Standard Bank - Kitco

Commodities
Commodities: Daily
China data for commodities marginally better
Focus: From a commodity demand perspective, we look closely at real economic indicators
in China. These indicators continue to point to stable, if not better commodity demand growth
than what we have seen YTD from the country.
The Chinese have made a fairly low key return to the base metal markets with an initial flurry
of interest quickly petering out as the SHFE metals equilibrated with global prices. Sharp falls
in Asian equity markets and general concern over commodity demand has weighed on the
base metals heading into Thursday afternoon, though decent dip-buying interest has also
emerged in copper, aluminium and zinc.
As pointed out last week, we keep a close eye on the US equity market. Key support for the
S&P sits at its 50day MA of 1,604 — this is also a support line which dates back to the start
of the year. The Nikkei and the FTSE have fallen below a similar support line two weeks ago.
Weaker equity markets may push the dollar weaker and precious metals higher. We would
favour platinum to rally more than gold.
Driven by a weakening trend in the dollar yesterday, oil markets ended the day higher. Frontmonth
WTI gained 50c/bbl to close at $95.88/bbl, while the North Sea benchmark ended the
day 53c/bbl lower, for a close of $103.49/bbl.
The TSI Fe 62% China CFR price index rose $1.10/t to $112/t (MTD: $112.74/t). The TSI Fe
58% index however remained flat at $100.70/t.
Commodity price data (12 June 2013)
Base metals LME 3-month
Sources: Standard Bank Research; LME; BBG
Strategists
Open Close High Low Daily change Change (%) Cash Settle
13 June 2013
Walter de Wet, CFA*
Walter.DeWet@standardbank.com
+27-11-3787236
Change in
cash settle
Cash - 3m
Aluminium 1,892 1,864 1,903 1,864 -28 -1.48% 1,843.00 -6 -42.75
Copper 7,030 7,120 7,162 7,020 90 1.28% 7,086.00 50 -33.00
Lead 2,116 2,118 2,143 2,099 2 0.09% 2,133.00 4 -10.50
Nickel 14,525 14,275 14,525 14,260 -250 -1.72% 14,385.00 -110 -77.50
Tin 20,699 20,400 20,699 20,230 -299 -1.44% 20,445.00 -155 -71.00
Zinc 1,856 1,865 1,874 1,843 9 0.47% 1,833.00 0 -36.75
Energy
Open Close High Low day/day Change (%)
ICE Brent 103.33 103.11 103.51 103.11 -0.38 -0.37%
NYMEX WTI 95.77 95.34 95.86 95.31 -0.54 -0.57%
ICE Gasoil 870.00 867.75 870.00 867.25 -5.25 -0.61%
API2 Q3'13 79.00 78.35 - - -0.65 -0.83%
AM Fix PM Fix High bid Low offer Closing bid Change (d/d) EFP's
Gold 1,377.25 1,382.75 1,394.40 1,374.00 1,392.20 13.70 -0.8/-0.4
Silver - 21.82 22.01 21.56 21.86 0.16 -8.0/-6.0
Platinum 1,483.00 1,481.50 1,488.00 1,471.00 1,481.50 2.50 +1.5/+3.5
Palladium 749.50 754.00 754.00 753.00 754.00 4.00 +0.0/+1.0
Leon Westgate*
Leon.Westgate@standardbank.com
+44-20-31456822
Melinda Moore*
Melinda.Moore@standardbank.com
+44-20-31456887
Marc Ground, CFA*
Marc.Ground@standardbank.co.za
+27-11-3787215
Please refer to the disclaimer at the end of this document *This document is not investment research, as it has not been prepared in accordance with the requirements designed to promote the independence of research. It therefore constitutes
a ―marketing communication‖ as defined by the UK FCA Handbook, and must not be considered a Research Report under US or any other regulatory regime. U.S. Disclosure: Standard Bank Group Limited does and seeks to do
business with companies covered in its reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in
making their investment decision.

