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COMMODITY NEWSBRIEFS: 10 OCTOBER 2014 Please note that these articles are available in electronic format and can be requested and delivered via e-Mail.

(http://intra.spoornet.co.za) Natasha.Havenga@transnet.net

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FAST MOVING CONSUMER GOODS WORLD FOOD PRICES SLUMP TO 15-YR LOWS (News24, 10/10/2014) Bumper harvests and big stockpiles of food are helping to drive world food prices down to the lowest levels for about 15 years, the UN Food and Agriculture Organisation reported on Thursday. The commodities showing the biggest price falls were sugar and dairy produce, followed by cereal and oil prices. World food prices fell for the sixth month running in September, marking "the longest period of continuous decline" since the late 1990's, the FAO said releasing its monthly food price index. The price of meat had firmed but could be stabilising, it said. "World wheat production in 2014 is forecast to reach a new record," the FAO said. Although the production of rice could fall slightly this year, stockpiles were "huge" and were enough to cover one third of expected consumption in 2015 and 2016. But the Ebola virus outbreak in West Africa was a "hot spot" of concern since it was disrupting markets and farming activities "affecting food security and large numbers of people", the FAO said in another quarterly report on crop prospects and the food situation. INDUSTRIAL SOUTH AFRICA'S AUGUST MANUFACTURING DOWN 1.2% Y/Y (Engineering News, 10/10/14) South Africa's manufacturing production fell less than expected in August, contracting 1.2% year-on-year from a revised 8.1% contraction in July, Statistics South Africa said on Thursday. On a month-on-month basis, factory production rose 2.2% but fell 1.4% in the three months to August compared with the previous three months. Economists had expected a 3.2% year-on-year contraction and 0.4% expansion on a month-on-month basis. IRON FORTUNE FAVOURS THE BRAVE - OPPORTUNITIES IN IRON ORE (CRU, 10/10/2014) The great fall in iron ore is now upon us: prices are down by >40% since January, producers in established mining zones are starting to fall victim and the investor mood is grim, as prices close in around $80/t. As such, this has been a remarkably different backdrop in which to produce our 2014 Iron Ore Long Term Outlook that forecasts prices to 2035 and, although our medium-term and long-term pricing methodologies differ, we emphasise that today’s environment could have important ramifications on long-run price dynamics. Our long-term report also highlights that, although hard to believe at present, all is not doom and gloom from here on in and opportunities will present themselves in the long-run. As discussed in our Iron Ore

