Commodity Spotlight Precious Metals

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1 Commodity Research Commodity Spotlight Commodity Spotlight Precious Metals Gold the shine is back 3 March 216 The gold price climbed to a 12-month high of US$ 1,26 a troy ounce in mid-february. The price rally was supported by financial market turbulence, the pricing out of Fed interest rate hikes and strong inflows into gold ETFs. The price rise could still continue. We see some correction potential though, especially if Fed interest rate hike speculation re-emerges. We envisage a gold price of US$ 1,25 a troy ounce at the end of the year. Silver, platinum and palladium have hardly followed gold s price rally so far but should do so in the course of the year. The gold price has made an impressive start to 216. In the first six weeks, the price gained as much as 2%. In mid-february, gold was trading at a good US$ 1,26 a troy ounce, marking a 12-month high, and it has been trading within a range of US$ ever since. In euro terms, gold has risen to a 13-month high of almost 1,15 a troy ounce (chart 1). Amid quite strong financial market turbulence at times, gold has been in high demand as a safe haven and the price has been supported by a number of factors. It gained tailwind from the temporarily sharp fall in global equity markets, reflecting rising risk aversion of market participants. This and a series of disappointing economic data from the USA have led to a pricing out of earlier expected interest rate hikes by the US Federal Reserve this year. Against this backdrop, the US dollar has depreciated markedly falling to a 4-month low versus the euro at one point. Furthermore, the yields of 1-year US Treasuries temporarily dropped to a 3½-year low of a good 1.5%, which can be seen as a further indication for the high risk aversion of market participants. Clear positive signals for gold have also come from the central banks. The Bank of Japan surprisingly cut its key interest rate into negative territory at the end of January, following the ECB, the Swiss National Bank and Sweden s Riksbank, which had already introduced negative rates. Moreover, Riksbank surprisingly cut interest rates further into negative territory at the beginning of February. The ECB is set to follow with a further rate cut in March. According to our rates strategists, bonds on a scale of more than 1bn are meanwhile trading worldwide with a negative yield. In Germany, government bonds with a maturity of eight years or less have a negative yield. The German average yield is only just above zero. While previously gold was said not to earn any interest, it s now more a case of gold not costing any interest. Commerzbank Forecasts 216 Q2 Q3 Q4 Precious metals Gold Silver Platinum Palladium USD per troy ounce CHART 1: Gold price up sharply since start of the year Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 Gold in US$ per troy ounce, left Gold in EUR per troy ounce, right For important disclosure information please see page 11. research.commerzbank.com / Bloomberg: CBKR / Research APP available Head of Commodity Research Eugen Weinberg eugen.weinberg@commerzbank.com Analyst Carsten Fritsch carsten.fritsch@commerzbank.com Analyst Barbara Lambrecht barbara.lambrecht@commerzbank.com Analyst Michaela Kuhl michaela.kuhl@commerzbank.com Analyst Daniel Briesemann daniel.briesemann@commerzbank.com

2 Gold ETFs show strong inflows Central banks are still increasing their gold reserves Gold demand in China and India expected to be robust In the wake of these developments, the rather modest investor interest in gold in past years has increased significantly. Especially gold ETFs have been in strong demand for weeks. The gold ETFs tracked by Bloomberg registered inflows of 24 tons in the first two months of the year (chart 2). Consequently, inflows into ETFs have already overtaken the total outflows for last year (138 tons) by far. The inflows so far this year correspond to about half of global mining output in this period. At around 185 tons, gold ETFs even recorded their most pronounced monthly inflow in February since the global economic and financial crisis seven years ago. And it has been evident lately how inflows into Gold ETFs have remained steady and even gained momentum despite rising equity markets and a slight fall in the gold price. It shouldn t be assumed that this pace of ETF inflows will continue. However, should this mean the end of the three-year trend of ETF outflows, this would be a clear price-supportive factor for gold; instead of adding supply to the