Read fx1jan05 text version

Survey Date July 25, 2011 Energy & Metals Consensus Forecasts surveys more than 30 energy and metals analysts each quarter for a range of commodity price forecasts. The results covering over 25 commodities ­ together with reference data, analysis, special surveys, and the underlying global macroeconomic outlook ­ are sent to subscribers by express mail and e-mail.

Factors Affecting Commodity Prices: A Special Survey

This month's special survey focuses on the extent to which commodity price movements are influenced by a range of different factors, including `demand/business cycle', `supply/production constraints', `government trade policies', `FX linkages/ US$ value' and `investment funds'. For our panellists' judgements as to which factors dominate the respective outlooks for 17 major commodities see pages 26 and 27.

Contents

Page Overview ................................................ 2

Macroeconomic Outlook ...................... 3 Commodity Price Indices ..................... 4 Long-Term Forecasts (2011-2021) ........ 5 Individual Commodity Forecasts Crude Oil ............................................. 6 Gasoline & Heating Oil ........................ 7 Gas Oil ................................................ 8 Natural Gas ......................................... 9 Coal ................................................... 10 Uranium ............................................. 11 Aluminium ......................................... 12 Alumina ............................................. 13 Copper .............................................. 14 Nickel ................................................ 15 Lead .................................................. 16 Zinc ................................................... 17 Steel .................................................. 18 Iron Ore ............................................. 19 Tin, Cobalt, Manganese .................... 20 Molybdenum, Rutile, Ilmenite, Zircon 21 Gold ................................................... 22 Silver ................................................. 23 Platinum ............................................ 24 Palladium .......................................... 25 Factors Affecting Commodity Prices: A Special Analysis .......................... 26-27 Chart of Commodity Forecasts ........... 28

Overview

A sharp sell-off in commodities in early May ­ which began with a slump in Silver (see chart below and page 23) ­ was fuelled by fears that premiums had become detached from fundamentals. Having climbed in the first five months of 2011 to near US$110 per barrel, WTI Crude Oil (page 6) suffered a drop of almost 10%. Copper (page 14), usually an economic bellwether due to its industrial versatility, fell by a smaller amount but doubts about its value also came to the fore. Clearly, the mass liquida(continued on page 2)

Gold & Silver Prices

US$ per troy oz.

1800 1600 1400 1200 1000 25 800 600 400 200 0 Jan 2001 Jan 2003 Jan 2005 Jan 2007 Jan 2009 Jan 2011 20 15

US$ per troy oz.

50 45 40

Gold (left scale)

35 30

Silver (right scale)

10 5 0

Energy & Metals Consensus Forecasts (ISSN: 1754-825X) is published by Consensus Economics Inc., 53 Upper Brook Street, London, W1K 2LT, United Kingdom [email protected] Tel: (44 20) 7491 3211 Fax: (44 20) 7409 2331 www.consensuseconomics.com

Publisher: Philip M. Hubbard

Editors: Che-Wing Pang & Claire Hubbard Assistant Editor: Matthew Record

© Copyright Consensus Economics Inc. 2011. All rights reserved. The contents of this publication, either in whole or in part, may not be reproduced, stored or transmitted in any form or by any means, electronic, photocopying, recording or otherwise without the prior written permission of the publisher. The Editor and Consensus Economics Inc., do not guarantee or take any responsibility for the information set forth herein, including the accuracy, completeness or timeliness of the forecasts or written analysis.

OVERVIEW

(continued from front page)

JULY 2011

materials. Short-term trends in commodities will likely continue to be closely linked to monetary policy and the availability of affordable finance. Issues regarding debt and leverage, notably the budget crisis in Europe and the US (which needs to extend the constitutional debt ceiling before early August), dominate investor sentiment. On balance, most panellists do not expect a significant correction in commodity prices to occur over the next few quarters, even though some are close to record levels. We feature on page 5 long-term forecasts for over 25 commodities, covering the period 2011 to 2021.

tion of energy and metals investments was exacerbated by signs of economic weakness in China and the debt plight in the euro zone (see macroeconomic analysis, page 3). Downward price pressures for precious metals, though, appear to have eased since then, as the US Federal Reserve appears very unlikely to reverse its ultra loose monetary stance before 2012. Minutes from the latest FOMC meeting reveal that a third round of quantitative easing (i.e. QE3) was even comtemplated which could fuel risk appetite. In terms of fundamentals, supply constraints and the out-performance of Asia and Latin America (though perhaps less vibrant than six months ago) appear sufficient to sustain demand for raw

SUMMARY OF ENERGY & METALS CONSENSUS FORECASTS

See page Crude Oil - WTI (US$/bbl) Natural Gas (US, US$/MMBtu) Coal (Steaming, US$/tonne) Uranium (US$/lb) Aluminium (US$/tonne) Alumina (US$/tonne) Copper (US$/tonne) Nickel (US$/tonne) Lead (US$/tonne) Zinc (US$/tonne) Tin (US$/tonne) Steel (HRC, Europe, US$/tonne) Iron Ore (Aust. Fine, US¢/dmtu) Gold (US$/oz.) Silver (US$/oz.) Platinum (US$/oz.) Palladium (US$/oz.) 6 9 10 11 12 13 14 15 16 17 20 18 19 22 23 24 25

