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COMMODITY NEWSBRIEFS: 23 FEBRUARY 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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FAST MOVING CONSUMER GOODS See article “WORST FOOD CRISIS SINCE 1992 LOOMS” under heading GRAIN STEEL GLOBAL CRUDE STEEL PRODUCTION AT 133 MT FOR JANUARY (Engineering News, 20/2/2015) Global crude steel production decreased by 2.9% year-on-year to 133-million tonnes in January, the World Steel Association (worldsteel) said on Friday. Of the 65 countries reporting to the association, China had the highest crude steel production for the month, with 65.5-million tonnes, a 4.7% decrease compared with January 2013. Japan produced nine-million tonnes, a 4% year-on-year decrease. Africa’s production totaled 1.2-million tonnes, a 3% contraction year-on-year. Production was led by Egypt, reporting an 11.6% increase to 605 000 t, while Morocco’s production fell 82.7% year-on-year to 10 000 t. South Africa’s production contracted by 9.6% to 550 000 t. The crude steel capacity utilisation ratio for the 65 countries in January was 72.5% – 4.4 percentage points lower than in January 2014 and 0.4 percentage points lower than December 2014. FUEL BIG PETROL PRICE INCREASE ON THE CARDS? (iAfrica, 23/2/2015) Economists are expecting the fuel price to increase by at least 60 cents a litre from next week after motorists have seen the petrol price declining consecutively the past three months. Dawie Roodt says this has to do with the oil price steadily increasing. He however expects the petrol price to increase by almost 80 cents a litre next month. “In the last few weeks we’ve seen quite a sharp increase in fuel price from less than $50 to more than $60 a barrel and that I’m afraid is going to result in an increase in petrol price in the region to about 80 cents a litre.” Economist Chris Hart says it is not all that bad news. “The fuel price hike is still a little below what we were paying in the middle of last year. I think we’ll still see fairly subdued food prices.” The Energy Department announces the new petrol price next week Friday. COAL ESKOM SOFTENS COAL CRISIS STANCE (MiningMx, 23/2/2015)