market, as in the last three years, gold ETFs would be taking gold off the market. Central banks are still on the buyer side in any case they have been net gold buyers for six years now. Last year, official-sector purchases totalled 588 tons according to the World Gold Council, which is roughly the level of the previous year (chart 3). These purchases were largely made by the Russian and Chinese central banks, which should have bought around 2 tons of gold each despite falling currency reserves. As the share of gold in China s currency reserves is still very low by international comparison, at just under 2%, the People s Bank of China is set to continue to build up its gold holdings in the foreseeable future. However, the fall in currency reserves has also led to a rise in the gold s share of total reserves. At 13%, Russia s share of gold in its currency reserves is not that low, but the CBR is still likely to continue expanding its gold reserves. Another contributing factor here is that there is no risk of sanctions in the case of gold, in contrast to the US dollar. Besides central banks, private households in China and India will continue to buy substantial quantities of gold. According to the World Gold Council, gold demand last year amounted to tons in China and 849 tons in India, most of which was attributable to jewellery demand. The WGC sees a brighter demand outlook this year compared to last year. Market turmoil at the beginning of the year is likely to have reminded retail investors in China of the risks of equity investments. A lack of investment alternatives capital investments abroad are barely possible and the property market is battling with an oversupply should led investors to buy more gold again. A representative of the World Gold Council has voiced the expectation that investment demand in China should be robust if the price rise continues. In India, gold demand last year was dampened by a poor monsoon season, which affected the harvest and thus the income of the rural population. As this year s monsoon season should be more normal again as the El Nino weather phenomenon has ended, gold demand should be stronger again as well. CHART 2: Gold ETFs showing massive inflows of late ETF holdings in tons, gold price in US$ per troy ounce Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Gold ETF holdings, left Gold price, right CHART 3: Central banks net gold buyers in 215 too Official-sector gold purchases in tons Source: World Gold Council, Commerzbank Research 2 3 March 216

3 Gold should rise further in the short term, but this is not a one-way street Higher gold price is dampening gold price in China and India New Fed rate hike speculation would weigh on gold Only limited correction potential though; US$ 1,2 at end of 216 Gold should continue its high-altitude flight initially as more speculative financial investors jump on the bandwagon. Their net long positions climbed to a 4-month high of 19 thousand contracts in late February, after net short positions still prevailed at the start of the year (chart 14, page 9). That said, by historic standards, the level of net long positions is still not especially high. Gold could therefore quite possibly reach its peak of US$ 1,3 a troy ounce from early 215 again. Should economic fears strengthen further and new turbulence on equity markets occur even higher prices are imaginable. That said, we warn against simply extrapolating the upward movement of the gold price since the beginning of the year in the coming months: the gold price trend is not a one-way street and a setback is possible at any time. The higher price level should dampen jewellery demand in China and India and there are already signs of this happening. In India, the gold price is currently trading at a discount of more than US$ 5 a troy ounce compared to the global market price. According to industry sources, India s gold imports could have dropped to their lowest level in almost 2½ years in February. Back then gold imports totalled only 2 tons in some months (chart 4). According to data from the Hong Kong Census and Statistics Department, China s net gold imports from Hong Kong dropped to their lowest level since August 214 in January (chart 18, page 9). The depreciation of the Chinese yuan was probably a contributing factor to these low imports, with the gold price in local currency rising at an even sharper rate than the price in US dollars. Furthermore, advance purchases were made in December. However, gold demand in China is now looking quite modest after investment demand in China was very strong