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COMMODITY NEWSBRIEFS: 10 JULY 2015 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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INDUSTRIAL HINTS OF A RECOVERY IN SOUTH AFRICA’S MANUFACTURED GOODS TRADE BALANCE (Engineering News, 10/7/2015) There are some signs; a new Barclays report asserts, that South Africa’s balance of trade in manufactured goods is starting to improve, helping to offset worsened terms of trade brought about by a decline in commodity prices. Speaking at the release of the quarterly report on Thursday, economist Peter Worthington said that South Africa was facing ongoing domestic challenges, which were being exacerbated by global risks. However, one “bright spot” was the recent recovery in the country’s trade-balance data – an improvement that took hold despite South Africa’s terms of trade being at their weakest level “in a number of years”, owing partly to a decline in coal and iron-ore prices and a rise in oil prices. Following dismal merchandise trade balances in January and February, there had been a rebound in March and April, leaving the performance for the year-to-date slightly ahead of 2013 and 2014. “We started the year very poorly and it just got worse, so that by February we were looking at a cumulative deficit which was much bigger than we had experienced in any of the previous five years. But then we had a good March trade print; April was also quite good. Then in May, we actually had a surprise surplus, partly on the back of improving balance of trade in the export of manufactures.” Worthington pointed to record vehicle exports of 33 441 units in May as a highlight and indicated that Barclays would be closely monitoring the export performance of manufactured products, including vehicle exports. The current account deficit narrowed in the first quarter of 2015 to 4.8% of gross domestic product (GDP) from 5.1% in the last quarter of 2014. However, this related primarily to a large improvement in dividend inflows, with the trade accounts deteriorating to -1.8% of GDP, as higher exports of manufactured goods were offset by lower exports of commodities such as coal and platinum group metals. Barclays was forecasting the current account deficit would narrow to 4.3% of GDP this year from 5.4% in 2014, with the “continued deterioration in the terms of trade hinting at downside risks”. Another risk related to South Africa’s sensitivity to key portfolio capital flows, which remained vulnerable to shifts in risk sentiment, with Barclays seeing the main risk relating to the US Federal Reserve’s interest rate “normalisation”. LOW OUTPUT FIGURES ADD TO SA GLOOM (Business Report, 10/7/2015) The latest disappointing mining and manufacturing output figures that were released yesterday added to a bleak outlook and reinforced the view that the South African economy will battle to attain the forecast 2 percent growth in 2015. Manufacturing production is likely to remain another drag on economic growth in the second quarter, unless there is substantial improvement in June. On a seasonally adjusted annualised basis, manufacturing output declined by 1.2 percent quarter on