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Market Outlook, a caveat to this is that, from the producers’ perspective, “conditions are set to get worse before they get better”, signalling that those with patience, amongst other things, will have the upper hand. FUEL BRENT OIL SLUMPS UNDER $90 (News24, 10/01/2014) Brent oil prices tumbled Thursday to a two-year low under $90 per barrel as gloomy German economic news sparked fresh demand concerns in a market already hit by abundant supplies. Brent North Sea crude for delivery in November dived to $89.90, the lowest level since June 25, 2012. The contract later stood at $90.18, down $1.20 from Wednesday. US benchmark West Texas Intermediate (WTI) for November slid to an 18-month trough at $85.60 a barrel. It later pulled back slightly to $85.81, down a hefty $1.50. Financial markets were hit by downbeat data, a cut in the growth forecasts of the eurozone's economic powerhouse Germany and a new IMF warning on recession. Crude futures had struck similar lows on Wednesday after the weekly US petroleum inventory report showed mounting stockpiles in top oil consumer the United States, signalling weakening demand. ” Brent's drop below the $90 level is another bearish development and suggests the market is not only worried about the excessive supply of oil, but now about demand too," Forex.com analyst Fawad Razaqzada told AFP. "All of a sudden, a recession for Germany looks imminent, which does not bode well for the eurozone as a whole with Germany being the economic powerhouse of the single currency bloc." The outlook darkened as top think tanks slashed their forecasts for German growth both this year and next. MINERAL MINING S AFRICA MINE OUTPUT DOWN 10.1% IN AUGUST (Mining Weekly, 10/10/2014) Mine production in South Africa decreased 10.1% year-on-year in August, as platinum group metals (PGMs) production fell 45%, diamond output 30.2% and other nonmetallic minerals 24.1%. Seasonally adjusted mining production fell 3.1% month-on-month in August, while mine output, on a seasonally adjusted basis, for the three months ended August 31, was down 1.1% on that produced in the three months ended May 30. Mineral sales, meanwhile, decreased 5.9% year-on-year in July, with eight of the 11 mineral groups and minerals having recorded negative growth rates. The largest changes were recorded for PGMs, contributing -2.3 percentage points; coal, contributing -2.2 percentage points; iron-ore, contributing -2 percentage points; manganese ore, contributing -1.4 percentage points; and copper, contributing -0.3 of a percentage point. On a month-on-month basis, seasonally adjusted mineral sales increased 6.5% in July, marking a turnaround from the month-on-month decreases of 7% and 3.8% recorded in June and May. BNP Paribas Cadiz Securities analyst Jeffrey Schultz commented that the disappointing production figures highlighted the severe pressure facing the mining sector, following the "damaging" industrial actions in the first half of the year. "We fail to see evidence at this stage of some producers’ recent comments which indicate a faster return to ‘normal’ production than envisaged. The sector looks very likely to contribute negatively to third-quarter production-side gross domestic product growth, in our view. "With global commodity prices under pressure thanks to a stronger US dollar and weaker Chinese activity, coupled with rising domestic input costs through above-inflation wage increases and higher domestic electricity prices from next year, it seems there is no easy outlook for this side of the economy," he noted. TRANSNET TRANSNET AND THELO’S AFRICAN AMBITION TURNS ON LEASING (Business Day, 10/10/2014) Transnet’s ambition to be Africa’s leading logistics company is gathering steam with two major deals announced in the past fortnight. Transnet Engineering has entered a partnership with local financier Thelo Rolling Stock to buy the rolling stock it manufactures for leasing to railway companies or concessioners that cannot afford to buy them. Leasing is cheaper in the short term until companies earn enough revenue to buy the stock, Transnet Engineering GM Msokoli Ntombana says. Thelo, 50% owned by the Industrial Development Corporation, this month delivered four locomotives and 75 wagons to Swaziland Railway in a $17m, 10-year lease deal. Transnet and Thelo are looking to conclude similar deals in Mozambique, Kenya, Namibia and Zimbabwe, says Mr Ntombana. Leasing rolling stock is relatively uncommon among African rail companies but South African firms are punting this model as a way of addressing years of underinvestment in locomotives and wagons on the continent. Transnet maintains 80% of the rail network in the sub-Saharan region. It is also the second-largest contributor to the state’s infrastructure spend, with a R300bn market demand strategy. This year, two of China’s largest rolling-stock

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manufacturers and their empowerment partners won about 60% of a tender to manufacture more than 1,000 locomotives for Transnet at a cost of R50bn. Transport economist Joachim Vermooten says Transnet risks losing focus by pursuing manufacturing ambitions. He believes it should rather support local private sector businesses that want to manufacture rolling stock. “You need critical mass in any business and if the assets are not enough to maintain the business sustainably, you may be compelled to buy from yourself to keep the operation going.” Transport economist Joachim Vermooten says Transnet risks losing focus by pursuing manufacturing ambitions. He believes it should rather support local private sector businesses that want to manufacture rolling stock. “You need critical mass in any business and if the assets are not enough to maintain the business sustainably, you may be compelled to buy from yourself to keep the operation going.” Since the Maputo centre was set up in August last year, there has been a 24% drop in dwell time — the time it takes to turn around trains and vessels — at Komatiport. Transnet Freight Rail’s volumes to Mozambique increased to 4.5million tonnes a year from 2.6-million. Magnetite exports through Maputo increased to an average 18 trains a week from 10 trains. CURRENCIES AND PRICES

ALSI: 3 month to 9 Oct 14

(Mail & Guardian, 10/10/2014)

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JSE AS AT 17:00PM 9 OCTOBER 2014