in particular at the beginning of 216. Renewed Fed interest rate hike speculation could also provide headwind. Based on the Fed fund futures, the market currently expects an interest rate hike by the end of the year at a probability of a bit more than 6%. However, our economists expect the US Fed to raise the key interest twice this year. As last year impressively showed, gold tends to react very sensitively to rate hike speculation, especially as the US dollar is set to strengthen in that case. The developments of the past two years also call for caution; gold made a strong start to the year but could not sustain its gains. Gold recorded its annual peak in the first quarter of both 214 and 215, then ended 214 slightly below the starting level for the year and 215 at a clear minus (chart 5). We do not expect that to happen this year however. Although the rise in the gold price in past months was probably too fast and correction potential has developed, we do not envisage the gold price to experience a sharp slide like last year. While a calmer market situation and brighter economic data from the USA should put pressure on gold again because interest rate hikes by the Federal Reserve will then become more likely again, this should weigh on the gold price only temporarily in our view. Instead, we believe gold is well supported in the market environment of continued high uncertainty and negative interest rates. We therefore expect gold to trade at US$ 1,25 a troy ounce by the end of 216. CHART 4: Indian gold imports expected to decline sharply in tons Jan-1 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 CHART 5: Gold also increased initially in 214 and 215 indexed 1 January = Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov Source: Reserve Bank of India, Bloomberg, Commerzbank Research 3 March 216 3

4 Silver Silver price lags behind gold price by far Weak industrial demand in electronics especially Rising demand in photovoltaics and ethylene oxide production Record-high demand for silver coins The silver price was able to profit from the upturn on the gold market and rose to a 3½-month high of US$ 16 a troy ounce at the beginning of February, but has since dropped again to US$ 15. At plus 8% since the start of the year, the price increase lags well behind that of gold. The gold/silver ratio has consequently risen to over 8 for the first time since December 28, with Silver showing relative weakness not just since the beginning of the year but for almost five years (chart 6). The hybrid nature of this precious metal as an alternative investment like gold and as a metal with industrial use means that silver sometimes performs better than gold and sometimes worse. This phenomenon is strengthened by the fact that the silver market is a smaller market than the gold market, meaning that just a few transactions can lead to price volatility. What is behind this weak price trend and will the trend turn in the foreseeable future? A factor weighing on prices has been weak industrial silver demand, accounting for over half of physical demand and falling by 11.5% since 21 (chart 7). The needs of the electronics industry, accounting for 5% of industrial demand, have decreased. Silver is being used here because of its exceptional conductivity. However, the use of silver in electronic applications has been reduced significantly in past years (thrifting). Demand from China has been particularly weak, though the trend should stabilise here, as already suggested by the sharper rise of silver imports again in the second of 215 (chart 2, page 9). The positive demand trends that were evident already last year in other industrial segments should continue. Demand in photovoltaics, accounting for 13% of industrial demand, should exceed its former record level from 211 this year. Here too, the use of silver has decreased in the last few years, dampening silver demand markedly. The reduction of silver in solar cells should gradually cease though and silver demand should therefore rise more in line with the solar cell production again. The global production of solar installations should expand this year at a high single-digit rate. The importance of the demand from manufacturers of ethylene oxide (EO), who require silver catalysts to produce this gas that is often used in the chemicals industry, is considerably less. However, this demand component is showing very strong growth. Last year, the increase was 4%. The Silver Institute expects demand to grow by 25% this year. The remaining physical demand for silver was virtually unchanged: The demand