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COMMODITY NEWSBRIEFS: 26 JANUARY 2016

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Natasha.Havenga@transnet.net

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FAST MOVING CONSUMER GOODS S AFRICAN CITRUS FARMERS’ INVESTMENT PAYING OFF AS EU EXPORTS RISE (Engineering News, 26/1/2016) Three years of intense collaboration between the European Union (EU) and the Citrus Growers Association of Southern Africa (CGA) resulted in record South African citrus exports in 2015. Given that the EU is the biggest export market for South African citrus, the domestic industry continues to invest in measures to ensure the fruit it exports to the EU is free from citrus black spot (CBS). Citrus exports to the EU had grown at a rate of 22% from January to November 2015. In volume, exports to the EU accounted for 40% of total citrus exports (30% oranges, 66% mandarins, 24% lemons), up from 36% in the prior season. “This season has by far surpassed everyone's expectations. I understand that some 100 000 workers operate during the picking season so it is easy to estimate the impact of such exports on jobs creation,” said EU Embassy spokesperson Frank Oberholzer. CGA CEO Justin Chadwick, meanwhile, said during a recent tour of the Laeveld Sitrus farm, in Limpopo, that "every year, the regulations and requirements have increased and resources have been stretched to ensure farmers comply with these regulations,” He noted that the citrus industry had, together with the Department of Agriculture, Forestry and Fisheries, developed a risk management system – involving many steps – to ensure South African-grown citrus fruit complied with EU regulation and was free of CBS. “The industry earns R10-billion a year, so 10% is going towards meeting the regulations.” Despite the high cost, South African farmers were expected to see additional benefits beyond the higher citrus exports. STEEL S AFRICA POSTS 16.3% UPTICK IN 2015 STEEL OUTPUT TO 7.6MT (Engineering News, 26/1/2016) While crude steel output from the 66 steel producing countries reporting to industry body worldsteel saw a 2.8% year-on-year drop to 1.62-billion tonnes, South Africa managed to lift its output by 16.3% over the 12 months, delivering 7.6-million tonnes of steel and becoming the world’s twenty-first largest producer. Although China remained the globe’s most prolific steel producer – delivering 808-million tonnes in 2015 – output narrowed by 2.3%, from 822.8-million tonnes the year before. Neighbour Japan followed, with 105.2-million tonnes, representing a 5% narrowing on volumes delivered in the prior year, while India’s delivery of 89.6-million tonnes last year saw it lifting its yearly contribution by 26%. The US, in fourth place, posted a hefty 10.5% year-on-year drop in output to 78.9-million tonnes, followed by Russia, whose steel production remained relatively flat, at 71.1-million tonnes, and South Korea, whose output narrowed 2.6% to 69.7-million tonnes in 2015. Taking a regional perspective, steel production from the European Union dropped 1.8% to 166.2-million tonnes, with Germany producing 42.7-million tonnes – a 0.6% year-on-year drop – and Italy narrowing its delivery by 7.1% to 22-million

