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COMMODITY NEWSBRIEFS: 20 APRIL 2016

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Natasha.Havenga@transnet.net

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AUTOMOTIVE EARTHQUAKE AFTERMATH WILL AFFECT TOYOTA DELIVERIES TO SA (Business Report, 20/4/2016) Completely built-up (CBU) Toyota vehicles imported from Japan to South Africa will be affected by the earthquakes in Japan last week and at the weekend. Clynton Yon, the senior manager communications at Toyota South Africa Motors, confirmed yesterday that production across Japan would be suspended “for a couple of days”. Nissan South Africa failed to respond to an e-mailed list of questions about the possible impact of the earthquakes on its operations in South Africa. IRON IRON ORE PRICE VAULTS $60 (Mining, 20/4/2016) The rally in the price of iron ore gained momentum on Tuesday with the steelmaking raw material scaling the $60 mark for the first time in more than a month. Northern China benchmark prices jumped 3.2% to $61.80 per dry metric tonne (62% Fe CFR Tianjin port) according to data supplied by The Steel Index. Iron ore is up 7.5% over two days of trading and the wild movements mirror that of last week when the price stopped just short of $60. The latest gyrations follow an insane 19.5% one-day rally in early March, the biggest jump since the introduction of a spot pricing system nearly a decade ago when the price reach its 2016 high of $63.30. The steelmaking raw material now boasts a 44% rise year to date and a more than two-thirds surge from near-decade lows reached mid-December. Yesterday Citigroup also displayed doubts about the rally saying in a note “prices may remain high in the second quarter before the rally fades”: “Weaker-than-expected Australian exports and more resilient Chinese steel production have kept prices elevated. However, both trends are likely to reverse in the medium and long term.” STEEL AMSA CONFIRMS ANOTHER ROUND OF STEEL PRICE INCREASES FROM MAY 1 (Engineering News, 20/4/2016) Steel producer ArcelorMittal South Africa (AMSA) has confirmed yet another round of price increases on both flat - and long-steel products, announcing average increases of 10% from May 1 and reinforcing what has become an established pricing trend since the start of 2016. However, acting CEO Dean Subramanian has again insisted that the latest increases have nothing to do with recent moves to raise import barriers and are, instead, the result of a recovery in international prices from depressed 2015 levels. Prices, AMSA notes, plunged by 38% between January and December 2015, as a consequence of falling demand and overcapacity, particularly in China. The resulting steel glut, made many steelmakers unprofitable and