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Good news has been in short supply at Eskom so it’s welcome to hear that the massive shortage in coal supply the utility said was a probability from 2018 now looks to be less likely. Unfortunately, this is cold comfort. One of the reasons the so-called ‘coal supply cliff’ won’t materialise is down to the fact that the South African economy is shrinking and electricity demand is expected to fall beneath previously demand growth rate estimates. At the same time, Eskom has also met with some success in its efforts to secure new sources of coal despite saying in the past that there wasn’t enough new investment in the sector. In fact, a significant amount of un-contracted coal had been identified and was in “various stages of negotiation”. That’s according to Vusi Mboweni, acting executive of Eskom’s primary energy division, who also said coal would remain as central to the country’s energy generation as it ever was, regardless of the push towards reneweable and nuclear forms of energy. Quite what this means for the redraft of the Integrated Resource Plan (IRP), a blue-print for South Africa’s energy mix in the future, is up for conjecture. Initially written to ensure an increase in the amount of energy sourced from renewable energy sources, as well as nuclear, the new IRP, which is yet to be signed off by the Department of Energy, seems to have fallen back on coal whilst promoting gas above nuclear, notwithstanding the South African government’s high profile agreements to discuss nuclear technology supply from Russia and China. Eskom data shows that the price it pays for coal has increased 20% a year on a compounded basis for the last few years whilst the tariff its charges for its electricity has not kept pace. “Eskom is juggling with escalations on the coal side which is the input for the generation of electricity at higher percentage than the regulated electricity price,” said Mboweni. “Surely there must be a balance at some point?,” he said. “We can’t have a situation where we have regulated electricity price and unregulated coal as we have to make sure we have a sustainable business.” 50% EMPOWERMENT DEMAND STALLS ESKOM COAL DEAL (Business Times, 22/2/2015) Times are indeed hard for the ASXand JSE-listed mining company based in Limpopo. The company is sitting with only about R1-million in cash, having recently recorded losses of more than R570-million for its 2014 financial year. The aspiring coal miner has been fighting a battle to secure a supply contract with Eskom. In 2010, it signed a memorandum of understanding to supply the power utility with coal for 30 years, but Eskom keeps shifting the goalposts for its black empowerment requirements, so a final deal has yet to be nailed down. The struggle has cost the company dearly. Its share price has fallen more than 80% since its last memorandum of understanding with Eskom. If it manages to build its mine, however, it has the potential to become the second-biggest producer of coal in Africa. But to supply Eskom, Waterberg Coal would need to be at least 50% black empowered — a far higher benchmark than South Africa’s Mining Charter, which requires only 26% for a mining licence. “We are finding the levels of bureaucracy in South Africa higher than in other countries . . . But, we want to move into this space, so we have made a decision to work our way towards complying,” CEO Stephen Miller said. Even though negotiations with Eskom are far from resolved, the company has decided to start development on the mine — with the first coal destined for export in 2016. If all goes well, it plans to export 4-million tons of coal a year by 2020. A stand-alone export project could bring in much-needed cash and form the basis for the company’s ambitions to build a coal-fired power station and move into independent power generation. But, for all of that, Waterberg Coal will still need to sign that supply agreement with Eskom, and Miller hopes this will happen soon. The biggest issues that still need to be resolved are around pricing, coal quality specifications, scheduling and, now, the additional black empowerment requirements. GRAIN MAIZE CROP FORECAST TO SHRINK TO FOUR-YEAR LOW (Business Report, 23/2/2015) The 2015 local maize crop may be the smallest since 2011 as hot, dry weather in the two biggest growing provinces damages the harvest, a survey showed. Farmers may reap 10.5 million tons of maize this season, according to a median of five analysts’ estimates in a survey. The range was between 9.9 million and 11 million tons and compares with 2014’s crop of 14.25 million tons, the biggest in 33 years. The government’s crop estimates committee will release its prediction on Thursday. Output was 10.4 million tons in 2011, the Grain Information Service said. The Free State and North West, which produced 64 percent of the harvest last year, haven’t had sufficient rains, according to Grain SA. They needed more than 20mm by the weekend for the crop to recover, with much of the damage being irreversible. While the consumer inflation rate fell to the lowest since March 2011 in January, investors are fretting that the deceleration may be ambushed by higher food and fuel prices. Prices have rallied this year because of concern that the drought may limit the harvest this year. Yellow maize rose for a fifth consecutive week, the longest such run of gains in more than a year. The grain has advanced 12 percent so far this year. White maize has surged 28 percent during the period. The Maize and Wheat Millers’ Association of Botswana, the country that imports as much as 95 percent of its annual maize requirements from South Africa, said on

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Thursday that customers should expect an increase in the price of the finished product from as early as next month. The committee will probably leave its estimate for the area of maize plantings unchanged from last month’s forecast of 2.66 million hectares, a median of three analysts surveyed shows. This will be 1.2 percent smaller than in 2014. The committee may leave its predictions for the output of wheat unchanged from the previous estimate at 1.78 million tons, a median of three analysts’ estimate shows. White maize for delivery in July dropped 1.4 percent to R2 750 a ton. WORST FOOD CRISIS SINCE 1992 LOOMS (Business Report, 23/2/2015) The country could be facing a food crisis of a magnitude not experienced since the crop failures of 1992, when the government had to subsidise mealie meal for the poor, if the north-west Free State, North West Province and Mpumalanga do not get sustained rain of at least 20mm in the next fortnight. Chief executive of Grain SA Jannie de Villiers said there was already “90 percent certainty” of a significant grain shortage, owing to extreme heat and low rainfall in those three areas recently. De Villiers said that by Thursday the government would announce the quantity of maize the country would harvest this season, but it was likely it would be significantly short of what is needed for domestic consumption. De Villiers said the country had 2.6 million hectares of maize in the ground and, despite the fact that last year produced the second-highest yield on record, North West Province, the north-west Free State and Mpumalanga – the areas that produce the bulk of the country’s maize – had received no rain from mid-February and had experienced extremely high temperatures. “One farmer told us that in the Free State area of Botha-ville there would normally be eight days in the year when the temperature was above 32ºC. Since the start of the year, there have already been 22 such days,” De Villiers said. “Combined with the low rainfall, the extreme heat limits the ability of the mealie kernels to fill the cob, with a negative impact on the viability of the crop.” The chief executive said that, while exact figures were not yet available on what the shortfall in domestic maize produce would be, “South Africa needs 10.2 million tons to feed those who rely on maize as their staple diet”. He said local shortages would also have an impact on neighbouring countries such as Botswana, Lesotho, Swaziland and Namibia, whose people also relied on the staple food. “The price of mealie meal has increased by around 50 percent, so the poorest of the poor are hard hit. “They are paying far more than usual for the mealie pap that is their main food source.” De Villiers said the failure of the local maize crop was exacerbated by the fact that the developed world did not produce white mealie meal for human consumption, but only for animal feed, thus limiting import options. However, he said it was still too early to declare a food security emergency. “We are red-flagging the issue, but we will only know the true extent of the problem in six to eight weeks’ time. By the end of March, we will have a clearer idea of where we stand. “While the early plantings have had it, there is still young maize that might survive if we get adequate rain in the next few weeks.” TIMBER, PAPER, PUBLISHING YORK EXPECTS 425% RISE IN H1 EARNINGS (Engineering News, 20/2/2015) York Timbers expects its earnings a share and headline earnings a share for the six months ended December 31 to jump by between 425% and 445% to between 21c and 21.8c. Operating profit was likely to be between 55% and 65% higher than that reported for the first six months of the prior financial year. In contrast, net cash flow from operating activities was likely to drop by between 95% and 105%, owing mainly to the timing of purchases of imported plywood. York added that the company’s biological asset valuation at the end of 2014 had exceeded that of the prior year. The company was expected to release its interim results on March 31. CURRENCIES AND PRICES

