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

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1 FICC Research Commodities: Daily 17 September 2010 Focus: Copper makes the next leg higher Walter de Wet, CFA* Leon Westgate* Focus: Copper makes the next leg higher Copper continues to push higher. At the same time nearby spreads have tightened. We are also witnessing copper premia in Asia that remain high. Shanghai CIF premium remains around the $90 level despite a negative LME/SFE arbitrage. These factors all support a higher copper price. While gold is being met with strong resistance on approach of $1,285, we believe it is a matter of time before the metal moves higher. There is current resistance from the gold physical market to gold s quick move from $1,250 to $1,280. The resistance form the physical market (with scrap also coming to the market), may see gold consolidating in the $1,270 $1,280 range for a while. Base metals and precious metals have rallied hard in recent days while crude oil has been lagging. While the market structure differs greatly, positive sentiment towards commodities in general may see oil outperform. Commodity price data (16 September 2010) Base metals LME 3-month Open Close High Low Daily change Change (%) Cash Settle Change in cash settle Cash 3m Aluminium 2,168 2,166 2,184 2, % 2, Copper 7,685 7,700 7,785 7, % 7, Lead 2,223 2,203 2,249 2, % 2, Nickel 23,350 23,250 23,570 23, % 23, Tin 23,350 23,500 23,750 23, % 23, Zinc 2,153 2,148 2,193 2, % 2, Open Close High Low day/day Change (%) ICE Brent % NYMEX WTI % ICE Gasoil % API2 Q3' % EUA Dec % AM Fix PM Fix High bid Low offer Closing bid Change (d/d) EFPs Gold 1, , , , , /1.6 Silver /3.0 Platinum 1, , , , , /3.0 Palladium /3.0 Sources: Standard Bank; LME; BBG Please refer to the disclaimer at the end of this document.

2 Focus: Copper makes the next leg higher LME aluminium inventory (mt) vs. Cancelled Warrants (%) Copper continues to push higher. At the same time, nearby spreads have tightened. We are also witnessing copper premia in Asia that remain high. Shanghai CIF premium remains around the $90 level, despite a negative LME/SFE arbitrage. These factors all support a higher copper price. Despite the factors mentioned above, both LME and SHFE warehouse inventories also continue to decline which are lending background support to prices. We believe this steady decline in inventories should remain in place. In recent days, cancelled warrants have also rise sharply. This too remains supportive of a higher copper price mt ('000) Furthermore, although open interest for LME copper has increased in recent weeks, it has not risen to extreme levels yet. In fact, until the start of the month open interest for copper was around the lows seen in mid-july and has been stumbling along at these levels for a while. There may be room for more length to be added. In our latest Base Metals Monthly Report we have adjusted our supply-demand balance, and we now expect an annual surplus in 2010 of 153,000 tonnes, down from 244,000 tonnes previously. Similarly, the deficit we expect to see in 2011 increases by around 90,000 tonnes to 194,000 tonnes, and our preliminary view of the balance in 2012 is now for a deficit in the order of 500,000 tonnes. This will reduce total reported stocks to just 1.9 weeks of consumption and supports our forecasts for record high annual average prices in both 2011 and On the demand side, seasonally we expect China s manufacturing activity to have picked up in Sept. Since at least 2005, China s PMI index has never declined m/m in Sept. Therefore, we expect good 100 Jan-07 May-07 Sep-07 Jan-08 May-08 Stock - on w arrant Sources: LME; Standard Bank Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Stock - cancelled w arrant manufacturing data out of China the first week of October, which may add support to prices. Together with high levels of liquidity in financial markets, this tight fundamental outlook supports our view on copper. Our forecast for 2010 remains at $7,375/ tonne, including an average of $7,800/tonne in the fourth quarter. While gold is being met with strong resistance on approach of $1,285, we believe it is a matter of time before the metal moves higher. There is current resistance from the gold physical market to gold s quick move from $1,250 to $1,280. The resistance from the physical market (with scrap also coming to the market), may see gold consolidating in the $1,270 $1,280 range for a while. Ultimately we see gold heading towards our target of $1,300 within the coming weeks. We believe, should gold breach $1,300, the metal could rally higher towards $1,320 on the back of technical buying. Gold support is at $1,270 and $1,265. Resistance is at $1,285 and $1,295. From a technical perspective we believe platinum is in the process of positively breaking out of its near-term consolidation phase. Our minimum target is at $1,702, with a forecast of continued strength to $1,713. Fundamentally we still look for platinum to trade towards $1,800 on a 6 month horizon. Support in the $1,594 to $1,576 area is expected to restrict weakness. Our view on silver is unchanged. With the metal at $20.80 it is still well supported. Consistent with our bullish view on gold into Q4:10, as well as good support for copper, we look for silver to test higher. Silver support is at $20.55 and $20.30, while resistance is at $20.90 and $

3 Overall, crude oil is in the middle of the $70/bbl $80/bbl range its been trading in for the last few months. The market seems stuck and appears to be desperately looking for positive news in terms of oil demand, or signs of an improving economic outlook. We still believe better economic data will be seized on and likely have a disproportionate effect on prices, whereas middling to poor data is priced in already. We highlighted yesterday that we are increasingly looking towards distillate inventory levels in the US for price direction in crude oil prices as we head towards winter in the US. However, we recognize that financial markets remain an important driver of oil prices in the short-term. Looking at short-term correlations, crude oil is taking direction from US equity markets (and to a lesser extent the dollar) in recent days. The equity futures market in the US signals a positive day for US equities. Data-wise we look at CPI in the US. While we expect inflation to remain low in the US, we also believe liquidity will continue to grow. Increased liquidity is supportive of commodity prices, including crude oil. Also on the data menu is US University of Michigan Consumer Confidence. A positive number could help push oil higher. Base metals and precious metals have rallied hard in recent days, while crude oil has been lagging. While the market structure differs greatly, positive sentiment towards commodities in general may see oil outperform. We see WTI front month support at $73.80 and $73.00, resistance is at $75.60 and $

4 Base metals Daily LME stock movement (mt) Metal Today Yesterday In Out One day change YTD change (mt) Contract turnover Aluminium 4,397,400 4,402, ,550-4, , , ,913 Copper 387, ,500-2,350-2, ,175 31, ,696 Lead 192, ,825 2, ,200 45,525 14, ,233 Nickel 119, , ,250 4, ,700 Tin 13,580 13, , ,170 Zinc 619, , ,875 54, ,684 Shanghai 3-month forward prices COMEX active month future prices ZAR metal prices (16 September 2010) Aluminium Copper Lead Nickel Tin Zinc ZAR/USD fix Cash 15,159 54,534 15, , ,841 15, month 15,620 55,527 15, , ,466 15, 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 Q4-10 Q1-11 Q2-11 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 Oct'10 Oct'10 Oct'10 Aug'11 Dec'10 Settlement 1, , , , , Open Interest 592, ,899 23,761 35,947 1, ,929 2,523 Change in Open Interest 1,951-2, , Date: 16 September 2010 Sources: Standard Bank; LME; Bloomberg Cancelled warrants (mt) Cancelled warrants (%) Metal Open Last 1d Change Open Close Change Change (%) Aluminium 15,660 15, Ali Dec' Copper 59,500 59, Cu Dec' % Zinc 17,750 17,

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