Positive outlook for commodity prices

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Positive outlook for commodity prices Sector Advisory ABN AMRO Group Economics ABN AMRO Sector Advisory ust Monthly Commodity Update price outlook for commodity markets

1 All commodities Energy / Precious / Industrials / Agri Position for rally in commodity prices Although we see some (modest) downside risks in the near term, we expect oil prices to trade higher in because of an expected supply shortage. Prices of many agricultural commodities have declined in recent months. We expect that a recovery will set in during the coming weeks. Especially cocoa, coffee and soybeans prices could contribute to the positive momentum for the CRB index. Tighter markets in most base metals markets in and continued global economic growth should support base metal prices. Gold, silver and platinum prices are expected to bottom out during the coming weeks. We expect higher prices in. As a result, we expect the CRB index to trade higher in the coming months. 3-month price index trend (Thomson Reuters Index): Price performance over last 3 months: Natural Gas (TTF) Wheat Natural Gas (HH) Iron ore Global steel (hrc) Nickel Oil (WTI) Sugar Coking coal CRB spot Oil (Brent) Aluminium Coffee Silver Gold Palladium Copper Platinum Corn Soybean Zinc Cocoa -24% Georgette Boele Senior Precious Metals & Diamond Analyst georgette.boele@nl.abnamro.com -2% -4% -5% -5% -6% -6% -8% -9% -9% -10% -10% -10% -11% -12% -% -16% -19% 7% 4% 2% 11% -30% -20% -10% 0% 10% 20% 720 680 Energy Thomson Reuters index 800 780 Precious Metals Thomson Reuters index 520 500 Industrial Metals Thomson Reuters index 540 520 Agri Thomson Reuters index 640 760 740 480 460 500 480 index 600 index 720 index 440 index 460 560 700 420 440 Sources: Thomson Reuters Datastream, ABN AMRO Group Economics, ABN AMRO Sector Advisory

2 Energy Oil / Gas Higher oil prices in Downside risks for oil prices remain in the near term as a long squeeze and trade tensions outweigh supply fears. Nevertheless, as we expect the growth effects of the trade conflict to remain limited, we raised our oil price forecasts for and 2020. This is driven by expected supply shortages (lower production Venezuela, Libyan exports and lower exports from Iran due to US sanctions). We expect global demand to continue to grow at a moderate pace of 1.5 mb/d. Lower OPEC supply of some members can be met internally by other OPEC producers (especially Saudi Arabia). However, this comes at a price, namely lower OPEC reserve capacity. US oil infrastructure needs to be improved in order to facilitate higher exports. This will not be realised before 2020. US natural gas is expected to remain trading within relatively small ranges (USD 2,60-3,00/mmBtu). Hans van Cleef Senior Energy Economist hans.van.cleef@nl.abnamro.com 1st contract (eop) (eop) (eop) (eop) (average) (eop) (average) Brent 70.6 70 75 80 75 73 85 85 USD/barrel WTI 67.3 65 70 75 70 67 76 78 USD/barrel Gas HH 2.93 2,50 2,75 3,00 2,75 2,70 3,00 2,90 USD/mmBtu Gas TTF 23.5 17 20 20 20 19 24 21 EUR/MWh 3-month price trend: 85 Oil - Brent 80 Oil - WTI 3.2 Gas - Henry Hub 28 Gas - TTF 80 75 3.0 26 USD/bbl 75 70 65 USD/bbl 70 65 60 USD/mmBtu 2.8 2.6 USD/mmBtu 24 22 60 55 2.4 20 Sources: Thomson Reuters Datastream, ABN AMRO Group Economics

