Open Close High Low Daily change Change (%) Cash Settle

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1 : Daily 24 November 2010 Walter de Wet, CFA* Focus: Focus: Nickel Chinese imports bucking the trend Leon Westgate* James Zhang* Focus: Nickel - Chinese imports bucking the trend: While the latest round of Chinese import and export figures for October were generally viewed as being bearish, (although not by ourselves), there were a couple of interesting highlights, in particular a sharp rebound in net imports of refined nickel. Since Monday gold in euro-terms has surged Eur30 higher. As pointed out on Monday, we believe sovereign credit risk in Europe, combined with the physical market should see gold in euro-terms outperform gold in dollarterms for the time being. For the DOE inventory release later today, we forecast a build in crude of 2.8mbbl, a build in gasoline of 2.1mbbl, and a draw in distillates of 2.5mbbl. However, we will be looking beyond the headline numbers, instead focusing on signs of real demand pick up for shift in fundamentals. The base metals rallied overnight, boosted by a stable dollar and a calming in the tensions on the Korean peninsular. After a solid start however, a subsequent strengthening in the dollar throughout the morning took the edge off prices a little, though the complex has recovered again heading into the afternoon. Commodity price data (23 November 2010) Base metals LME 3-month Open Close High Low Daily change Change (%) Cash Settle Change in cash settle Cash 3m Aluminium 2,251 2,255 2,296 2, % 2, Copper 8,105 8,145 8,329 8, % 8, Lead 2,166 2,187 2,260 2, % 2, Nickel 21,250 21,605 21,870 21, % 21, Tin 23,900 23,900 2,224 23, % 23, , Zinc 2,090 2,087 2,170 2, % 2, Open Close High Low day/day Change (%) ICE Brent % NYMEX WTI % ICE Gasoil % API2 Q1' % EUA Dec % AM Fix PM Fix High bid Low offer Closing bid Change (d/d) EFPs Gold 1, , , , , /-0.5 Silver /-1 Platinum 1, , , , , /3 Palladium /1 Sources: Standard Bank; LME; BBG Please refer to the disclaimer at the end of this document.

2 Focus: Nickel - Chinese imports bucking the trend While the latest round of Chinese import and export figures for October were generally viewed as being bearish, (although not by ourselves), there were a couple of interesting highlights, in particular a sharp rebound in net imports of refined nickel. After embarking on a massive re-stocking/stockpiling drive during mid 2009, it appears that the first half of 2010 has been characterised by Chinese de-stocking activity, in part related to the high prices seen early Q2. That activity looks to have ended however, with net refined nickel imports picking up strongly since the summer time and China once again looking like it is perhaps embarking on a restocking phase as we head towards Looking at LME inventories, the sizeable draw-down in nickel stocks seen during H related to production issues, but also restocking / normalisation of inventory at Western smelters - was followed by a period of stability. At a time that usually sees large stock inflows, solid, if not spectacular demand helped to keep inventory levels in check. Nickel stocks have started to move back towards their normal seasonal patterns over the past month or so, with renewed concerns over the state of various Western World economies resulting in a pause in activity. However, while rising LME inventories are removing some of the background support for prices, its worth noting that stocks in Asian locations have started to come back under pressure. Looking ahead, with the normal seasonal pick up in activity expected to take place in early 2011, and with China already appearing to be more active and perhaps entering a restocking phase already, the nickel market may be set for a period of tightness. Looming additions to production capacity are on the way, however any delays in that mine supply, may see a short term, but nevertheless aggressive rally in prices early next year. By Leon Westgate Figure 1. Chinese import/exports of refined nickel Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Imports Exports Net Refined Imports Sources: Standard Bank, Chinese Customs data Figure 2. Regional LME on-warrant nickel stocks Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Asia on-w rnt USA on-w rnt Euro on-w rnt Sources: Standard Bank, LME Base metals The base metals rallied overnight, boosted by a stable dollar and a calming in the tensions on the Korean peninsular. After a solid start however, a subsequent strengthening in the dollar throughout the morning took the edge off prices a little, though the complex has recovered again heading into the afternoon. The impact from the currencies appears to be on the wane, for the moment at least, somewhat, with the performance of the equity markets and position housekeeping likely to be the key factors governing prices ahead of tomorrow s Thanksgiving holiday in the US. Concerns over the imminent maxing out of China s bank lending for 2010 continues to weigh on sentiment, it had little impact overnight as copper prices rallied back above $8,200. Copper has again seen good turnover, with the latest dip in prices continuing to be seen as a buying opportunity by some. With China intent on cracking down on inflation, it will be interesting to see how strict the banks are over the coming month or so, in terms of sticking to their lending limits. 2 If the limits are enforced, then the Chinese are essentially out of the game until January. Counter-intuitively perhaps, that is not necessarily a bearish outcome from our point of view, with discipline now, perhaps avoiding a harsher clampdown later. Furthermore, if the fund community manage to keep metal prices at current, elevated levels, then copper and the other base metals are set for a potentially very bullish Q1 next year. By Leon Westgate