All Share Index 9/10 48,134

+ 99.90 + 0.21%

Industrials Index 9/10 44,627

+ 121.84 + 0.27%

Financials Index 9/10 36,405

+ 75.22 + 0.21%

Top 40 Index 9/10 42,913

+ 66.57 + 0.16%

Industrial 25 Index 9/10 57,431

- 16.48 - 0.03%

Financial 15 Index 9/10 13,865

+ 42.33 + 0.31%

Resources 10 Index 9/10 50,006

+ 316.75 + 0.64%

Alt-X Index 9/10 1,294

+ 3.19 + 0.25%

WORLD INDICATORS

FOREX

Rand/Dollar 06:06 11.0619

- 0.001 - 0.007%

Rand/Pound

06:10 17.8086

- 0.04 - 0.20%

Rand/Euro 06:10 14.0450

- 0.04 - 0.28%

COMMODITIES

Gold (usd/oz) 06:06 1,222.76

+ 0.26 + 0.02%

Platinum (usd/oz)

06:06 1,260.25

- 21.75 - 1.70%

Brent (usd/barrel) 06:03 88.37

- 3.01 - 3.29%

WORLD MARKETS

Wall St (DJIA) 9/10 16,659

- 334.97 - 1.97%

Germany (DAX)

9/10 9,005

- 81.19 - 0.89%

Japan (Nikkei) 06:06 15,279

- 317.29 - 2.03%

(Business Report, 10/10/2014) COPPER A – SETTLEMENT PRICE – 6767 FORWARD RATES - Dollar/rand 4pm close: R11, 03

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Petrol/ Diesel Price

YR2014

01-Jan-

14

05-Feb-

14

05-Mar-

14

02-Apr-

14

07-May-

14

04-Jun-

14

02-Jul-

14

06-Aug-

14

03-Sep-

14

01-Oct-

14

05-Nov-

14

03-Dec-

14

COASTAL

95 LRP (c/l) 1320.00 1359.00 1395.00 1398.00 1383.00 1361.00 1392.00 1392.00 1325.00 1320.00

95 ULP (c/l) 1320.00 1359.00 1395.00 1398.00 1383.00 1361.00 1392.00 1392.00 1325.00 1320.00

Diesel 0.05% (c/l) 1260.55 1284.75 1311.95 1299.15 1269.37 1245.79 1259.79 1254.17 1228.79 1215.79

Diesel 0.005% (c/l) 1263.95 1288.15 1316.35 1304.55 1274.77 1249.19 1263.19 1258.57 1234.19 1221.19

Illuminating Paraffin (c/l) 963.828 975.828 991.828 953.028 934.028 924.028 947.028 940.028 921.028 907.028

Liquefied Petroleum Gas

(c/kg) 2260.00 2314.00 2372.00 2350.00 2346.00 2319.00 2377.00 2365.00 2257.00 2269.00

GAUTENG

93 LRP (c/l) 1336.00 1375.00 1411.00 1416.00 1401.00 1379.00 1408.00 1408.00 1341.00 1343.00

93 ULP (c/l) 1336.00 1375.00 1411.00 1416.00 1401.00 1379.00 1408.00 1408.00 1341.00 1343.00

95 ULP (c/l) 1357.00 1396.00 1432.00 1439.00 1424.00 1402.00 1433.00 1433.00 1366.00 1361.00

Diesel 0.05% (c/l) 1287.15 1311.35 1338.55 1329.75 1299.97 1276.39 1290.39 1284.77 1259.39 1246.39

Diesel 0.005% (c/l) 1290.55 1314.75 1342.95 1335.15 1305.37 1279.79 1293.79 1289.17 1264.79 1251.79

Illuminating Paraffin (c/l) 1009.728 1021.728 1037.728 1003.228 984.228 974.228 997.228 990.228 971.228 957.228

Liquefied Petroleum Gas

(c/kg) 2442.00 2496.00 2554.00 2532.00 2528.00 2501.00 2559.00 2547.00 2439.00 2451.00