3 Precious Metals Gold / Silver / Platinum / Palladium Prices to bottom out Georgette Boele Senior Precious Metals & Diamond Analyst georgette.boele@nl.abnamro.com Gold prices have dropped below USD 1,200 per ounce because a lower Chinese yuan has resulted in fears of lower demand. Moreover, a higher US dollar is also weighing on gold prices. The Chinese yuan is now the most important driver for gold prices followed by the US dollar. We expect that Chinese authorities will try to avoid a further sharp weakening of the yuan from current levels. Speculative positions in gold, silver and platinum are at all-time highs and net-positioning is close to zero (gold and silver) or negative (platinum) We think that investors who are negative on precious metals are already short and that there is not much room to increase shorts from here. We expect prices to start bottoming out at current levels. spot (eop) (eop) (eop) (eop) (average) (eop) (average) Gold 1,195 1,225 1,250 1,300 1,250 1,280 1,400 1,325 USD/ounce Silver 15.09 15.6 16.0 17.0 16.0 16.2 20.0 18.0 USD/ounce Platinum 814 800 850 900 850 883 1,100 981 USD/ounce Palladium 905 900 900 925 900 963 1,000 950 USD/ounce 3-month price trend: 40 Gold 17.5 Silver 940 Platinum 1050 Palladium 00 17.0 900 1000 1260 16.5 16.0 860 950 USD/oz 1220 1180 USD/oz 15.5 15.0 USD/oz 820 780 USD/oz 900 850 Sources: Thomson Reuters Datastream, ABN AMRO Group Economics

4 Base Metals Aluminium / Copper / Nickel / Zinc A more positive outlook in Base metal prices remain sensitive to higher trade tensions between the US and China because of fears of lower demand and because of a deterioration in investor sentiment. We expect a neutral price trend for As soon as fundamental indicators take over again and trade tensions ease, a positive price trend will probably re-emerge. From a fundamental perspective - with tighter markets in most base metals in and continued global economic growth - base metal prices (especially aluminium, copper and nickel) are expected to appreciate during again. Zinc still remains the odd one out: towards the end of, the zinc market will face a surplus due to the ramp-up of supply. Casper Burgering Senior Sector Economist casper.burgering@nl.abnamro.com spot (eop) (eop) (eop) (eop) (average) (eop) (average) Aluminium 2,064 2,095 2,175 2,260 2,175 2,170 2,250 2,275 Copper 6,124 6,250 6,815 7,000 6,815 6,710 7,250 7,350 Nickel,455 14,300 14,500 15,500 14,500 14,270 14,400 15,325 Zinc 2,470 2,585 2,630 2,670 2,630 2,960 2,665 2,650 3-month price trend: 2550 Aluminium 7500 Copper 16000 Nickel 3400 Zinc 2350 2150 7000 6500 15000 14000 000 3200 3000 2800 2600 1950 6000 12000 2400 Sources: Thomson Reuters Datastream, ABN AMRO Sector Advisory

5 Ferrous Metals Steel / Iron Ore / Coking Coal Price weakness on the horizon Global steel prices have increased by 8% since the start of, which was mainly due to the strongly rising prices in the US and Latin America. US steel (HRC) prices have risen by 36% on trade war tensions. Steel prices in Latin America increased by 3% and in Russia by 4% since 1 January. Iron ore prices lost 6% in value since the start of and coking coal prices lost 11%. Chinese demand for steelmaking raw materials is softening, mainly due to environmental policies imposed on steelmaking facilities. Prices have also softened on the weakness in the Chinese yuan. Uncertainty will remain high. Going forward, we expect global steel prices to soften on seasonal weak demand. Iron ore prices will drift lower, mainly because of sufficient Australian supplies. Chinese cuts in steel production will result in weaker demand for steelmaking raw materials. Steel (HRC) spot (eop) (eop) (eop) (eop) (average) (eop) (average) 653 665 650 648 650 662 610 630 Iron Ore 69.5 62 61 65 61 67 60 62 Coking coal Casper Burgering Senior Sector Economist casper.burgering@nl.abnamro.com 171 190 185 183 185 191 172 178 3-month price trend: 680 670 Steel (HRC) 72 70 68 Iron Ore 210 200 190 Coking Coal 660 66 180 650 64 62 170 160 640 60 150 Sources: Thomson Reuters Datastream, ABN AMRO Sector Advisory