2
Focus: China data for commodities marginally better
From a commodity demand perspective, we look closely at
real economic indicators in China. These indicators continue
to point to stable, if not better commodity demand growth than
what we have seen YTD from the country.
In terms of the latest data, we look at electricity and cement
production. We believe that for the second month running,
China’s electricity production data paints a picture of real economic
activity that is steady and improving, although not spectacular
yet. The latest data shows electricity production in
China rose a relatively strong 5.3% y/y in May, marginally
lower than the 7.4% y/y in April. China’s electricity production
YTD (i.e. January to May) also looks slightly better — it grew
5.1% YTD y/y, compared to 4.8% YTD y/y in 2012. The current
trend may be similar to Q4:12 where electricity data
showed a continued improvement and economic growth also
picked up.
Other data in the Chinese economy also points perhaps to an
improvement in economic activity which could attract stronger
industrial demand for commodities. China’s cement production
grew 9.3% y/y in May and 9.2% y/y in April. This is up from a
weak 4.3% in March. Compared to last year, the cement production
also looks good. Growth in May 2012 was 4.5% y/y
and 5.9% y/y in April (see Figure 2).
That said, we note that the data out of China is not yet consistent
and strong enough to make a case for commodity prices
to move rapidly, and sustainably higher. For example, China’s
PMI data is still relatively weak, and so is data on rail freight
volumes and even the Chinese leading economic indicator.
But we believe that the latest data is still positive and encouraging
in the light of commodity price action since March this
year. As pointed out in our Commodities Daily dated 15 May
2013, market expectations and commodity prices seem to
have adjusted already to reflect slower growth from China. As
a result, much of the downside may be reflected in prices already.
Perhaps the price surprise for commodities in general
lies marginally to the upside rather than the downside.
Base metals
Commodities
China electricity production
480
400
320
240
160
Sources: Standard Bank Research; CNBS
China cement production
260
210
160
110
60
Jan
Jan
kWh (bn)
Feb
Sources: Standard Bank Research; CNBS
Mar
Apr
May
Commodities Daily — 13 June 2013
Jun
2008 2009 2010
2011 2012 2013
mt (million)
By Walter de Wet
Feb
Mar
Apr
May
Jun
2008 2009 2010
2011 2012 2013
The Chinese have made a fairly low key return to the base metal markets with an initial flurry of interest quickly petering out as
the SHFE metals equilibrated with global prices. Sharp falls in Asian equity markets and general concern over commodity demand
has weighed on the base metals heading into Thursday afternoon, though decent dip-buying interest has also emerged
in copper, aluminium and zinc.
The recent weakness in LME copper prices saw the SHFE-LME arbitrage window open overnight, yielding a $36/mt profit
(basis a bonded premium of $145). Overall, SHFE copper prices opened lower then drifted sideways after an initial rally, with
October-13 - currently the most active contract - ending the day just over 2% lower than Friday. SHFE copper open interest
meanwhile climbed by around 5%. LME prices also staged an initial rally higher in response the SHFE activity before falling
back towards $7,050 during the course of Thursday morning.
Freeport finally announced force majeure on concentrate shipments from its Grasberg mine yesterday afternoon. As noted, the
impact will be felt in the concentrates market first of all. It’s also worth noting however that the accident probe has been com-
Jul
Jul
Aug
Aug
Sep
Sep
Oct
Oct
Nov
Nov
Dec
Dec

Commodities Daily — 13 June 2013
pleted, with the investigation team due to report to the Energy and Mineral Resources Minister either over the weekend or
early next week. The report will include the cause of the accident and recommendations on how to avoid similar incidents in
the future. Aside from taking the recommendations on board, union displeasure may also need to be addressed before operations
can ramp back up.
One side effect of nickel’s continued price weakness is that LME prices are nearly at a breakeven level to allow imports into
China, with a temporary floor to LME prices perhaps forming just above $14,000/mt. How aggressive any Chinese buying may
turn out to be is debateable however, providing a respite to nickel’s price collapse rather than a catalyst for a sustained recovery.