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tonnes. Steel production in North America, meanwhile, decreased by 8.6-million tonnes to 110.7-million tonnes in 2015. Crude steel output from the Commonwealth of Independent States fell 4.3% to 101.5-million tonnes. Crude steel production from South America dropped by 2.5% to 43.9-million tonnes, while Brazil produced 33.2-million tonnes over the 12 months – a 1.9% year-on-year contraction. World crude steel production in December narrowed 5.7% to 126.7-million tonnes, while the crude steel capacity utilisation ratio for the 66 countries dropped 4.9% to 64.6% in the last month of the year. The average capacity utilisation in 2015 was 69.7%, compared with 73.4% in 2014. CONSTRUCTION, BUILDING MATERIALS & CEMENT PPC PROGRESSES EXPANSION STRATEGY, DESPITE WARNING OF LOWER H1 EARNINGS (Engineering News, 26/1/2016) Cement supplier PPC says its expansion programme remains on track, with construction at sites in the Democratic Republic of the Congo, Zimbabwe and Ethiopia continuing to progress on schedule. The company continued to advance its proposed acquisition of ready-mix concrete supplier 3Q Mahuma Concrete, in line with its stated intent of becoming a provider of materials and solutions into the basic services sector and progressing the company’s ready-mix channel management strategy. Looking to PPC’s operational performance, overall cement sales volumes declined by 3% for the first quarter of 2016, while cement sales in the South African business declined by 1.6% and the international businesses recorded an 8% decline. “Despite the tough South African operating environment, coastal regions achieved positive volume growth; however, this was more than offset by declines in the increasingly competitive Gauteng and inland regions. “For the same period, average selling prices decreased by 4%,” the group said in a trading update on Monday. Meanwhile, PPC reported that the conclusion of major infrastructure projects in Zimbabwe had led to double-digit declines in local sales, while cement exports had also reduced significantly on the back of exchange-rate effects. “After a strong performance in 2015, cement sales volumes in Botswana have reduced, as the retail market remains highly contested owing to weak demand and intense competitor activity,” the company added. Meanwhile, in the first quarter of 2016, cement sold by PPC’s operation in Rwanda more than doubled at the expected earnings before interest, depreciation and amortisation margin. High rainfall, coupled with constrained export opportunities, had a negative impact on sales. GRAIN WHITE CORN ADVANCES BY MAXIMUM ON WEATHER, FORECAST (Moneyweb, 26/1/2016) White corn in South Africa, the continent’s biggest producer of the grain, rose by its daily trading limit on concern recent rain isn’t enough to make up for an earlier drought before the government’s Crop Estimates Committee delivers its first production forecast. “The market is looking at the Wednesday’s National Crop Estimates, with anticipation of lower crop,” Wandile Sihlobo, an economist at farmers’ lobby Grain SA, said by e-mail on Monday. “Recent rains are welcomed but not sufficient to replenish the soil moisture. It’s still quite dry out there and too late for any additional maize plantings.” White corn for delivery in July rose by its R120 ($7.28) limit, or 2.5%, to R4 925 a metric ton by midday on the South African Futures Exchange, the biggest gain since January 14. Yellow corn for delivery in the same month climbed 1.5% to R3 614 a ton. The white type is used to make a staple food known locally as pap, while the yellow variety is mainly fed to animals. South Africa will probably produce 6.1 million tons of corn this season, according to the median estimate of seven analysts surveyed by Bloomberg. That’s down from the 9.9 million tons in the previous season expected by the nation’s Crop Estimates Committee. The range of forecasts was 5.5 million to 7.5 million tons in the survey carried out before the estimates panel is due to release its first production outlook for 2015-16 on January 27. The nation probably sowed corn on 1.6 million hectares (2 million acres) this season ending April 2016, 37% less than farmers had planned, the median estimate of six of the analysts showed. The country planted 2.65 million hectares the previous year. About five million tons of corn in the year to April 2017 will probably need to be imported as the Free State and North West provinces, producers of 64% of 2014’s crop, lacked rain, according to Grain SA. MINERAL MINING Link to African Mining - Projects in progress - January 2016