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quarter in May. The sector came out much worse than expected, according to data released by Statistics SA yesterday. Factory output registered a decline of 1.4 percent from a contraction of 2.1 percent in April. This was against a market expectation of an expansion of 1 percent. Nedbank economists said the outlook for manufacturing, which accounts for 13 percent of gross domestic product, remained subdued. “The electricity crisis, rising production costs, low global commodity prices and patchy global and local demand are likely to weigh on production in most manufacturing industries,” they said. “The sector is likely to record only a moderate growth off a low base in 2015 as a whole.” IRON ANGLO URGED TO CUT DIVIDEND WHILE KUMBA SHEDS jobs (Business Day, 10/7/2015) Anglo American subsidiary Kumba Iron Ore will cut as many as 190 jobs in a weak commodity environment, which prompted Investec to urge Anglo to cut its dividend payments to preserve its balance sheet. The iron ore price experienced a record fall on Wednesday, dropping 10% to $44.59 a tonne of ore with a 62% iron content delivered in Qingdao in China. Yesterday, the price recovered those losses to trade at $48.99. Iron ore and other commodities have been battered by the meltdown on the Chinese stock exchange. Trade union Solidarity said yesterday that Kumba, SA’s largest iron ore miner, had issued a formal notice to employees about “large-scale restructuring” at its flagship Sishen and Kolomela mines in the Northern Cape. Solidarity said it had been told that up to 190 employees would be affected. Kumba, whose CEO is Norman Mbazima, is 70% owned by Anglo, and Investec singled out Anglo’s iron-ore business as the most embattled, describing it as the “weakest link”. If the weak iron ore price persisted, Anglo could have to mothball assets, Investec analyst Marc Elliott said. “At Kumba we believe it likely the mine plan can adapt, and a weaker rand may provide much-needed relief. “However, adjusting for a protracted weak iron ore price would likely lead to a different profile where high-grade ore is cherry picked and stripping is reduced, so the result would be lower volumes and a shorter mine life,” he said. Anglo, which has fallen by about 30% this year, is one of the worst-performing mining stocks on the FTSE 100 index in London and among the worst performers since the start of 2013. IRON ORE PRICE ROCKETS 9.5% (Mining, 10/7/2015) The price of iron ore surged on Thursday, regaining much of yesterday lost territory as authorities in top consumer China step in to calm markets rocked by steep declines on the country's equity markets. The benchmark 62% Fe import price including freight and insurance at the Chinese port of Tianjin jumped $4.20 or 9.5% to $48.30 a tonne according to data provided by The SteelIndex, the biggest one day jump on record. The resurgence comes just a day after a precipitous drop that saw the spot price reach an all-time low of $44.10 a tonne in a knee-jerk reaction to the chaos on Chinese equity markets. After almost halving in 2014, the price of iron ore is down 30% this year and amid all the gloom it’s easy to forget just how much today’s 1.3 billion tonnes seaborne trade has changed in just the last decade. MINERAL MINING MINING OUTPUT GROWTH SLOWS TO 2.7% IN MAY (Mining Weekly, 10/7/2015) Amid poor global growth, lower commodity prices and local infrastructure constraints, mining production growth slowed to 2.7% year-on-year in May from 7.9% in April, Statistics South Africa has reported. The highest positive production growth rate was recorded for platinum-group metals (PGM), which grew by 99.6%, partly as a result of the low base in May 2014, when the PGM sector was adversely affected by industrial action. Seasonally adjusted mining production decreased by 4.7% in May compared with April, which followed a month-on-month contraction of 4.7% in April and growth of 6.9% in March. On a quarterly basis, seasonally adjusted mining production increased by 4.1% in the three months ended May 31, compared with the previous three months, boosted chiefly by a 4.1% increase in PGMs output. Mineral sales, meanwhile, increased by 4.5% year-on-year in April, with the highest positive contributions to the increase emerging from PGMs (57.3%), chromium ore (45%) and coal (4.5%). Conversely, growth in iron-ore sales decreased by 39.4% year-on-year and was a significant negative contributor. Seasonally adjusted mineral sales at current prices increased by 3% in April compared with March. Nedbank believed growth in mining production would continue to recover in the “very” short term, as the effects of last year's five-month platinum strike worked through the base. Noting that mining figures remained volatile and had little influence on policy decisions in the short term, the bank said in a statement that the poor climate for mining production was expected to hurt economic growth as the year progressed.

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GENERAL IMF SUSTAINS SOUTH AFRICA’S GROWTH OUTLOOK, BUT POINTS TO DOWNSIDE RISKS (Engineering News, 10/7/2015) The International Monetary Fund (IMF) has sustained its 2% growth outlook for South Africa for 2015 in its World Economic Outlook Update, despite a modest downward revision, to 3.3% from 3.5%, to its global growth forecast. The projection for South Africa’s 2016 growth has also been held at 2.1%, which remains well below the country’s National Development Plan growth aspiration of over 5% a year. The South African economy grew by only 1.3% in the first quarter, when electricity supply problems and drought weighed on manufacturing and agricultural output respectively. However, most economists still expect the economy to grow by about 2% this year, while warning that the outlook could be negatively affected by any protracted gold-sector strike, a further rise in fuel prices, or an increase in electricity load-shedding. The IMF has modestly trimmed its 2015 growth outlook for sub-Saharan Africa to 4.4% from 4.5%, but has maintained its 2016 projection for the region at 5.1%. However, the IMF warns that the risks to global economic activity remain “tilted to the downside”, with growth in emerging market and developing economies projected to fall from 4.6% in 2014 to 4.2% this year, before picking up to 4.7% in 2016. CURRENCIES AND PRICES

ALSI: 3 mnth to 9 Jul 15

(Mail & Guardian, 10/7/2015)

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JSE AS AT 17:06PM 9 JULY 2015

All Share Index 9/07 51,452

+ 1,216.60 + 2.42%

Industrials Index 9/07 44,825

+ 798.07 + 1.81%

Financials Index 9/07 44,323

+ 1,156.90 + 2.68%

Top 40 Index 9/07 45,872

+ 1,193.61 + 2.67%

Industrial 25 Index 9/07 66,256

+ 1,772.90 + 2.75%

Financial 15 Index 9/07 16,836

+ 462.82 + 2.83%

Resources 10 Index 9/07 37,376

+ 488.78 + 1.33%

Alt-X Index 9/07 1,317

+ 5.33 + 0.41%

WORLD INDICATORS

FOREX

Rand/Dollar 06:18 12.4566

- 0.12 - 0.98%

Rand/Pound

06:15 19.1435

- 0.15 - 0.78%

Rand/Euro 06:15 13.8199

- 0.11 - 0.78%

COMMODITIES

Gold (usd/oz) 06:18 1,162.05

+ 3.05 + 0.26%

Platinum (usd/oz)