for silver coins reached a record level last year, accounting for 12% of the total physical demand for silver. This year again, the Silver Institute expects robust demand for coins given attractive prices and a growing interest in safe haven assets. In contrast, the demand for silver jewellery declined slightly in 215. The Silver Institute expects a rise here of 5% in 216. CHART 6: Silver shows relative weakness compared to gold Ounces of silver per ounce of gold Silver price in USD a troy ounce CHART 7: Industry weighing on silver demand in million ounces Jan-9 Jan-1 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan Gold/Silver ratio, left Silver price, right industrial use jewelry & silverware coins & bars Source: Thomson Reuters GFMS, Silver Institute, Commerzbank Research 4 3 March 216

5 Mining supply should fall in 216 for the first time in 14 years Fall in production costs cannot fully cushion the fall in price Supply of silver scrap is still decreasing High supply deficit suggests rising silver price Last year, weak demand was accompanied by a falling silver supply. Global mining supply stagnated in 215 for the first time in years on account of the lower prices (chart 8). Silver is mainly being produced as a by-product of gold, copper, lead and zinc production. However, substantial cuts have been announced in the mining production of industrial metals as prices have plunged and profitable operations are often no longer possible. The outlook is also deteriorating for the primary production of silver, accounting for almost a third of mining supply. Many producing countries still profit from the depreciation of their currencies. Mexico and Peru are the biggest producers, providing a third of supply, and the Mexican peso has depreciated by as much as 3%, the Peruvian sol by a good 2%, against the US dollar. This is dampening the costs in US dollar, especially as the commissioning of new mines and the expansion of cost-efficient mines, such as the Saucito mine in Mexico, is likewise curbing production costs. This has been able to offset the price-related fall in by-product credits. Overall, the cash costs in the primary production of silver have actually fallen. However: if capital costs are also considered, 2% of silver producers are making a loss due to the lower silver prices according to research company GFMS. Also because of the sharp reduction of exploration expenditure in recent years, mining supply is expected to fall by 5% in 216, which would be the first annual decline since 22. Silver scrap is the second most important supply component, making up almost 15% of physical supply. This has been on a downtrend for some years. Supply from industry (almost 5%) should stagnate, at best, in 216; given the low price level, the recovery of silver from electronic appliances is often not profitable. On the other hand, additional recycling supply could come from the ethylene oxide segment, with the scrapping of old catalysts. The scrap supply of silver ware and silver jewellery is price sensitive and a continued decrease is therefore to be expected here. Furthermore, the supply of scrap silver from the photo industry has also declined further for structural reasons. The total supply of silver scrap should therefore continue to fall overall. Consequently, 216 should be a year of rising silver demand and falling silver supply (chart 9). The silver market should therefore show a supply deficit about three times greater than in 215. How much this will affect prices essentially depends on how investment demand develops. Last year, investors withdrew 524 tons of silver from ETFs, allowing the supply deficit to shrink by about half and knocking the price of silver (chart 23, page 1). A short-term risk is the sharp rise in speculative net long positions on the futures market. These have risen sevenfold since the beginning of the year to 51 thousand contracts and are therefore just slightly below the record level reached in October 215 (chart 22, page 1). If speculative financial investors withdraw from the market, this could put pressure on the price temporarily. In the medium term, the silver price should rise given the substantial expansion of the supply deficit also in relation to gold. We see the silver price at US$ 17 a troy ounce at the end of the year. The gold/silver ratio would then fall to 74. CHART 8: Stagnating mining production, less silver scrap Silver supply in million ounces CHART 9: Sharp increase in supply deficit Physical supply and physical demand in million ounces mine production other * silver supply silver demand * estimate Source: Thomson Reuters GFMS, Silver Institute, Commerzbank Research Source: Thomson Reuters GFMS, Silver Institute, Commerzbank Research 3 March 216 5