Nickel prices in China are trading around the 100,000 CNY level, considered by some to offer key psychological support.
Aluminium has continued to weaken, trading around $1,860 heading into US trade and back around its mid-May levels. The
weakness has seen some consumer-related buying interest emerge around the lows, albeit opportunistic in nature. Although
the buying interest provides some near-term support, it is not enough to help spark a sustained rally higher.
Precious metals
By Leon Westgate
The metals remain range-bound, although technically they look weak. That said, a weaker US dollar is assisting in providing
support to prices.
As pointed out last week, we keep a close eye on the US equity market. Key support for the S&P sits at its 50day MA of 1,604
— this is also a support line which dates back to the start of the year. The Nikkei and the FTSE have fallen below a similar
support line two weeks ago. Weaker equity markets may push the dollar weaker and precious metals higher. We would favour
platinum to rally more than gold.
We maintain that silver remains vulnerable on the back of weak fundamentals. The metal is still trading below $22, which has
provided good support in the past two months. Silver might rally a bit on short-covering, but rallies should fade.
Gold support is at $1,375 and $1,366. Resistance is at $1,388 and $1,400. Silver support is at $21.52 and $21.23, resistance
is at $22.00 and $22.32.
Platinum support is at $1,450 and $1,445. Resistance is at $1,500 and $1,525. Palladium support is at $733 and resistance at
$765.
Energy
By Walter de Wet
Driven by a weakening trend in the dollar yesterday, oil markets ended the day higher. Front-month WTI gained 50c/bbl to
close at $95.88/bbl, while the North Sea benchmark ended the day 53c/bbl lower, for a close of $103.49/bbl.
For Brent, another point of support was the IEA’s forecast of lower North Sea output due to planned oilfield maintenance. The
agency predicts that some 330kbd will be lost over May to September. For the global supply picture, in the same report the
IEA estimated that OPEC output reached a seven-month high in May of 30.89mbd. This exceeds the 30mbd target ceiling
reaffirmed at OPEC’s last meeting, perhaps leading some participants to think that the cartel might reign in some supply over
the coming month. To our mind, within OPEC, the decision to cut back rests largely with Saudi Arabia, and given its stated
comfort with current price levels we don’t feel that there would be much incentive for it to do so.
DOE numbers started the market on a downward trend later in the day. Crude oil inventories grew 2.5m bbls, especially
surprising for a market expecting a 1.5m bbl drawdown (according to Bloomberg consensus, although after the API reported
9.0m bbls the actual market expectation was probably quite different from this). On the bright side for WTI, Cushing inventories
dropped considerably, falling 0.8m bbls. Gasoline inventories climbed 2.7m bbls, and implied gasoline and crude oil demand
both fell to 9.0mbd (from 9.1mbd) and 14.7mbd (from 15.5mbd) respectively.
This underscores the point we made in yesterday’s Focus section of this report (see Commodities Daily dated 12 June 2013).
With the apparent resilience of the US consumer and an easing of retail gasoline prices in the US (which reflect these high
levels of gasoline inventory), we are now more confident that robust gasoline demand over the coming months could see a
working down of both gasoline and ultimately crude oil inventories in the US. However, we do feel that market participants
might still be overestimating this work down if they simply extrapolate recent trends.
By Marc Ground
Commodities
3

4
Bulks
Commodities
Commodities Daily — 13 June 2013
China’s steel markets behaved rather benignly today, despite being the first day back after the holidays, with last weekend’s
May key economic data releases (IP, FAI, CPI, trade) needing to be absorbed. Shanghai Equities were less sanguine, falling
2.74% back below the 2200 level, to 2148, as the market began to realise what the steel industry has known since mid-May:
that China is in the midst of a cyclical slowdown, particularly in urban areas, where housing completions and new starts are
both falling. With GDP growth at 7.7% in Q1, China could be heading for a slower rate for Q2. Some brokers have begun
further downgrading their forecasts. Beijing’s new leadership, under Xi and Li, are therefore already being given their first test:
will they buckle and support the market slightly with further monetary/fiscal policy measures, or will they continue on their
market reforms/market forces industry restructuring path? CPI rates appear to be giving them some wiggle-room for the
former.