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others unviable, with South Africa’s second-largest producer, Highveld Steel and Vanadium, entering business rescue in early 2015. The company has since ceased operations and retrenched workers after a bid to sell the operation as a going concern failed in January. AMSA has itself pursued a far-reaching cost-reduction and restructuring programme, with its Vereeniging Works having been curtailed. It has also warned that the sustainability of its Saldanha Works is at risk, owing to fast-rising electricity prices. Scaw Metals, meanwhile, has also downsized operations and cuts jobs. AMSA has also led the campaign to increase import protection, from 0% previously to the 10% bound rate allowed for under South Africa’s World Trade Organisation commitments. It has succeeded in securing such protection on a range of long- and flat-steel products and is awaiting a determination from the International Trade Administration Commission of South Africa (Itac) on the last few products, including hot-rolled coil (HRC) other bars and rods. The majority of the 103 000 t of foreign steel having landed in South Africa during February was in the form of HRC. US AND SEVEN OTHER COUNTRIES CALL FOR URGENT ACTION ON STEEL OVERCAPACITY (Mineweb, 20/4/2016) The United States and seven other countries on Tuesday called for urgent action to address global steel overcapacity, a day after major steel producing countries failed to agree on measures to tackle an industry crisis. Representatives of the United States, Canada, the European Union, Japan, Mexico, South Korea, Switzerland and Turkey agreed that urgent steel industry restructuring was imperative, and must be market driven, according to a joint statement released by the US Department of Commerce. They also agreed that their governments should not provide subsidies or other support that sustain loss-making steel plants or encourage additional capacity. In a separate statement, US officials said they would continue to lobby for action on steel with trade partners. “It is our shared goal that other economies, including China, will come to recognize the value of these actions and will join our collective effort to address the causes of the current excess capacity problem,” Secretary of Commerce Penny Pritzker and US Trade Representative Michael Froman said in a separate statement. “The United States will continue to engage bilaterally and multilaterally with trading partners, including China, to take meaningful action to meet that goal.” A meeting of ministers and trade officials from over 30 countries, hosted by Belgium and the OECD on Monday, concluded only that overcapacity had to be dealt with in a swift and structural way. The OECD says global steelmaking capacity was 2.37 billion tonnes in 2015, but declining production meant only 67.5% of that was being used, down from 70.9% in 2014. pointed the finger at China, saying Beijing needed to cut overcapacity or face possible trade action from other countries. GRAIN SA IMPORTS MAIZE FROM US AS DROUGHT WORSENS (The Times, 20/4/2016) South Africa, the continent's largest producer of maize, imported the white variety from the US for the first time in 12 years as the worst drought in more than a century hurt local output. The country imported 1330 tons of white maize from the US last week, South African Grain Information Service said yesterday. It last brought in US maize in the season ended April 2004, when it imported 32937 tons. South Africa, which is a net exporter of agricultural products, last year experienced the lowest rainfall since records started in 1904, damaging crops and raising prices. It may need to import 3.8million tons of yellow and white maize this year to bolster domestic supplies, according to Grain SA, the biggest lobby group for farmers. White is used to make mealie pap and is more difficult to source internationally because the yellow variety is more widely grown overseas. In southern and eastern Africa, yellow maize is mainly fed to animals. The country's grain buyers would work to source more non-genetically modified white maize from the US and Mexico in the next few months to supplement domestic demand, which is forecast at about 1.1million tons through April 2017, Wandile Sihlobo, an economist at Grain SA, said. While the price of maize in the US, the world's biggest producer, has more than halved from a record harvest in 2012 because of a glut in supply, the cost of the white variety of the grain produced in South Africa has more than doubled since the start of last year because of the drought. Local white-maize futures fell 1.6% to R4440 a ton in Johannesburg while yellow was little changed at R3182 a ton. South Africa, which traditionally supplies white maize to its neighbours, exported 10505 tons to these nations last week, South African Grain Information Service said. It imported 52319 tons of the yellow variety from Argentina in the period, while exporting 4050 tons to neighbouring countries, it said. HOW MAIZE PRICES CAN HURT THE ANC AT THE POLL (News24, 20/4/2016) The lowest rainfall on record in 2015 has led to parched lands and soaring feed costs. When combined with a weak rand currency that makes imported goods more expensive this has meant maize products, bread, lamb, beef have all got more expensive. Of particular concern is the rising price of white maize that poor and lower-income households use to make the

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calorie-rich porridge known as "pap" and of sunflower oil that they use for cooking. Consumer inflation in Africa's most advanced economy sped up to 7% in February from 6.2% in January, with the food component rising to 8.6% from 6.9%. For very low-income households, the data is even gloomier, with inflation running at 7.8% and food inflation as high as 11.8 percent in rural areas, the ANC's stronghold, speeding ahead of the annual 8.1% increase in social grants. Meat, then cereals including maize derivatives, and bread, contribute the largest chunk of food, which makes up 14.2% of the overall indicator. With a time lag between delivery and retail prices, analysts are expecting it to continue to accelerate at least until June of next year. The retail price of maize and sunflower oil products increased on average by 32% year-on-year in February. Price pressures remain in the pipeline because of the six-nine-month lag period from the delivery price to silos and futures market, according to Wandile Sihlobo, economist with producer group Grain SA. "We will see additional price increases, probably until the middle of 2017. If we get good rains by December that will reflect in the futures prices which will then come down after six months," he said. If not, price pressures will remain. White maize futures prices doubled last year and are currently around R4 500 ($313) a tonne, within striking distance of record peaks just above R5 000. South Africa will likely harvest 7.1 million tonnes of maize in 2016, 29% less than last year because of the drought and late plantings, the government's Crop Estimates Committee said last month. Prices for bread and other starches are also on the rise as are those for meat. Gerhard Schutte, chief executive of South Africa's Red Meat Producers' Organisation, told Reuters that prices for the most produced grades of beef and lamb have risen 13% on a year-on-year basis. Parched grazing lands and soaring feed costs have forced farmers to slaughter cattle, which has contained price rises for processed products but not fresh meat. More increases are on the horizon because of the reduction in the size of the national herd of around 13 million animals, which will mean potential shortages as numbers are rebuilt Schutte said subsistence farmers, who own about 40% of the herd, were estimated to have lost 7 to 8% of their cattle, while commercial farmers' herds suffered mortality rates of around 3%. CHROME & MANGANESE SINOSTEEL CEDES HALF ITS CHROME CLAIMS IN ZIMBABWE TO STATE (Mineweb, 20/4/2016) China’s Sinosteel’s business in Zimbabwe has ceded half its mining claims to the government, complying with Harare’s demands to chrome producers to give up some of their claims, a company official said on Tuesday. The Southern African nation holds the world’s second largest deposits of chrome, which is smelted to produce ferrochrome, a raw material used in the making of stainless steel. Zimbabwe’s mines minister last year asked Sinosteel’s Zimasco and Zimbabwe Alloys, which owned 80% of all chrome mining claims, to release some ground for distribution to new investors. The companies were owned by Anglo American until 2006. The government has previously said it wants to redistribute some claims to several local investors as part of its black economic empowerment drive and would not pay compensation. Zimasco held 45,900 hectares of claims before giving up half to the government, Clara Sadomba, the company’s general manager for administration told Reuters. Zimbabwe holds more than 950 million in chrome reserves, according to ministry of mines data. In 2014 Zimbabwe produced 260,000 tonnes of high-carbon ferrochrome, which was 2.3% of global output. Zimasco produced 68% of Zimbabwe’s ferrochrome in 2014. CURRENCIES AND PRICES

