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1 Commodities Daily 17 September 2009 Focus: OPEC non-compliance offsets rising demand While the decline in crude oil demand in the US and other OECD countries has stopped, oil product demand in July and August has remained below levels last seen in 2007 and We expect that 2009 product demand from non-oecd countries will outstrip 2008 demand; we also believe crude oil will find it difficult to sustain a move above $75/bbl in Q4:09. The weaker dollar and firm gold prices helping keep the base metals supported heading into Thursday afternoon. In spite of a strong close on Wednesday however, there has been only limited follow through buying during Thursday morning, suggesting this latest rally may be running out of momentum. * CFA +44 (20) Walter.DeWet@standardbank.com Leon Westgate* +44 (20) Leon.Westgate@standardbank.com Manqoba Madinane* +27 (11) Manqoba.Madinane@standardbank.co.za After trading above $1,020 again this morning, gold remains the focus in the commodities markets. It continues to find good support whenever it breaks lower. However, close to $1,033, resistance is also growing. Front-month WTI crude is once again trading above $72.00/bbl. The draw on US crude inventories continued yesterday, with US crude oil inventories falling a sizable 4,729K. Market expectations were for a 2,500K draw. This is the fifth consecutive week that crude oil inventories have declined. However, product inventory is still building. Commodity price data (16 September 2009) Base metals LME 3-month Open Close High Low Daily change Change (%) Cash Settle Change in cash settle Cash 3m Aluminium 1,893 1,927 1,943 1, , Copper 6,335 6,420 6,470 6, , Lead 2,250 2,294 2,325 2, , Nickel 17,250 17,300 17,500 16, , Tin 14,500 14,700 14,765 14, , Zinc 1,900 1,937 1,958 1, , Sources: Standard Bank; LME; BBG Open Close High Low day/day Change (%) ICE Brent % NYMEX WTI % ICE Gasoil % API2 Q4' % ICE EUA Dec % AM Fix PM Fix High bid Low offer Closing bid Change (d/d) EFPs Gold* 1, , , , , /1.7 Silver /3.5 Platinum 1, , , , , /4 Palladium /3 Please refer to the disclaimer at the end of this document.

2 Focus: OPEC non-compliance offsets rising demand OPEC crude oil production While the sharp decline in crude oil demand in the US and other OECD countries has stopped, oil product demand in July and August has remained below levels last seen in 2007 and However, there has been a good recovery in non-oecd product demand. mbpd Non-OECD product demand started the year below 2008 demand. YTD product demand was 26.7mbpd, compared to 26.9mbpd last year. However, we estimate that in June and July, y/y product demand was higher. We expect this trend to continue, and that 2009 product demand from non-oecd countries will outstrip 2008 demand Jan-00 Oct-00 Jul-01 Apr-02 Jan-03 Oct-03 Jul-04 Apr-05 Jan-06 Oct-06 Jul-07 Apr-08 Jan-09 This rise in non-oecd demand is important support for crude oil prices, however, these countries do make up only a small percentage of global crude oil demand. While we believe non- OECD countries should continue to lead the rise in demand for crude oil in 2010, they consume only 45% of crude oil. OECD countries, excluding the US, consumes 37% of crude oil, while the US consumes 18%. Inventory levels remain high in the US which, despite stabilisation in demand, remains a hindrance to any price rally. But the latest data also shows that OPEC is increasingly defying quotas and that the compliance level has been falling. While the OPEC quota (excl. Iraq) has been unchanged at 24.8mbpd Base metals Actual production Source: OPEC, BBG Production quota (excl. Iraq) since the start of the year, actual OPEC production has steadily risen from a low of mbpd in March to 28.45mpd in August. As long as crude oil price remains around $70/bbl, OPEC members could continue to defy quotas. Therefore, despite recovering demand, rising production by OPEC and high inventories, we believe crude oil will find it difficult to sustain a move above $75/bbl in Q4:09. The weaker dollar and stronger gold prices saw the base metals complex rally strongly during Wednesday morning. The metals pushed on again during the afternoon as the US markets reacted to the morning s price activity and also bought metals. Decent economic data helped keep the upwards momentum going, while sporadic short covering activity was also a factor. The same themes are again in play this morning, with weaker dollar and firm gold prices helping keep the base metals supported. In spite of a strong close on Wednesday however, there has been only limited follow through buying during Thursday morning, suggesting this latest rally may be running out of momentum. Volumes are slightly better than previous days, but not dramatically so, again pointing to the continuing indecision and uncertainty in the market. Against this backdrop, and general lack of clarity, technical signals are likely to dominate short term direction. Wednesday s macroeconomic data was again generally better than expected, with US Industrial production posting a 0.8% increase in August, compared to expectations of a 0.6% gain. This afternoon sees the release of the US Housing Starts and Building Permits data for August (expected at 598K and 583K respectively), and the latest round of Initial and Continuing jobless claims. After a very strong day yesterday, Copper has spent Thursday morning trading sideways, keeping one eye on the dollar. Overall however the metal remains firmly rangebound, with copper continuing to trade within the same ~$500 range its been stuck in since the beginning of September. Until there are indications that the physical markets, particularly China, are picking up, or unless the dollar weakens dramatically, its seems likely that this range will continue to hold. In some respects copper arguably represents a better hedge against inflation than the likes of gold over the coming months, with the metal also benefiting from an expected recovery in industrial demand and a poor project pipeline. However, over the short to medium term at least, the red metal s fortunes are still very much reliant on the behaviour and buying patterns of the Chinese. 2 The rest of the base metals complex are generally higher heading into the afternoon, with nickel, lead and zinc all making further gains, albeit on the back of lacklustre volumes. Elsewhere, tin is trading sideways, with a 670 mt increase in on-warrant stocks apparently weighing on sentiment. Meanwhile, Nyrstar has announced it will restart production at its Balen zinc smelter by the end of this month. Leon Westgate