06:18 1,031.20

- 0.80 - 0.08%

Brent (usd/barrel) 06:15 59.05

+ 2.00 + 3.51%

WORLD MARKETS

Wall St (DJIA) 9/07 17,549

+ 33.20 + 0.19%

Germany (DAX)

9/07 10,996

+ 319.63 + 2.99%

Japan (Nikkei) 06:18 19,913

+ 175.83 + 0.89%

(Business Report, 10/7/2015)

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(TFR Commercial Management: Business Performance Dept)

Petrol/ Diesel Price

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

95 ULP (c/l) 1083.00 990.00 1086.00 1246.00 1246.00 1293.00 1334.00

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Diesel 0.05% (c/l) 997.49 895.49 969.49 1090.09 1085.09 1134.09 1138.09

Diesel 0.005% (c/l) 1001.89 899.89 973.89 1096.49 1091.49 1137.49 1141.49

Illuminating Paraffin (c/l) 697.728 595.728 668.728 690.828 685.828 727.828 733.828

Liquefied Petroleum Gas

(c/kg) 1829.00 1679.00 1833.00 1918.00 1935.00 2035.00 2091.00

GAUTENG

93 LRP (c/l) 1102.00 1009.00 1105.00 1261.00 1261.00 1308.00 1352.00

93 ULP (c/l) 1102.00 1009.00 1105.00 1261.00 1261.00 1308.00 1352.00

95 ULP (c/l) 1124.00 1031.00 1127.00 1289.00 1289.00 1336.00 1377.00

Diesel 0.05% (c/l) 1028.09 926.09 1000.09 1122.79 1117.79 1166.79 1170.79

Diesel 0.005% (c/l) 1032.49 930.49 1004.49 1129.19 1124.19 1170.19 1174.19

Illuminating Paraffin (c/l) 747.928 645.928 718.928 743.828 738.828 780.828 786.828

Liquefied Petroleum Gas

(c/kg) 2011.00 1861.00 2015.00 2100.00 2117.00 2217.00 2273.00

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 1275.00 1206.00

95 ULP (c/l) 1320.00 1359.00 1395.00 1398.00 1383.00 1361.00 1392.00 1392.00 1325.00 1320.00 1275.00 1206.00

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 1154.79 1101.49

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 1161.19 1106.89

Illuminating Paraffin (c/l) 963.828 975.828 991.828 953.028 934.028 924.028 947.028 940.028 921.028 907.028 855.028 805.728

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 2164.00 2039.00

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 1298.00 1229.00

93 ULP (c/l) 1336.00 1375.00 1411.00 1416.00 1401.00 1379.00 1408.00 1408.00 1341.00 1343.00 1298.00 1229.00

95 ULP (c/l) 1357.00 1396.00 1432.00 1439.00 1424.00 1402.00 1433.00 1433.00 1366.00 1361.00 1316.00 1247.00

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 1185.39 1132.09

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 1191.79 1137.49

Illuminating Paraffin (c/l) 1009.728 1021.728 1037.728 1003.228 984.228 974.228 997.228 990.228 971.228 957.228 905.228 855.928

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 2346.00 2221.00

(SAPIA online)

Daily prices for 9 July 2015

LME Official Prices, US$ per tonne

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Contract Aluminium Alloy Aluminium Copper Lead Nickel Tin Zinc NASAAC

Cash Buyer 1740.00 1648.00 5571.00 1803.50 11285.00 14350.00 2008.00 1720.00

Cash Seller & Settlement 1750.00 1649.00 5576.00 1804.00 11290.00 14355.00 2009.00 1730.00

3-months Buyer 1755.00 1692.00 5589.00 1807.00 11315.00 14300.00 2009.00 1740.00

3-months Seller 1765.00 1692.50 5590.00 1808.00 11320.00 14335.00 2010.00 1750.00

15-months Buyer 14280.00

15-months Seller 14330.00

Dec 1 Buyer 1755.00 1748.00 5645.00 1832.00 11465.00 2040.00 1805.00

Dec 1 Seller 1765.00 1753.00 5655.00 1837.00 11565.00 2045.00 1815.00

Dec 2 Buyer 1798.00 5685.00 1853.00 11565.00 2050.00

Dec 2 Seller 1803.00 5695.00 1858.00 11665.00 2055.00

Dec 3 Buyer 1858.00 5705.00 1873.00 11565.00 2040.00

Dec 3 Seller 1863.00 5715.00 1878.00 11665.00 2045.00

(London Metal Exchange, 10/7/2015)

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