Meanwhile, the PBOC didn’t conduct any cash-draining repurchase offers into the market today, with the 7-day Shanghai
interbank rate remaining at the high rate of 6.38%, significantly above our 3.5% squeal factor for ore and steel inventory
holders. A month ago, rates were at just 2.9%.
Shanghai Rebar Futures closed up a paltry RMB1/t at 3422. Although a Yangang weekly spot billet tender closed RMB26/t
lower w/w, spot billet prices fell only RMB10/t, having risen RMB20/t last weekend. However, rebar in Shanghai and Tianjin
enjoyed post-holiday restocking momentum, rising RMB30-50/t.
Among physical cargoes, BHPB sold a MAC fines Fe 60.5% cargo (21-30 laycan) via tender at $111.85/t, while the miner sold
a similar cargo on CBMX for $111.98/t, injecting confidence into the post-holiday market. globalORE has seen a number of
bids for June and July delivery enter its screens across the $105-110/t range, suggesting a level of mill interest is creeping
back into the markets. An off-screen offer of prompt Newman Fe 62.7% fines is being offered at $114/t. Meanwhile tomorrow,
RioT plans to conduct an Fe 61.4% PB fines cape cargo (27 June-6 July laycan) tender.
The TSI Fe 62% China CFR price index rose $1.10/t to $112/t (MTD: $112.74/t). The TSI Fe 58% index however remained flat
at $100.70/t.
Among IO supply news, China is to scrap its import licensing system from 1 July, opening the industry to ―market forces‖, in a
complete turnaround from CISA’s previous belief that controlling imports would somehow give mills greater control over
pricing. In reality, only greater supplies relative to demand can improve pricing for end-users. We are seeing this begin to take
hold now, given the increase in expansion tonnes from key seaborne supplies, particularly in Australia’s Pilbara region.
Guinea no longer expects RioT to begin shipping in 2015 from Simandou, which the government estimates could cost as much
as $20-25bln to develop. The country has decided to apply a 5% royalty rate to ore exports, although some refinements may
be required to the formula adopted thus far. Meanwhile, RioT continues to negotiate the sale of its stake in IOC.
Coking coal remains in the $136-140/t range, with negotiations yet to be completed with the Japanese, for Q3 contract volume
prices. Q2 prices had been set at $172/t Qld fob; although mills have given considerable push back subsequently, with prices
believed to be crossing below $150/t Qld fob already for certain contract volumes.
For Q3:13 thermal coal prices, API 2 is trading at $77.30/t; API 4 is trading at $77.30/t; while Newcastle is trading at $81.30/t.