6 Platinum and palladium Platinum and palladium still showing supply deficits Continued upswing in automotive industry in the US as well as in China and the EU The platinum price has been shuttling back and forth between US$ 92 and US$ 95 a troy ounce since mid-february. It has recovered by 15% as compared with its January seven-year low. Since slumping to a 5½-year low in the first half of January, the palladium price has been hovering around the US$ 5 a troy ounce mark (chart 1). Johnson Matthey, the world s largest refiner of platinum and palladium, revised its estimate for the 215 platinum supply deficit in January upwards by 5, to 72, ounces. The global platinum market is likely to show a supply deficit in 216 too, though the World Platinum Investment Council (WPIC) expects it to be smaller than last year. According to the WPIC, worldwide platinum supply should grow thanks to an increased availability of recycling supply. Platinum demand, on the other hand, is set to decrease slightly. The WPIC particularly expects to see lower investment demand, which benefited from a strong demand for bars in Japan in 215. On the other hand, Johnson Matthey downwardly revised the 215 palladium supply deficit from 427, to 231, ounces. Massive outflows from palladium ETFs were responsible in this case. The deficit is set to grow again in 216 because demand from the automotive industry is rising and investment demand should prove less negative than last year. Johnson Matthey will publish its first concrete estimates of this year s platinum and palladium market situation in May. Demand from the automotive industry the largest component of demand for both precious metals should remain buoyant. According to data from Ward s Automotive Group, million vehicles were sold in the US last year, exceeding the previous record high from the year 2 (chart 11). Various aspects contributed to the strong sales: for one thing, gasoline prices in the US have fallen sharply, and for another the US labour market has shown itself to be very robust, meaning that real incomes have risen significantly. What is more, low interest rates make cars more affordable. A combination of low gasoline prices, low interest rates and rising wages could also make 216 a year of solid vehicle sales. Furthermore, the fleet of cars in the US is relatively old at an average age of eleven years so there is a need for vehicles to be replaced. Because new vehicles require more platinum and palladium per autocatalyst than older models, the net impact on demand should be positive. Record sales were also achieved in China, the second big gasoline-heavy auto market. According to data from the China Association of Automobile Manufacturers (CAAM), around million cars were sold in 215, which is 7.1% up on the previous year. The CAAM estimates that auto sales will increase by 7.8% to 22.6 million in 216. This should benefit palladium above all, as it is used in autocatalysts for gasoline engines. The automotive market in the EU was likewise buoyant last year: according to figures from the European Automobile Manufacturers Association (ACEA), new car registrations surged by 9.3% year-on-year to 13.7 million in 215 (chart 11). This was also the highest figure since 29. All the major sales markets contributed to this positive trend, which is also likely to continue in 216, albeit at a less dynamic pace. Since the European auto market is diesel-heavy, demand for platinum should profit in particular. CHART 1: Performance of platinum and palladium prices in US$ per troy ounce Platinum, left Palladium, right CHART 11: Auto markets still on the up annual sales and/or new registrations in million vehicles USA EU China Source: Ward s, ACEA, CAAM, Bloomberg, Commerzbank Research 6 3 March 216