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NON-FERROUS METALS FINAL LISHEEN ZINC SHIPMENT LEAVES GAP SOUTHERN AFRICA CAN FILL – VEDANTA (Engineering News, 26/1/2016) The final shipment of zinc from Vedanta Resources' Lisheen mine has brought zinc supply from the Irish mine to an end, opening up an opportunity for the Gamsberg project, which is inching forward at a carefully measured pace in South Africa’s Northern Cape. Lisheen’s closure means that some 120 000 t of zinc a year will no longer be going into the market from the discontinued mine in Ireland’s Tipperary province, leaving Southern Africa in the wings to offer part replacement and part growth to Vedanta’s zinc portfolio going forward. Through life extensions at both Lisheen and Vedanta’s Black Mountain operations in South Africa, the India-rooted London-listed diversified mining company has received substantial payback of the $1 338-million that it paid Anglo American Zinc for the assets nearly five years ago. In these markets, Gamsberg is proving tough to finance but a modular advance is being maintained with more than five-million tonnes of waste being moved since the first blast on July 27. The diversified Vedanta produces aluminium, copper, zinc, lead, silver, iron-ore, oil, gas and commercial energy at operations in India, Zambia, Namibia, South Africa, Liberia, Australia and Sri Lanka. GENERAL S AFRICA’S ECONOMY TO REMAIN WEAK – S&P’S (Engineering News, 26/1/2016) Ratings agency Standard & Poor’s (S&P’s) expects a tough year for the South African economy. In its ‘Sub-Saharan Africa Rating Trends 2016’ report, the agency noted that slow economic growth was at the core of the country’s problems, exacerbated by weak European demand for local goods; weak Chinese demand for key hard commodity exports including gold, platinum, iron-ore and coal; electricity shortages and weak business confidence. “Lower-than-expected gross domestic product growth, combined with the government's exposure to weak State-owned enterprises, such as Eskom, could pose a risk to the government achieving its fiscal targets. “In addition, foreign investor sentiment could add to the woes. Even though 90% of the total general government debt stock is in local currency, about 34% of this is held by non-residents, which makes the sovereign vulnerable to global investor sentiment, relative returns and diverging policy decisions elsewhere,” it stated. In December, S&P’s revised South Africa’s outlook to negative. The ratings agency further highlighted that economic conditions for most rated sub-Saharan Africa (SSA) sovereigns would remain difficult this year, with the main challenges stemming from the region's continued heavy reliance on oil and other commodity exports, as well as lower appetite from global investors for emerging and frontier market debt issuance, owing to likely ongoing interest rate rises in the US. “We expect the oil exporters, including Nigeria, Angola, Gabon, Congo and Ghana, to continue to be most affected by these issues. However, other hard commodity exporters, such as Zambia, South Africa, Botswana and Mozambique, will also face challenges,” the agency warned. This had also led to an overall deterioration in SSA sovereign creditworthiness since mid-2015. “On the other hand, some net hydrocarbon importers such as Senegal, Rwanda and Ethiopia have experienced a modest improvement in their imports as a result of lower oil prices. However, we do not currently view this as enough to trigger positive rating actions,” S&P’s pointed out. CURRENCIES AND PRICES

JSE AS AT 17:00PM 25 JANUARY 2016

All Share Index

25/01 47,210 - 0.95%

Industrials Index

25/01 38,788 - 0.13%

Financials Index

25/01 37,278 - 0.64%

Top 40 Index

25/01 42,413 - 1.26%

Industrial 25 Index

25/01 67,501 - 0.89%

Financial 15 Index

25/01 13,744 - 1.23%

Resources 10 Index

25/01 23,409 - 2.34%

Alt-X Index

25/01 1,525 + 0.62%

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WORLD INDICATORS

FOREX

Rand/Dollar 06:24 16.5458 + 0.67%

Rand/Pound 06:25 23.5089

+ 0.28%

Rand/Euro 06:25 17.9423 + 1.00%

COMMODITIES

Gold (usd/oz) 06:24 1,112.90 + 1.26%

Platinum (usd/oz) 06:24 860.30

+ 3.59%

Brent (usd/barrel) 06:24 29.89 - 7.12%

WORLD MARKETS

Wall St (DJIA) 25/01 15,885 - 1.29%

Germany (DAX) 25/01 9,736

+ 1.69%

Japan (Nikkei) 06:24 16,789 - 1.88%

3month

(Business Report, 26/1/2016)

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(TFR Commercial Management: Business Performance Dept)