6 Agri Wheat / Corn / Soybeans / Sugar / Coffee / Cocoa Drought affects soft commodity prices Prices of wheat are on the rise and are taking corn along for the ride. The severe drought in Northern Europe, mainly in France and Germany (the biggest producers of wheat in the EU) has caused lower crop quality. In addition, the quality of Russian wheat output has disappointed. Prices of US soybeans are lower than expected due to Chinese import tariffs, while Brazilian prices are on the rise. This reflects the increased dependence of China on Brazilian soybeans. But because demand is still strong, US prices will probably not fall much further. Prices of cocoa are as expected - decreasing since their top in May. Fears of lower oversupply could change into a fears of a supply shortage. However, ICO still expects a surplus, but a lower one than last season. We expect prices to rise towards the end of this year, since they have sold off too much in our view. USDc/bu 6 5 4 Wheat 3 USDc/bu 4.0 3.8 3.6 3.4 3.2 Nadia Menkveld Sector Economist nadia.menkveld@nl.abnamro.com 2nd contract (eop) (eop) (eop) (eop) (average) (eop) (average) Wheat 531 550 550 600 550 520 600 600 USD/bu Corn 321 350 400 410 410 380 420 420 USD/bu Soybeans 816 850 900 1000 900 900 1100 1050 USD/bu Sugar 11.26 12 14 12 15 14 USDc/lb Coffee 107.51 115 125 0 125 125 150 5 USD/lb Cocoa 2,082 2,200 2,300 2,300 2,300 2,400 2,400 2,400 Corn 3.0 USDc/bu 11 10 9 8 7 Soybeans 6 USDc/lb 14 Sugar 12 11 10 2800 2300 1800 Sources: Thomson Reuters Datastream, ABN AMRO Sector Advisory 3300 Cocoa USDc/lb 0 Coffee 120 110 100

A Appendix Contact details, disclaimer & extra information Contact information ABN AMRO Group Economics: Knowledge area: Phone: E-mail: - Marijke Zewuster Head Commodity Research +31 20 383 05 18 marijke.zewuster@nl.abnamro.com - Georgette Boele Precious Metals +31 20 629 77 89 georgette.boele@nl.abnamro.com - Hans van Cleef Energy +31 20 343 46 79 hans.van.cleef@nl.abnamro.com Contact information ABN AMRO Sector Advisory: Knowledge area: Phone: E-mail: - Casper Burgering Ferrous & Non-ferrous Metals +31 20 383 26 93 casper.burgering@nl.abnamro.com - Nadia Menkveld Grains & Softs commodities +31 20 628 64 41 nadia.menkveld@nl.abnamro.com ABN AMRO on the internet: - Insights: insights.abnamro.nl/eng - Twitter Group Economics @ABNAMROeconomen - Twitter Sector Knowledge @ABNAMROsectoren Disclaimer This document has been prepared by ABN AMRO. It is solely intended to provide financial and general information on the sector developments in the Netherlands. The information in this document is strictly proprietary and is being supplied to you solely for your information. It may not (in whole or in part) be reproduced, distributed or passed to a third party or used for any other purposes than stated above. This document is informative in nature and does not constitute an offer of securities to the public, nor a solicitation to make such an offer. No reliance may be placed for any purposes whatsoever on the information, opinions, forecasts and assumptions contained in the document or on its completeness, accuracy or fairness. No representation or warranty, express or implied, is given by or on behalf of ABN AMRO, or any of its directors, officers, agents, affiliates, group companies, or employees as to the accuracy or completeness of the information contained in this document and no liability is accepted for any loss, arising, directly or indirectly, from any use of such information. The views and opinions expressed herein may be subject to change at any given time and ABN AMRO is under no obligation to update the information contained in this document after the date thereof. Before investing in any product of ABN AMRO Bank N.V., you should obtain information on various financial and other risks and any possible restrictions that you and your investments activities may encounter under applicable laws and regulations. If, after reading this document, you consider investing in a product, you are advised to discuss such an investment with your relationship manager or personal advisor and check whether the relevant product considering the risks involved- is appropriate within your investment activities. The value of your investments may fluctuate. Past performance is no guarantee for future returns. ABN AMRO reserves the right to make amendments to this material. ABN AMRO, Publication closed on 15 March 7