3 After trading above $1,020 again this morning, gold remains the focus in the commodities markets. It continues to find good support whenever it breaks lower. However, close to $1,033, resistance is also growing. Gold ETFs continue to add to their holdings. The latest figures show that another 277,245oz were added to ETF gold holdings. There is still good resistance in the physical market (in which buying activity has slowed down substantially). The now familiar trend continues. Equities continues to make gains, and the futures market signals this may continue today in the US. US treasuries are on the back foot, with the 10-year yield rising 10 bps in a few minutes, to trade around 3.40%. As a result, the dollar continues to weaken. Gold support is at $1,025 and $1,030, and support at $1,010 and $1,000. Platinum has broken above the $1,340 level, and the market seems very bullish. There was a sizable increase of 19,052 oz of platinum to ETF holdings yesterday, which has no doubt supported the price. Providing additional support is the strong ZAR which is offsetting most of the gains for platinum producers from a higher dollar-denominated platinum price. Despite platinum s gains, there has been very little movement in palladium which remains stuck at $290-$300. However, it looks set for a break higher should platinum continue its push higher. There are a few important data releases in the US today. The US is seeing housing starts for August, initial jobless claims and continuing claims for the second and first week of September respectively. The market expects good housing numbers and fairly flat employment figures. Silver continues to defy the odds, and remains well supported. However, the metal remains subject to a sizable downturn should gold also find resistance. With silver at these levels the market might be reluctant to add more long positions. Silver support is at $17.15 and $16.85, and resistance at $17.60 and $ Front-month WTI crude is once again trading above $72.00/bbl. The draw on US crude inventories continued yesterday, with US crude oil inventories falling a sizable 4,729K. Market expectations were for a 2,500K draw. This is the fifth consecutive week that crude oil inventories have declined. However, product inventory is still building. Distillate inventory was also up much higher-than-expected, rising 2,237K against expectations for 1,250K. Gasoline inventories were up 547K. The market saw this as bullish despite the increased product inventories. Given the declining crude oil inventories, the focus remains on US refineries. US refinery runs are still close to the highs of the year at 86.94%. But pressure are rising on the back of deteriorating refinery margins to cut production runs. This might ultimately see the recent decline in crude oil inventory stop. We expect gasoline stock to continue to build as seasonal demand declines in Q4. We also expect distillate stock to rise despite being already at very high levels. The dollar remains weak, at $ against the euro. Our target has been $1.50 against the euro by year-end. However, the dollar has decreased so fast recently that a pull-back remains possible. However, we still see a general weaker trend for the dollar. But despite a dollar target against the euro at $1.50 by December, the high product inventories and increased production by OPEC could make it difficult for crude oil to sustain a rally above $ WTI front-month support is at $70.90 and $6.50, with resistance at $73.00 and $

4 Base metals Daily LME stock movement (mt) Metal Today Yesterday In Out One day change YTD change (mt) Contract turnover Aluminium 4,624,150 4,629, ,775-4,850 2,295, , ,223 Copper 324, ,225 1, ,150-15,400 8, ,952 Lead 124, , ,000 1, ,069 Nickel 118, , ,416 2, ,501 Tin 23,335 22, , ,811 Zinc 435, , ,500 9, ,062 Shanghai 3-month forward prices Copper 49,000 48, Cu Sep' % Zinc 15,215 15, ZAR metal prices (16 September 2009) Aluminium Copper Lead Nickel Tin Zinc ZAR/USD fix Cash 13,629 46,501 16, , ,046 13, month 14,424 48,054 17, , ,031 14, futures pricing Price Change Price Change Price Change Price Change Price Change 1-month forward 2-month forward 3-month forward 6-month forward 1-year forward Sing Gasoil ($/bbbl) Gasoil 0.1% Rdam ($/mt) NWE CIF jet ($/mt) Singapore Kero ($/bbl) % Rdam barges ($/mt) % Fuel Oil FOB ($/mt) Sing FO 380 Cargo ($/mt) Sing FO180 Cargo ($/mt) Thermal coal Q4:09 Q1:10 Q2:10 Cal 11 Cal 12 API2 (CIF ARA) API4 (FOB RBCT) Carbon Spot Dec-09 Dec-10 Dec-11 Dec-12 ICE - ECX EUA ( /mt) ICE - ECX CER ( /mt) Forwards (%) 1-month 2-month 3-month 6-month 12-month Gold Silver USD Libor Technical Indicators 30-day RSI 10-day MA 20-day MA 100-day MA 200-day MA Support Resistance Gold Silver Platinum , , , , , Palladium Active Month Future COMEX GLD COMEX SLV NYMEX PAL NYMEX PLAT DGCX GLD TOCOM GLD CBOT GLD Dec'09 Sep'09 Oct'09 Oct'09 Aug'09 Jun'10 Aug'09 Settlement 1, , , , , Open Interest 473, ,004 22,241 28,489 1,787 94,152 3,354 Change in Open Interest -15,477-1, , , Date: 16 September 2009 Sources: Standard Bank; LME; Bloomberg Cancelled warrants (mt) COMEX active month future prices Cancelled warrants (%) Metal Open Last 1d Change Open Close Change Change (%) Aluminium 14,950 14, Ali Sep' % 4

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