Petrol/ Diesel Price

YR2016

06-Jan-

16

03-Feb-

16

02-Mar-

16

06-Apr-

16

04-May-

16

01-Jun-

16

06-Jul-

16

03-Aug-

16

07-Sep-

16

05-Oct-

16

02-Nov-

16

07-Dec-

16

COASTAL

95 LRP (c/l) 1194.00

95 ULP (c/l) 1194.00

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Diesel 0.05% (c/l) 972.47

Diesel 0.005% (c/l) 977.87

Illuminating Paraffin (c/l) 594.028

Liquefied Petroleum Gas

(c/kg) 1892.00

GAUTENG

93 LRP (c/l) 1209.00

93 ULP (c/l) 1209.00

95 ULP (c/l) 1237.00

Diesel 0.05% (c/l) 1005.17

Diesel 0.005% (c/l) 1010.57

Illuminating Paraffin (c/l) 647.028

Liquefied Petroleum Gas

(c/kg) 2074.00

YR2015

07-Jan-

15

04-Feb-

15

04-Mar-

15

01-Apr-

15

06-May-

15

03-Jun-

15

01-Jul-

15

05-Aug-

15

02-Sep-

15

07-Oct-

15

04-Nov-

15

02-Dec-

15

COASTAL

95 LRP (c/l) 1083.00 990.00 1086.00 1246.00 1246.00 1293.00 1334.00 1283.00 1214.00 1218.00 1196.00 1197,00

95 ULP (c/l) 1083.00 990.00 1086.00 1246.00 1246.00 1293.00 1334.00 1283.00 1214.00 1218.00 1196.00 1197,00

Diesel 0.05% (c/l) 997.49 895.49 969.49 1090.09 1085.09 1134.09 1138.09 1062.27 1008.27 1061.27 1052.27 1048,47

Diesel 0.005% (c/l) 1001.89 899.89 973.89 1096.49 1091.49 1137.49 1141.49 1067.67 1016.67 1067.67 1057.67 1055,87

Illuminating Paraffin (c/l) 697.728 595.728 668.728 690.828 685.828 727.828 733.828 663.828 608.828 658.828 656.828 657,028

Liquefied Petroleum Gas

(c/kg) 1829.00 1679.00 1833.00 1918.00 1935.00 2035.00 2091.00 2002.00 1887.00 1898.00 1851.00 1847,00

GAUTENG

93 LRP (c/l) 1102.00 1009.00 1105.00 1261.00 1261.00 1308.00 1352.00 1301.00 1232.00 1230.00 1208.00 1209,00

93 ULP (c/l) 1102.00 1009.00 1105.00 1261.00 1261.00 1308.00 1352.00 1301.00 1232.00 1230.00 1208.00 1209,00

95 ULP (c/l) 1124.00 1031.00 1127.00 1289.00 1289.00 1336.00 1377.00 1326.00 1257.00 1261.00 1239.00 1240,00

Diesel 0.05% (c/l) 1028.09 926.09 1000.09 1122.79 1117.79 1166.79 1170.79 1094.97 1040.97 1093.97 1084.97 1081,17

Diesel 0.005% (c/l) 1032.49 930.49 1004.49 1129.19 1124.19 1170.19 1174.19 1100.37 1049.37 1100.37 1090.37 1088,57

Illuminating Paraffin (c/l) 747.928 645.928 718.928 743.828 738.828 780.828 786.828 716.828 661.828 711.828 709.828 710,028

Liquefied Petroleum Gas

(c/kg) 2011.00 1861.00 2015.00 2100.00 2117.00 2217.00 2273.00 2184.00 2069.00 2080.00 2033.00 2029,00

(SAPIA online)

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Daily prices for 25 January 2016

LME Official Prices, US$ per tonne

Contract Aluminium Alloy Aluminium Copper Lead Nickel Tin Zinc NASAAC

Cash Buyer 1529.00 1479.00 4453.00 1628.00 8550.00 13745.00 1514.00 1685.00

Cash Seller & Settlement 1530.00 1480.00 4454.00 1628.50 8555.00 13750.00 1514.50 1685.50

3-months Buyer 1555.00 1480.00 4453.00 1631.00 8590.00 13575.00 1516.50 1700.00

3-months Seller 1565.00 1481.00 4455.00 1633.00 8610.00 13600.00 1517.50 1710.00

15-months Buyer 13465.00

15-months Seller 13515.00

Dec 1 Buyer 1635.00 1540.00 4435.00 1658.00 8750.00 1560.00 1770.00

Dec 1 Seller 1645.00 1545.00 4445.00 1663.00 8850.00 1565.00 1780.00

Dec 2 Buyer 1595.00 4435.00 1688.00 8850.00 1575.00

Dec 2 Seller 1600.00 4445.00 1693.00 8950.00 1580.00

Dec 3 Buyer 1662.00 4450.00 1732.00 8920.00 1580.00

Dec 3 Seller 1667.00 4460.00 1737.00 9020.00 1585.00

(London Metal Exchange, 26/1/2016)

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