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ALSI: 3 mnth to 20 Feb 15

(Mail & Guardian, 23/2/2015)

JSE AS AT 17:00PM 20 FEBRUARY 2015

All Share Index 20/02 53,035

+ 199.71 + 0.38%

Industrials Index 20/02 48,574

- 107.10 - 0.22%

Financials Index 20/02 43,647

- 97.02 - 0.22%

Top 40 Index 20/02 46,881

+ 163.99 + 0.35%

Industrial 25 Index 20/02 65,920

+ 98.62 + 0.15%

Financial 15 Index 20/02 16,743

- 56.67 - 0.34%

Resources 10 Index 20/02 45,755

+ 749.62 + 1.67%

Alt-X Index 20/02 1,493

+ 15.76 + 1.07%

WORLD INDICATORS

FOREX

Rand/Dollar 06:39 11.6470

- 0.02 - 0.16%

Rand/Pound

06:40 17.8778

- 0.08 - 0.45%

Rand/Euro 06:40 13.2532

- 0.009 - 0.07%

COMMODITIES

Gold (usd/oz) 06:36 1,203.97

- 4.23 - 0.35%

Platinum (usd/oz)

06:30 1,168.50

+ 2.50 + 0.21%

Brent (usd/barrel) 06:36 60.37

+ 0.16 + 0.27%

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WORLD MARKETS

Wall St (DJIA) 20/02 18,140

+ 154.67 + 0.86%

Germany (DAX)

20/02 11,051

+ 89.64 + 0.82%

Japan (Nikkei) 06:39 18,441

+ 108.28 + 0.59%

(Business Report, 23/2/2015) COPPER A – SETTLEMENT PRICE – N/A FORWARD RATES - Dollar/rand 4pm close: N/A

(TFR Commercial Management: Business Performance Dept)

Petrol/ Diesel Price

YR2015 07-Jan- 04-Feb- 04-Mar- 01-Apr- 06-May- 03-Jun- 01-Jul- 05-Aug- 02-Sep- 07-Oct- 04-Nov- 02-Dec-

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15 15 15 15 15 15 15 15 15 15 15 15

COASTAL

95 LRP (c/l) 1083.00 990.00

95 ULP (c/l) 1083.00 990.00

Diesel 0.05% (c/l) 997.49 895.49

Diesel 0.005% (c/l) 1001.89 899.89

Illuminating Paraffin (c/l) 697.728 595.728

Liquefied Petroleum Gas

(c/kg) 1829.00 1679.00

GAUTENG

93 LRP (c/l) 1102.00 1009.00

93 ULP (c/l) 1102.00 1009.00

95 ULP (c/l) 1124.00 1031.00

Diesel 0.05% (c/l) 1028.09 926.09

Diesel 0.005% (c/l) 1032.49 930.49

Illuminating Paraffin (c/l) 747.928 645.928

Liquefied Petroleum Gas

(c/kg) 2011.00 1861.00

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

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