By Melinda Moore

Commodities Daily — 13 June 2013
Base metals
Daily LME Stock Movement (mt)
Metal Today Yesterday In Out
Energy
Precious metals
Sources: Standard Bank; LME; Bloomberg
One day
change
YTD change
(mt)
Cancelled
warrants
(mt)
Cancelled
warrants (%)
Contract
turnover
Aluminium 5,214,150 5,198,425 23,550 7,825 15,725 - 2,073,175 39.76 256,373
Copper 609,550 609,250 1,125 825 300 289,500 223,100 36.60 155,717
Lead 200,325 202,550 300 2,525 -2,225 -120,000 144,325 72.05 70,845
Nickel 183,720 182,814 1,050 144 906 43,812 24,384 13.27 61,007
Tin 14,495 14,505 0 10 -10 1,670 3,595 24.80 6,780
Zinc 1,096,250 1,100,450 1,550 5,750 -4,200 -124,500 703,225 64.15 110,214
Shanghai 3-month forward prices COMEX active month future prices
Metal Open Last 1d Change Open Close Change Change (%)
Aluminium 14,625 14,755 -185 Ali Jul'13 - - - -
Copper 51,850 52,050 -1,140 Cu Jul'13 323 322.45 -0.10 -0.03%
Zinc 14,540 14,575 -225
ZAR metal prices
Aluminium Copper Lead Nickel Tin Zinc ZAR/USD fix
Cash 18,458 70,966 21,362 144,066 204,757 18,357 10.0150
3-month 18,920 72,268 21,498 144,891 207,060 18,930 10.1500
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 ($/bbbl) 118.50 1.26 118.08 2.04 117.45 1.99 117.25 1.73 115.63 -1.25
Gasoil 0.1% Rdam ($/mt) 867.75 -5.25 869.00 -5.75 872.25 -5.25 873.75 -6.00 869.00 9.75
NWE CIF jet ($/mt) 939.60 11.27 944.89 16.84 947.38 15.16 951.58 13.33 939.04 -8.92
Singapore Kero ($/bbl) 116.64 1.19 117.46 2.07 117.50 2.08 117.63 1.76 116.89 1.34
3.5% Rdam barges ($/mt) 581.77 3.48 579.25 5.35 576.90 4.89 571.09 4.22 564.81 2.72
1% Fuel Oil FOB ($/mt) 608.62 1.57 608.44 2.42 608.15 3.33 603.42 3.34
Sing FO180 Cargo ($/mt) 621.53 4.70 614.25 7.35 608.22 6.02 603.09 4.72
Thermal coal Q3-13
Q4-13 Q1-14 Cal 13 Cal 14
API2 (CIF ARA) 78.35 -0.65 81.60 -0.40 84.65 -0.20 87.75 -0.25 93.50 -0.20
API4 (FOB RBCT) 78.05 -0.65 79.75 -0.35 82.40 -0.10 84.95 -0.15 89.40 -0.20
Forwards (%) 1 month 2 months 3 months 6 months 12 months
Gold 0.14667 0.16167 0.17667 0.20833 0.24667
Silver 0.62000 0.61600 0.61800 0.61200 0.56800
USD Libor 0.19250 0.22976 0.27325 0.41376 0.68320
Technical Indicators 30-day RSI 10-day MA 20-day MA 100-day MA 200-day MA Support Resistance
Gold 42.50 1,394.21 1,390.16 1,521.32 1,618.82 1,384.27 1,394.63
Silver 37.53 22.16 22.34 26.53 29.55 21.67 21.98
Platinum 46.57 1,493.10 1,478.36 1,553.54 1,582.25 1,465.56 1,481.08
Palladium 54.32 757.03 750.70 737.21 700.35 753.33 758.48
Active Month Future COMEX GLD COMEX SLV NYMEX PAL NYMEX PLAT DGCX GLD TOCOM GLD CBOT GLD
Aug'13 Jul’13 Jul'13 Jul'13 Aug'13 Apr'14 Aug'13
Settlement 1,389.10 21.7600 756.10 1,482.30 1,388.00 4,238.00 1,392.00
Open Interest 373,844 147,175 37,301 62,964 981 102,943 531
Change in Open Interest -2,799 -301 -11 477 -74 595 0
Commodities
5

6
Bulks
Sources: Standard Bank; LME; Bloomberg
Commodities
Commodities Daily — 13 June 2013
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 322.12 - -4.45% -10.86% -18.01% -15.55% -15.05%
China Tangshan Steel Billet $/t 473.00 - -0.63% -6.52% -8.16% -4.83% -17.31%
China HRC export (Shanghai FOB) $/t 505.00 - -0.98% -6.83% -16.94% -8.68% -18.94%
North Europe HRC domestic (ex-works) $/t 437.50 - -1.13% -4.89% -12.94% -3.85% -14.63%
North America HRC domestic (Midwest FOB) $/t 581.60 - 1.99% -1.05% -3.90% -9.61% -7.68%