JSE AS AT 17:00PM 19 APRIL 2016

All Share Index

19/04 53,381 + 0.40%

Industrials Index

19/04 44,757 + 0.59%

Financials Index

19/04 42,812 + 0.34%

Top 40 Index

19/04 47,025 + 0.31%

Industrial 25 Index

19/04 71,276 - 0.24%

Financial 15 Index

19/04 15,653 + 0.47%

Resources 10 Index

19/04 31,598 + 2.37%

Alt-X Index

19/04 1,522 - 0.77%

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WORLD INDICATORS

FOREX

Rand/Dollar 06:32 14.3546 - 0.99%

Rand/Pound 06:45 20.5896

- 0.20%

Rand/Euro 06:45 16.3045 - 0.40%

COMMODITIES

Gold (usd/oz) 06:48 1,250.90 + 1.41%

Platinum (usd/oz) 06:40 1,014.00

+ 3.95%

Brent (usd/barrel) 06:29 43.16 + 0.58%

WORLD MARKETS

Wall St (DJIA) 19/04 18,054 + 0.27%

Germany (DAX) 19/04 10,350

+ 2.96%

Japan (Nikkei) 06:28 16,927 + 0.31%

3month

(Business Report, 20/4/2016)

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(TFR Commercial Management: Business Performance Dept)

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

95 ULP (c/l) 1194.00 1200.00 1131.00 1214.00

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

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

Illuminating Paraffin (c/l) 594.028 535.028 552.028 608.028

Liquefied Petroleum Gas (c/kg)

1892.00 1893.00 1773.00 1883.00

GAUTENG

93 LRP (c/l) 1209.00 1215.00 1146.00 1232.00

93 ULP (c/l) 1209.00 1215.00 1146.00 1232.00

95 ULP (c/l) 1237.00 1243.00 1174.00 1262.00

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

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

Illuminating Paraffin (c/l) 647.028 588.028 605.028 662.628

Liquefied Petroleum Gas (c/kg)

2074.00 2075.00 1955.00 2065.00

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

(SAPIA online)

Daily prices for 19 April 2016

LME Official Prices, US$ per tonne

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Contract Aluminium Alloy Aluminium Copper Lead Nickel Tin Zinc NASAAC

Cash Buyer 1520.00 1565.00 4811.00 1727.50 9060.00 17060.00 1900.00 1690.00

Cash Seller & Settlement 1530.00 1565.50 4812.00 1728.00 9070.00 17100.00 1902.00 1695.00

3-months Buyer 1560.00 1565.00 4802.00 1726.00 9080.00 17015.00 1911.00 1715.00

3-months Seller 1570.00 1566.00 4803.00 1728.00 9090.00 17035.00 1913.00 1725.00

15-months Buyer 16740.00

15-months Seller 16790.00

Dec 1 Buyer 1625.00 1608.00 4790.00 1742.00 9210.00 1900.00 1790.00

Dec 1 Seller 1635.00 1613.00 4800.00 1747.00 9310.00 1905.00 1800.00

Dec 2 Buyer 1657.00 4790.00 1748.00 9310.00 1863.00

Dec 2 Seller 1662.00 4800.00 1753.00 9410.00 1868.00

Dec 3 Buyer 1708.00 4790.00 1778.00 9395.00 1838.00

Dec 3 Seller 1713.00 4800.00 1783.00 9495.00 1843.00

(London Metal Exchange, 20/4/2016)

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