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

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1 : Daily Focus: Nickel risk of potential disruptions, but upside capped 2 November Focus: Nickel risk of potential supply disruptions, but upside capped: We wouldn t be surprised if supply continued to underperform our expectations, as we have identified more than 800,000 tpy of nickel capacity potentially at risk of some sort of production disruption over the next months or so. However, we are not looking for nickel prices to do much more than mount an eventual, though probably volatile, recovery towards $20,000-22,000/tonne during our forecast period out to Precious metals are awaiting the non-farm payrolls data from the US today. If the data print is much higher than the 125K consensus number and gold sells off, we would see this as a buying opportunity. We have been targeting the $1,700 level for support for some time now and, as a result, would see a drop below this level as a buying opportunity. Strategists Walter de Wet, CFA* Walter.DeWet@standardbank.com Leon Westgate* Leon.Westgate@standardbank.com Marc Ground, CFA* Marc.Ground@standardbank.co.za Its been a fairly choppy end to the week for the base metals. Aluminium, lead and zinc have all rallied into Friday afternoon, after a period of sideways trading this morning, while copper, nickel and tin have drifted lower. The key focus for the markets are this afternoon s US Nonfarm Payroll figures (expected +125K). Given the ongoing cleanup in New York, and the US election on Tuesday, the market may well quieten down fairly quickly after the initial reaction to the data. Commodity price data (1 November 2012) Base metals LME 3-month Open Close High Low Daily change Change (%) Cash Settle Change in cash settle Cash - 3m Aluminium 1,904 1,940 1,945 1, % 1, Copper 7,767 7,826 7,865 7, % 7, Lead 2,062 2,127 2,133 2, % 2, Nickel 16,200 16,300 16,480 16, % 16, Tin 19,902 20,375 20,491 19, % 20, Zinc 1,863 1,889 1,902 1, % 1, Energy Open Close High Low day/day Change (%) ICE Brent % NYMEX WTI % ICE Gasoil % API2 Q1' % AM Fix PM Fix High bid Low offer Closing bid Change (d/d) EFP's Gold 1, , , , , /0.4 Silver /+1.5 Platinum 1, , , , , /3.5 Palladium /1.0 Sources: Standard Bank; LME; BBG Please refer to the disclaimer at the end of this document.

2 Focus: Nickel risk of potential supply disruptions, but upside remains capped: For some years now, the nickel market has been waiting apprehensively for the start up of numerous new mega projects conceived during the heady days of the previous decade, when prices topped $50,000/tonne. Their arrival, and the start of a new era of oversupply has been postponed many times, helping keep prices supported over the past couple of years as the likes of Goro (now VNC) and others have been delayed again and again. Indeed, 2012 has proved to be no different, with the year to date littered with a series of delays and disruptions to most of the new generation of projects. We started the year forecasting surpluses of 59,000 tonnes in 2012 and 42,000 tonnes in 2013, on supply growth averaging around 8% per year. However, our latest revisions have taken the expected surpluses down to 48,000 tonnes and 35,000 tonnes respectively, on supply growth rates closer to 5% (see our LME Week Base Metals Report dated 15 October 2012). We wouldn t be surprised if supply continued to underperform our expectations, while it would only take the unplanned loss of an additional 30,000-40,000 tonnes to put the market back in balance. Arguably, given weak demand fundamentals, a degree of producer discipline is perhaps needed to help restore the market closer to balance, though increased warehousing/financing demand could also help absorb the surplus, potentially benefitting premiums in the future, albeit at the expense of current prices. Notable nickel mine capacity additions and production forecasts, excluding laterite DSOs Design Forecasts Mine Company Country Type Start year capacity Ravensthorpe restart First Quantum Australia HPAL VNC (Goro) Vale New Caledonia HPAL Koniambo Xstrata New Caledonia Ferronickel Doniambo optimization Eramet New Caledonia Ferronickel Taganito Sumitomo Philippines HPAL Ramu MMC PNG HPAL Taguang Taung China NFMM Myanmar Ferronickel Ambatovy Sherritt Madagascar HPAL Fraser Morgan Xstrata Canada Sulphide Eagle Rio Tinto USA Sulphide Barro Alto Anglo American Brazil Ferronickel Onca Puma Vale Brazil Ferronickel Santa Rita Mirabela Brazil Sulphide Cerro Matoso expansion BHP Billiton Colombia Ferronickel Trojan restart Bindura Nickel Zimbabwe Sulphide Sotkama Talvivaara Finland Heap leach Kevitsa First Quantum Finland Sulphide Totals production disruption allowance total production adddition after disruption allowance 441 Sources: MBR, Standard Bank Research Selected nickel operations at risk of disruption Operation Company Country Notes VNC (Goro) Vale New Caledonia Various commissioning difficulties. Asset review. Onca Puma Vale Brazil Furnace problems. Asset review. Barro Alto Anglo American Brazil Extended maintenance amid ramp-up challenges. Loma de Niquel Anglo American Venezuala Nationalisation threat. Cerro Matoso BHP Billiton Colombia Contract/royalty renegotiation with government. Ambatovy Sherritt Madagascar Permitting uncertainties. Bindura Nickel Mwana Africa Zimbabwe Funding risks. Falcondo Xstrata Dominican Rep. Local opposition due to environmental concerns. Sudbury Xstrata Canada Labour contract negotiations Q Cosmos Xstrata Australia Placed on care & maintenance due to low price, high A$. Nickel West BHP Billiton Australia Company review of nickel assets. Sotkama Talvivaara Finland Operational problems. Various Pt ops Various South Africa Labour disputes at South African platinum mines. Various NPI Various China Ore supply uncertainty, margin/environment pressures at old plants. 2 Sources: MBR, Standard Bank Research