7 High outflows from ETFs continue Renewed supply outages in South Africa? Significant recovery of platinum and palladium prices expected The positive demand trend from the automotive industry is currently being overshadowed by negative physical investment demand. After platinum ETFs tracked by Bloomberg already saw sizeable outflows last year (amounting to 332, ounces or 12% of holdings), this year has also registered outflows of 79, ounces to date (chart 12 or chart 25, page 1). This trend is even significantly more pronounced when it comes to palladium ETFs: a reduction in holdings of 723, ounces (24% of the total volume) last year has been followed by further outflows of 147, ounces so far in 216 (chart 12 or page 27, page 1). First and foremost, these are attributable to the South African ETFs. This is because the platinum price and the palladium price in South African rand have fallen less sharply than the price in US dollars, meaning that some South African investors are doubtless still making a profit. The ongoing ETF outflows are generating additional supply on the market and thus weighing on prices. Last year s palladium outflows were equivalent to six weeks of global mining supply, while platinum outflows equalled three weeks of worldwide mining production. On the supply side, there is again a risk this year of outages in South Africa, the largest platinum and second-largest palladium producer, as new collective wage negotiations are due and could lead to strikes. From April or May, platinum producers will negotiate with unions on a new threeyear agreement for the 13, or so workers in the South African platinum industry. Confrontations seem inevitable even in the run-up to the negotiations given that the dominant and radical Association of Mineworkers and Construction Union (AMCU) intends to conduct separate and individual negotiations with Anglo American Platinum, Impala Platinum and Lonmin rather than taking part in joint talks. Despite the weak market environment, it seems likely that AMCU will make unrealistic demands again. The South African Chamber of Mines had pointed out once again that 8% of the local platinum industry would operate at a loss despite the country s weak currency. In 214 there was a five-month strike because the parties were unable to reach any agreement. At that time sufficiently high stocks were able to prevent any supply shortages, but this is no longer likely to be the case this time. If there are supply outages because of strikes again, this should lend support to platinum and palladium prices. Investors are also likely to reposition themselves in the event of a strike, in which case the outflows from the platinum and palladium ETFs would cease in all likelihood and turn into inflows. In any case, we do not envisage the negative investment trend lasting for any great length of time but rather expect to see greater investor interest in platinum and palladium again. What is more, platinum should profit from increased jewellery demand because platinum is significantly cheaper than gold. Currently, platinum is trading at a discount of US$ 3 a troy ounce as compared with gold the highest discount ever recorded since exchange trading of platinum began in 1987 (chart 28, page 1). However, the most important demand component for both precious metals remains the automotive industry, and we expect its upswing to continue. Prices should also find support from persistent supply deficits (chart 13). By year s end we anticipate a platinum price of US$ 1,5 per troy ounce and a palladium price of US$ 65 per troy ounce. CHART 12: Outflows from platinum and palladium ETFs ETF holdings in ounces Jan. 15 Apr. 15 Jul. 15 Okt. 15 Jan. 16 Platinum ETF holdings Palladium ETF holdings CHART 13: Platinum and palladium with supply deficits global market balance in ounces Platinum Palladium Source: Johnson Matthey, Commerzbank Research 3 March 216 7

8 At a glance TABLE 1: Our forecasts USD per troy ounce Quarterly average Yearly average 2-Mar Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q Gold Silver Platinum Palladium Quarterly averages, based on spot prices; TABLE 2: ETF holdings (weekly data) Total net change % change 52 weeks Date Holdings 1 week 1 month 1 year 1 year High Low Gold ETFs (in ' ounces) Silver ETFs (in ' ounces) Platinum ETFs (in ' ounces) Palladium ETFs (in ' ounces) TABLE 3: Net long positions of money managers (weekly data) Total net change % change 52 weeks Date Level 1 week 1 month 1 year High Low Gold (in ' contracts) Silver (in ' contracts) Platinum (in ' contracts) Palladium (in ' contracts) Source: CFTC, Bloomberg, Commerzbank Research TABLE 4: History Current % change History USD /oz 2-Mar 1 week 1 month y-t-d y-o-y Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Gold Silver Platinum Palladium TABLE 5: World Official Gold Holdings (monthly data) Country tonnes Country tonnes USA 8,133.5 Russia 1,392.9 (+4.7) Germany 3,381. Switzerland 1,4. IMF 2,814. Japan Italy 2,451.8 Netherlands France 2,435.4 India China 1,762.3 (+53.8) Turkey (+11.) Source: World Gold Council, Commerzbank Research TABLE 6: Upcoming Events 4 Mar / 1 Apr USA Nonfarm payrolls, February / March 1 Mar / 21 Apr EUR ECB meeting 16 Mar / 14 Apr USA Consumer Price Inflation, February / March 16 Mar / 15 Apr EUR EU new car registrations, February / March 16 Mar / 27 Apr USA FOMC meeting ca. 25 Mar CHN Gold imports via Hong Kong, February 1 Apr / 3 May USA Vehicle sales, March / April Source: Fed, ECB, Bloomberg, Commerzbank Research 8 3 March 216

