c/l) 972.47 910.47 925.47 1015.47 1014.47

Diesel 0.005% (c/l) 977.87 914.87 928.87 1020.87 1018.87

Illuminating Paraffin (c/l) 594.028 535.028 552.028 608.028 601.028

Liquefied Petroleum Gas (c/kg)

1892.00 1893.00 1773.00 1883.00 1877.00

GAUTENG

93 LRP (c/l) 1209.00 1215.00 1146.00 1232.00 1244.00

93 ULP (c/l) 1209.00 1215.00 1146.00 1232.00 1244.00

95 ULP (c/l) 1237.00 1243.00 1174.00 1262.00 1274.00

Diesel 0.05% (c/l) 1005.17 943.17 958.17 1053.87 1052.87

Diesel 0.005% (c/l) 1010.57 947.57 961.57 1059.27 1057.27

Illuminating Paraffin (c/l) 647.028 588.028 605.028 662.628 655.628

Liquefied Petroleum Gas (c/kg)

2074.00 2075.00 1955.00 2065.00 2060.00

YR2015

07-Jan-

15

04-Feb-

15

04-Mar-

15

01-Apr-

15

06-May-

15

03-Jun-

15

01-Jul-

15

05-Aug-

15

02-Sep-

15

07-Oct-

15

04-Nov-

15

02-Dec-

15

COASTAL

95 LRP (c/l) 1083.00 990.00 1086.00 1246.00 1246.00 1293.00 1334.00 1283.00 1214.00 1218.00 1196.00 1197,00

95 ULP (c/l) 1083.00 990.00 1086.00 1246.00 1246.00 1293.00 1334.00 1283.00 1214.00 1218.00 1196.00 1197,00

Diesel 0.05% (c/l) 997.49 895.49 969.49 1090.09 1085.09 1134.09 1138.09 1062.27 1008.27 1061.27 1052.27 1048,47

Diesel 0.005% (c/l) 1001.89 899.89 973.89 1096.49 1091.49 1137.49 1141.49 1067.67 1016.67 1067.67 1057.67 1055,87

Illuminating Paraffin (c/l) 697.728 595.728 668.728 690.828 685.828 727.828 733.828 663.828 608.828 658.828 656.828 657,028

Liquefied Petroleum Gas

(c/kg) 1829.00 1679.00 1833.00 1918.00 1935.00 2035.00 2091.00 2002.00 1887.00 1898.00 1851.00 1847,00

GAUTENG

93 LRP (c/l) 1102.00 1009.00 1105.00 1261.00 1261.00 1308.00 1352.00 1301.00 1232.00 1230.00 1208.00 1209,00

93 ULP (c/l) 1102.00 1009.00 1105.00 1261.00 1261.00 1308.00 1352.00 1301.00 1232.00 1230.00 1208.00 1209,00

95 ULP (c/l) 1124.00 1031.00 1127.00 1289.00 1289.00 1336.00 1377.00 1326.00 1257.00 1261.00 1239.00 1240,00

Diesel 0.05% (c/l) 1028.09 926.09 1000.09 1122.79 1117.79 1166.79 1170.79 1094.97 1040.97 1093.97 1084.97 1081,17

Diesel 0.005% (c/l) 1032.49 930.49 1004.49 1129.19 1124.19 1170.19 1174.19 1100.37 1049.37 1100.37 1090.37 1088,57

Illuminating Paraffin (c/l) 747.928 645.928 718.928 743.828 738.828 780.828 786.828 716.828 661.828 711.828 709.828 710,028

Liquefied Petroleum Gas

(c/kg) 2011.00 1861.00 2015.00 2100.00 2117.00 2217.00 2273.00 2184.00 2069.00 2080.00 2033.00 2029,00

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(SAPIA online)

Daily prices for 31 May 2016

LME Official Prices, US$ per tonne

Contract Aluminium Alloy Aluminium Copper Lead Nickel Tin Zinc NASAAC

Cash Buyer 1535.00 1547.50 4698.00 1691.00 8455.00 16175.00 1923.50 1660.00

Cash Seller & Settlement 1545.00 1548.00 4700.00 1691.50 8465.00 16200.00 1924.00 1661.00

3-months Buyer 1560.00 1558.50 4674.00 1696.00 8510.00 16200.00 1925.00 1685.00

3-months Seller 1570.00 1559.00 4675.00 1698.00 8520.00 16250.00 1927.00 1695.00

15-months Buyer 15965.00

15-months Seller 16015.00

Dec 1 Buyer 1620.00 1603.00 4675.00 1713.00 8625.00 1910.00 1800.00

Dec 1 Seller 1630.00 1608.00 4685.00 1718.00 8725.00 1915.00 1810.00

Dec 2 Buyer 1652.00 4685.00 1725.00 8730.00 1870.00

Dec 2 Seller 1657.00 4695.00 1730.00 8830.00 1875.00

Dec 3 Buyer 1698.00 4695.00 1755.00 8820.00 1845.00

Dec 3 Seller 1703.00 4705.00 1760.00 8920.00 1850.00

(London Metal Exchange, 1/6/2016)

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