3 It will be interesting to see whether any unplanned supply disruptions are enough to return the market to deficit next year, or whether nickel goes the route of aluminium, zinc, lead, and now perhaps even copper, with surplus refined units being skimmed off and stuck in the LME warehousing system. The first eventuality would be bullish for prices, albeit only to the point at which higher cost nickel pig iron producers start firing up their furnaces again. The second outcome would be neutral or bearish for prices, but potentially bullish for premia when demand finally starts to recover. With the inbuilt NPI pressure valve in the nickel system, we are not looking for nickel prices to do much more than range trade, even if supply disappoints, and we continue to forecast only a gradual recovery towards $20,000-22,000/tonne over the next couple of years. CTA positioning meanwhile, and how the rest of the market reacts to that positioning, will continue to be a key short-term driver of prices over the coming months as the market waits to see how nickel s fundamental picture evolves. By Leon Westgate Base metals Its been a fairly choppy end to the week for the base metals. Aluminium, lead and zinc have all rallied into Friday afternoon, after a period of sideways trading this morning, while copper, nickel and tin have drifted lower. The key focus for the markets are this afternoon s US Nonfarm Payroll figures (expected +125K). Given the on-going cleanup in New York, and the US election on Tuesday, the market may well quieten down fairly quickly after the initial reaction to the data. Aluminium has detached itself from copper this morning, staging an abortive rally this morning before mounting a more sustained push higher heading into Friday afternoon. LME on-warrant stocks climbed 22,325 mt, due mainly to a 19,425 mt inflow at Vlissingen, and a 3,000 mt inflow at Rotterdam, while SHFE aluminium inventories also climbed again, gaining 5,546 mt to 450,788 mt. Copper prices have come back under pressure following Thursday s rally, again trading below $7,800. The 100-day MA (currently around $7,775) is providing a bit of a reference point at the moment, though perhaps more so for copper s closing price, rather than offering absolute technical support/resistance. Meanwhile, LME on-warrant inventories climbed 4,875 mt following inflows in Busan (+2,125 mt), Gwangyang (+1,650 mt) and more strangely Hull in the UK (+1,250 mt). SHFE inventory also increased following last week s modest fall, climbing 5,176 mt to 197,937 mt. By Leon Westgate Precious metals Precious metals are awaiting the non-farm payrolls data from the US today. If the data print is much higher than the 125K consensus number and gold sells off, we would see this as a buying opportunity. We have been targeting the $1,700 level for support for some time now and, as a result, would see a drop below this level as a buying opportunity. Why would we look for gold to rebound after a potential knee-jerk sell-off? The Fed is not going to respond to stronger-thanexpected data with tighter policy and, more importantly, the interest rate markets are not going to expect the Fed to change course. The Fed believes that rates won t start to rise until mid-2015 at the earliest, and the market seems to buy this view. If rates can t rise materially on strong data the dollar is unlikely to rise materially. We continue to look for support for platinum around the $1,550 level. Anglo Platinum s mine production is still disrupted. However, while platinum availability is clearly not an issue for the market at this stage (and for that reason we believe rallies towards $1,700 will fade), we believe that being short platinum at $1,550, when the gold/platinum spread is around levels equivalent to pre-strike levels, does not hold much value from a risk/return perspective. Gold support is at $1,707 and $1,700. Resistance is $1,730 and $1,737. Silver support is at $31.90 and $31.55, resistance is at $32.66 and $ Platinum support is at $1,556 and $1,537, resistance is at $1,585 and $1,595. Palladium support is at $602 and resistance at $619. By Walter de Wet 3