3 Gold (and silver) continues to find cause for support. The Fed minutes of the their FOMC meeting earlier this month indicated the FOMC considered (but decided against it) targeting longer dated yields irrespective of the amount of bond buying necessary. The minutes further indicated the FOMC in general agreed that more liquidity is necessary for the US economy. They moved their growth forecast lower and unemployment forecast higher. Higher unemployment and lower growth implies very accommodative monetary policy in Concerns remain over European sovereign debt, with 5y CDS rising for Spain, Portugal and Ireland yesterday - despite the Irish bail-out plan. These concerns are set to weigh on the euro. Credit concerns are also set to benefit gold. Based on the physical market, gold remains a buy on dips. We believe sovereign credit risk in Europe, combined with the physical market should see gold in euro-terms outperform gold in dollar-terms for the time being. We've seen strong physical selling and scrap gold coming to market during the first two weeks of November as the gold price pushed above $1,400. However, the latest decline in the gold price below $1,350 last week has spurred renewed physical buying interest. Our Standard Bank Gold Physical Flow Index (GPFI) has jumped into positive territory after lingering in negative territory earlier this month (see Daily dated 23 Nov 10). The return of buying interest in the market is an indication that the physical gold market is slowly adjusting to the higher gold price which now sees a higher low in the gold price as a buying opportunity. Long-term this is a bullish sign. We continue to expect gold physical demand to prevail on dips into January. Since Monday gold in euro-terms has surged Eur30 higher. As pointed out on Monday, we believe sovereign credit risk in Europe, combined with the physical market should see gold in euro-terms outperform gold in dollar-terms for the time being. Gold support is at $1361 and $1,345. Resistance is at $1,388 and $1,397. Silver support is at $27.10 and $ Resistance is at $27.90 and $ By Walter de Wet For the DOE inventory release later today, we forecast a build in crude of 2.8mbbl, a build in gasoline of 2.1mbbl, and a draw in distillates of 2.5mbbl. However, we will be looking beyond the headline numbers, instead focusing on signs of real demand pick up for shift in fundamentals something that has been largely absent to in the US so far. The API reported an inventory build in crude of 5.2mbbl, and small draws in gasoline and distillate of 0.3mbbl and 0.5mbbl respectively yesterday. The crude inventory build was mainly due to a massive increase in imports of 2.2mpd on the previous week. The API total crude inventory is now at the same level as the DOE s numbers from a week earlier. The API also reported a jump of 2% in refinery runs (after reporting a surprising drop of 2.8% the week before); the refinery run rates of the API and DOE are currently very similar. Oil traded lower yesterday as risk appetite waned on the back of increased tension in the Korean peninsula and concerns over the European debt situation. Front month WTI and Brent lost 49c/bbl and 71c/bbl to settle at $81.25 and $ ICE gasoil held up well ending the day practically flat, while Nymex RBOB and heating oil moved lower in line with crude. Product cracks and refinery margin mostly weakened so did time spread. Physical differentials strengthened in general, as future contracts weakened. On macroeconomic data, US Q3 GDP came out at 2.5%, slightly ahead of the market expectation of 2.4%. However, existing home sales for October declined more than what the market expected. In Europe, the financial market appeared still deeply concerned over the European debt problem, as 5y CDS rising for Spain, Portugal and Ireland rose yesterday. We are well into a short trading week in the US. Given the developments in the Korean peninsula and European debt issues we expect rallies in crude to be sold. By James Zhang 3

4 Base metals Daily LME stock movement (mt) Metal Today Yesterday In Out One day change YTD change (mt) Contract turnover Aluminium 4,291,675 4,294,600 1,375 4,300-2, , , ,917 Copper 357, , ,200 31, ,534 Lead 203, , ,100 5, ,081 Nickel 130, , ,576 4, ,135 Tin 14,655 14, , ,249 Zinc 632, , ,650 34, ,916 Shanghai 3-month forward prices COMEX active month future prices ZAR metal prices (23 November 2010) Aluminium Copper Lead Nickel Tin Zinc ZAR/USD fix Cash 15,705 57,622 15, , ,350 14, month 16,166 58,392 15, , ,339 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 Q1-11 Q2-11 Q3-11 Cal 11 Cal 12 API2 (CIF ARA) API4 (FOB RBCT) 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'10 Dec 10 Jan'11 Jan'11 Dec'10 Oct'11 Dec'10 Settlement 1, , , , , Open Interest 623, ,214 25,079 35,216 1, ,739 2,330 Change in Open Interest 4, Date: 23 November 2010 Sources: Standard Bank; LME; Bloomberg Cancelled warrants (mt) Cancelled warrants (%) Metal Open Last 1d Change Open Close Change Change (%) Aluminium 16,210 16,260 0 Ali Dec' Copper 61,850 62, Cu Dec' % Zinc 17,240 17,

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