9 CHART 14: Net long positions of money managers (Gold) 25 ' contracts Spec. net long (ls) Gold (USD per troy ounce, rs) Source: CFTC, Bloomberg, Commerzbank Research CHART 16: Gold versus US dollar US-Dollar Index (inverted), ls Gold (US$/oz.), rs CHART 18: Chinese net gold imports via Hong Kong in tons Jan-1 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Source: Statistics Department of HK, Reuters, Commerzbank Research CHART 2: Chinese silver imports 35 3 ytd in tons Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: Chinese Customs Authority, Commerzbank Research CHART 15: Gold: ETF holdings in mm oz ETF holdings, left CHART 17: US real interest rates versus gold Gold price (US$/oz), right Real interest rates, ls Gold (US$/oz), rs CHART 19: Global gold demand per quarter in tons Q1'8 Q1'9 Q1'1 Q1'11 Q1'12 Q1'13 Q1'14 Q1'15 Jewellery Investment Technology Official Sector Source: WGC, Commerzbank Research CHART 21: Gold/Silver ratio Ounces of silver per ounce of gold March 216 9

10 CHART 22: Net long positions of money managers (Silver) 5 ' contracts spec. net long positions, ls Silver (US$/oz.), rs Source: CFTC, Bloomberg, Commerzbank Research CHART 24: Net long posit. of money managers (Platinum) ' contracts CHART 23: Silver: ETF holdings in mm oz ETF holdings, ls CHART 25: Platinum: ETF holdings in ' oz Silver price (US$/oz), rs spec. net long positions, ls Platinum (US$/oz), rs ETF holdings, ls Platinum price (US$/oz), rs Source: CFTC, Bloomberg, Commerzbank Research CHART 26: Net long posit. of money managers (Palladium) 3 1 ' contracts CHART 27: Palladium: ETF holdings in ' oz spec. net long positions, ls Palladium (US$/oz), rs ETF holdings, ls Palladium price (US$/oz), rs Source: CFTC, Bloomberg, Commerzbank Research CHART 28: Price difference platinum vs gold (US$/oz) CHART 29: Price ratio platinum/palladium March 216

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To the extent that the information contained herein references securities of an issuer incorporated, formed or created under the laws of Canada or a province or territory of Canada, any trades in such securities may not be conducted through Commerz Markets LLC. No securities commission or similar regulatory authority in Canada has reviewed or in any way passed upon these materials, the information contained herein or the merits of the securities described herein and any representation to the contrary is an offence. European Economic Area: Where this document has been produced by a legal entity outside of the EEA, the document has been re-issued by Commerzbank AG, London Branch for distribution into the EEA. Singapore: This document is furnished in Singapore by Commerzbank AG, Singapore branch. It may only be received in Singapore by an institutional investor as defined in section 4A of the Securities and Futures Act, Chapter 289 of Singapore ( SFA ) pursuant to section 274 of the SFA. Hong Kong: This document is furnished in Hong Kong by Commerzbank AG, Hong Kong Branch, and may only be received in Hong Kong by professional investors within the meaning of Schedule 1 of the Securities and Futures Ordinance (Cap.571) of Hong Kong and any rules made there under. Japan: Commerzbank AG, Tokyo Branch is responsible for the distribution of Research in Japan. Commerzbank AG, Tokyo Branch is regulated by the Japanese Financial Services Agency (FSA). Australia: Commerzbank AG does not hold an Australian financial services licence. This document is being distributed in Australia to wholesale customers pursuant to an Australian financial services licence exemption for Commerzbank AG under Class Order 4/1313. Commerzbank AG is regulated by Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) under the laws of Germany which differ from Australian laws. Commerzbank AG 215. All rights reserved. Version 9.21 Commerzbank Corporates & Markets Frankfurt Commerzbank AG London Commerzbank AG, London Branch New York Commerz Markets LLC Singapore Branch Commerzbank AG Hong Kong Branch Commerzbank AG DLZ - Gebäude 2, Händlerhaus Mainzer Landstraße Frankfurt PO BOX Gresham Street London, EC2P 2XY 225 Liberty Street, 32nd floor New York, NY , Robinson Road, #12-1 Singapore th Floor, Lee Garden One 33 Hysan Avenue, Causeway Bay Hong Kong Tel: Tel: Tel: Tel: Tel: March