4 Base metals Daily LME Stock Movement (mt) Metal Today Yesterday In Out One day change YTD change (mt) Cancelled warrants (mt) Cancelled warrants (%) Contract turnover Aluminium 5,071,475 5,077,375 3,000 8,900-5, ,075 1,719, ,356 Copper 239, ,775 1,450 1, ,300 40, ,284 Lead 322, , ,500-1,500-30, , ,076 Nickel 130, , ,236 13, ,611 Tin 11,885 11, , ,590 Zinc 1,169,875 1,170, , , ,661 Shanghai 3-month forward prices COMEX active month future prices Metal Open Last 1d Chnge Open Close Change Change (%) Aluminium 15,380 15, Ali Dec' Copper 57,090 56, Cu Dec' % Zinc 14,900 14,805-5 ZAR metal prices Aluminium Copper Lead Nickel Tin Zinc ZAR/USD fix Cash 16,321 67,791 18, , ,657 15, month 17,053 68,791 18, , ,096 16, Energy Energy futures pricing Price Change Price Change Price Change Price Change Price Change 1 month 2 month 3 month 6 month 1 year Sing Gasoil ($/bbbl) Gasoil 0.1% Rdam ($/mt) NWE CIF jet ($/mt) 1, , , Singapore Kero ($/bbl) % Rdam barges ($/mt) % Fuel Oil FOB ($/mt) Sing FO180 Cargo ($/mt) Thermal coal Q1-12 Q2-13 Q3-13 Cal 13 Cal 14 API2 (CIF ARA) API4 (FOB RBCT) Precious metals Forwards (%) 1 month 2 months 3 months 6 months 12 months 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'12 Dec'12 Jan'13 Jan'13 Dec'12 Oct'13 Dec'12 Settlement 1, , , , , Open Interest 454, ,585 20,761 61,449 1, , Change in Open Interest 1, ,249 0 Sources: Standard Bank; LME; Bloomberg 4

5 Bulks Percentage change Latest Price Steel Physical 1-day 1-week 1-month 3-month 6-month 1-year Turkish Scrap 80:20 (Iskinderun CFR) $/t % 0.00% 3.05% -0.18% % - China Tangshan Steel Billet $/t % -0.96% 3.39% 0.00% % % China HRC export (Shanghai FOB) $/t % 0.95% 3.40% -6.17% % % North Europe HRC domestic (ex-works) $/t % -1.09% -6.19% -9.00% % - North America HRC domestic (Midwest FOB) $/t % 3.83% 0.00% -1.21% % -4.69% Steel Futures LME Billet Cash $/t % 1.39% 0.73% -8.56% % % LME Billet Futures (1-mth) $/t % 1.39% -0.07% -9.28% % % LME Steel Billet Stocks change -1, Shanghai Rebar Futures (1-mth) $/t % 0.25% 3.69% 4.71% % % Shanghai Rebar Futures On-Warrant Stocks change Iron ore China Iron Ore Fines (62% Fe; CFR Tianjin) $/t % 0.59% 15.45% 2.73% % -0.08% China Iron Ore Fines (58% Fe; CFR Tianjin) $/t % 1.09% 13.22% 3.82% % 2.96% SGX AsiaClear IO Swaps 62% Fe $/t (1-mth) % 3.75% 10.59% 3.30% % -8.56% China Iron Ore Inventory (10,000 tonnes) % 0.00% -4.40% -7.53% -4.79% -3.83% Coking coal Premium Hard Coking Coal (Qld FOB) $/t % 0.00% -5.06% % % - Capesize freight Tubarao Brazil-Beilun China (C3) % 0.00% 0.00% 0.00% 0.00% % Pilbara Australia-Qingdao China (C5) % 8.76% 34.39% 64.84% 39.74% -4.09% Saldanha South Africa-Beilun China % -1.45% 17.24% % % Tubarao Brazil to Rotterdam Europe % 9.00% 19.13% % % Saldanha South Africa-Rotterdam Europe % 10.86% 36.62% % % Sources: Standard Bank; LME; Bloomberg 5

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