Steel—Futures
LME Billet Cash $/t 136.50 - -3.70% -9.00% -43.60% -53.49% -64.27%
LME Billet Futures (1-mth) $/t 137.50 - -4.35% -8.33% -43.65% -53.23% -64.12%
LME Steel Billet Stocks—change -130.00 - - - - - -
Shanghai Rebar Futures (Active contract) $/t 526.78 - -0.08% -5.87% -9.59% -8.88% -17.42%
Shanghai Rebar Futures O/W Stocks—change - - - - - - -
SHFE Rebar - Open Interest 300 - - - - - -
SHFE Rebar - Total Volume - - - - - - -
China Steel Inventory (million tonnes) 17.00 - -2.67% -9.75% -17.62% 38.44% 7.20%
Iron ore
China Iron Ore Fines (62% Fe; CFR Tianjin) $/t 110.90 - -2.63% -14.30% -20.22% -12.26% -17.05%
China Iron Ore Fines (58% Fe; CFR Tianjin) $/t 100.70 - -5.45% -14.66% -24.46% -13.19% -17.53%
SGX AsiaClear IO Swaps 62% Fe $/t (1-mth) 112.50 - 1.35% -13.05% -19.68% -9.33% -15.73%
SGX AsiaClear IO Swaps 62% Fe—Open interest 31,397 - - - - - -
China Iron Ore Inventory (million tonnes) 71.59 - 1.23% 4.96% 8.04% -5.27% -24.75%
Coking coal
Premium Hard Coking Coal (Qld FOB) $/t 142.00 - - -5.33% -16.47% -12.35% -36.89%
Capesize freight
Tubarao Brazil-Beilun China (C3) 17.52 - 0.11% -0.79% -0.34% 2.16% 1.10%
Pilbara Australia-Qingdao China (C5) 7.51 - 3.16% 2.04% 0.27% -0.92% 10.93%
Saldanha South Africa-Beilun China 13.00 - - 2.36% 0.39% -1.89% -
Tubarao Brazil to Rotterdam Europe 7.86 - 4.38% 2.88% 4.38% 3.97% 8.12%
Saldanha South Africa-Rotterdam Europe - - - - - - -
Financials pricing
RMB Currency 6.1397 0.10% 0.06% -0.11% -1.20% -1.49% -3.60%
China 7-day repo 6.3000 5.0% 16.7% 117.1% 123.4% 134.2% 133.3%
Shanghai Equities Composite 2,142.8113 -3.08% -4.43% -4.42% -5.35% 3.95% -7.59%

Commodities Daily — 13 June 2013
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Bank Ghana Limited; in Iran by Standard Bank Plc – representative office; in Isle of Man by Standard Bank Isle of Man Limited; in Jersey
by Standard Bank Jersey Limited; in Mexico by Standard Bank Plc – representative office; in Madagascar by Union Commercial Bank S.A.; in
Mozambique by Standard Bank s.a.r.l.; in Malawi by Standard Bank Limited; in Namibia by Standard Bank Namibia Limited; in Mauritius by
Standard Bank (Mauritius) Limited; in Peru by Standard Bank Plc – representative Office; in Taiwan by The Standard Bank of South Africa; in
Tanzania by Stanbic Bank Tanzania Limited; in Singapore by Standard Merchant Bank (Asia) Limited; in Swaziland by Standard Bank Swazi-
Commodities
7

8
Commodities
Commodities Daily — 13 June 2013
land Limited; in Zambia by Stanbic Bank Zambia Limited; in Zimbabwe by Stanbic Bank Zimbabwe Limited; in UAE by Standard Bank Plc –
Dubai branch
In jurisdictions where SBG is not already registered or licensed to trade in securities, transactions will only be effected in accordance with applicable
securities legislation, which will vary from jurisdiction to jurisdiction and may require that the trade be made in accordance with applicable
exemptions from registration or licensing requirements.
Standard Bank Group Ltd Reg.No.1962/000738/06) is listed on the JSE Limited. It is an Authorised Financial Services Provider and it also
regulated by the South African Reserve Bank.
Copyright 2013 SBG. All rights reserved. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent
of Standard Bank Group Ltd.