YR2013

02-Jan-

13

06-Feb-

13

06-Mar-

13

03-Apr-

13

01-May-

13

05-Jun-

13

03-Jul-

13

07-Aug-

13

04-Sep-

13

02-Oct-

13

06-Nov-

13

04-Dec-

13

COASTAL

95 LRP (c/l) 1151.00 1192.00 1273.00 1283.00 1210.00 1202.00 1286.00 1318.00 1313.00 1293.00 1265.00 1282.00

95 ULP (c/l) 1151.00 1192.00 1273.00 1283.00 1210.00 1202.00 1286.00 1318.00 1313.00 1293.00 1265.00 1282.00

Diesel 0.05% (c/l) 1086.67 1104.47 1162.85 1170.01 1114.45 1110.47 1188.67 1221.63 1235.45 1233.45 1218.25 1228.37

Diesel 0.005% (c/l) 1091.07 1108.87 1167.25 1175.41 1118.85 1114.87 1193.07 1226.03 1240.85 1238.85 1221.65 1231.77

Illuminating Paraffin (c/l) 807.128 833.128 890.128 860.328 802.328 803.328 878.328 903.328 928.328 924.328 908.328 924.828

Liquefied Petroleum Gas

(c/kg) 2047.00 2120.00 2238.00 2183.00 2102.00 2107.00 2236.00 2258.00 2267.00 2227.00 2186.00 2204.00

GAUTENG

93 LRP (c/l) 1165.00 1206.00 1287.00 1297.00 1224.00 1216.00 1300.00 1332.00 1327.00 1308.00 1280.00 1297.00

93 ULP (c/l) 1165.00 1206.00 1287.00 1297.00 1224.00 1216.00 1300.00 1332.00 1327.00 1308.00 1280.00 1297.00

95 ULP (c/l) 1186.00 1227.00 1308.00 1320.00 1247.00 1239.00 1323.00 1355.00 1350.00 1330.00 1302.00 1319.00

Diesel 0.05% (c/l) 1111.37 1129.17 1187.55 1196.61 1141.05 1137.07 1215.27 1248.23 1262.05 1260.05 1244.85 1254.97

Diesel 0.005% (c/l) 1115.77 1133.57 1191.95 1202.01 1145.45 1141.47 1219.67 1252.63 1267.45 1265.45 1248.25 1258.37

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Illuminating Paraffin (c/l) 849.028 875.028 932.028 906.228 848.228 849.228 924.228 949.228 974.228 970.228 954.228 970.728

Liquefied Petroleum Gas

(c/kg) 2229.00 2302.00 2420.00 2365.00 2284.00 2289.00 2418.00 2440.00 2449.00 2409.00 2368.00 2386.00

(SAPIA online)

Daily prices for 9 October 2014

LME Official Prices, US$ per tonne

Contract Aluminium Alloy Aluminium Copper Lead Nickel Tin Zinc NASAAC

Cash Buyer 2105.00 1923.00 6766.50 2081.00 16625.00 20200.00 2327.50 2156.00

Cash Seller & Settlement 2115.00 1924.00 6767.00 2082.00 16630.00 20225.00 2328.00 2157.00

3-months Buyer 2120.00 1955.00 6712.00 2093.50 16700.00 20175.00 2338.00 2185.00

3-months Seller 2130.00 1956.00 6712.50 2095.50 16710.00 20180.00 2339.00 2190.00

Dec 1 Buyer 2120.00 1990.00 6655.00 2120.00 16795.00 2358.00 2220.00

Dec 1 Seller 2130.00 1995.00 6665.00 2125.00 16895.00 2363.00 2230.00

15-months Buyer 20255.00

15-months Seller 20305.00

Dec 2 Buyer 2028.00 6600.00 2143.00 16665.00 2340.00

Dec 2 Seller 2033.00 6610.00 2148.00 16765.00 2345.00

Dec 3 Buyer 2068.00 6545.00 2153.00 16425.00 2315.00

Dec 3 Seller 2073.00 6555.00 2158.00 16525.00 2320.00

(London Metal Exchange, 10/10/2014)

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