% change since end Dec. 2010 +21.4% -28.5% +57.2% +13.5% +13.7% +30.1% +23.3% +21.2% +10.6% -5.9% +42.4% +31.7% +84.9% +36.3% +77.7% +18.3% +50.7%

Spot Price July 25 2011 98.97 4.465 126.8 53.50 2573 415.0 9620 23780 2670 2426 28145 803.8 272.7 1616 40.78 1787 806.0

Consensus Forecasts Dec. 2011 Mar. 2012 Jun. 2012 98.93 4.610 127.0 57.67 2598 396.3 9824 24514 2645 2365 27651 804.3 259.3 1535 35.47 1833 848.4 99.94 4.954 127.3 58.38 2585 393.4 10049 24654 2664 2442 27436 810.7 254.8 1522 33.96 1868 894.6 100.9 4.764 127.2 59.08 2610 395.4 10202 24783 2658 2483 27625 836.4 254.9 1517 33.97 1871 898.5

Forecast % change to Jun. 2012 +1.9% +6.7% +0.3% +10.4% +1.4% -4.7% +6.0% +4.2% -0.4% +2.3% -1.8% +4.0% -6.5% -6.2% -16.7% +4.7% +11.5%

NOTES, ABBREVIATIONS, WEIGHTS AND MEASURES

WTI ­ West Texas Intermediate EIA ­ Energy Information Agency (USA) LME ­ London Metal Exchange LBMA ­ London Bullion Market Association LPPM ­ London Platinum and Palladium Market NYMEX ­ New York Mercantile Exchange COMEX ­ New York Commodities Exchange ICE - Intercontinental Exchange GDP na fob bbl dltu dmtu MMBtu rhs/lhs ­ ­ ­ ­ ­ ­ ­ ­

JULY 2011

Gross Domestic Product Not Available Free On Board Barrel Dry long tonne unit (1/100 of a dry long tonne) Dry metric tonne unit (1/100 of a dry metric tonne) Millions of British Thermal Units (Btu) right-hand scale/left-hand scale

All individual commodity forecasts on pages 6-25 are listed in descending order of their approximate 1-year percentage change estimates. Consensus forecasts are mean averages of individual quarterly average forecasts. Historical price data in this publication has been provided by Commodity Research Bureau and other sources. Gross Domestic Product (GDP) is expressed in real (i.e. inflation-adjusted) terms. GDP and Industrial Production are expressed as average percentage changes over the previous calendar year unless otherwise indicated. 1 short ton = 0.907 metric tonnes = 2000 pounds 1 kilogram = 32.1507 troy ounces 1kilogram (kg) = 2.2046 pounds 1,000 kilograms = 1 metric tonne = 2204.6 pounds 1 long tonne = 1.016 metric tonnes = 2240 pounds 1 barrel = 42 US gallons 10 Therms of Natural Gas = 1 million Btu = 1MMBtu 1 metric/long tonne unit (MTU/LTU) = 1/100 of a metric/long tonne

© Copyright Consensus Economics Inc. 2011

2

JULY 2011

MACROECONOMIC OUTLOOK

Economic growth rates provide a valuable insight into the behaviour of energy and metals prices, with industrial production growth forecasts in particular giving an overview of the likely demand for many commodities. The forecasts below are taken from the current issues of our publications Consensus Forecasts, Asia Pacific Consensus Forecasts, Eastern Europe Consensus Forecasts and Latin American Consensus Forecasts.

REAL GDP GROWTH

(% change on previous year)

United States Japan Euro zone China Australia 1 World

1

2008 0.0 -1.2 0.3 9.6 2.6 4.0

2009 -2.6 -6.3 -4.1 9.2 1.3 2.0

2010 2.9 4.0 1.7 10.3 2.7 4.0

Consensus Forecasts 2011 2012 2.5 3.0 -0.7 3.1 2.0 1.6 9.2 8.8 1.9 4.0 3.2 3.6

INDUSTRIAL PRODUCTION GROWTH

(% change on previous year)

United States Japan Euro zone China Australia World 1

2008 -3.7 -3.4 -1.6 12.9 2.5 1.2

2009 -11.2 -21.8 -14.7 11.0 -1.6 -7.4

2010 5.3 16.6 7.4 15.7 4.4 9.6

Consensus Forecasts 2011 2012 4.2 3.9 -2.2 8.6 4.9 3.6 13.9 12.8 -0.2 4.1 5.7 6.2

country weights available to qualified subscribers upon request.

2011 REAL GDP GROWTH

(%)

2010 Jan 3.5 3.0 Mar

Consensus Forecasts From Surveys Of:

May J ul Sep Nov 2011 Jan Mar May

(%)

Jul 9.5

(%)

2010 Jan 6.0 4.0 2.0 0.0 -2.0 -4.0

2011 INDUSTRIAL PRODUCTION GROWTH

(%)

Consensus Forecasts From Surveys Of:

Mar May Jul Sep Nov 2011 Jan Mar May Jul 15.0

United States (lhs)

2.5 2.0 1.5

United States (lhs)

9.4 9.3 9.2

14.6

Euro Zone (lhs)

Euro Zone (lhs)

14.2

1.0 0.5 0.0 -0.5 -1.0 9.1

China (rhs)

13.8

China (rhs) Japan (lhs)

9.0 8.9

13.4

Japan (lhs)

-6.0 13.0

Clouds on the Horizon A significant amount of uncertainty continues to surround the global recovery which over the past two quarters has endured a spike in commodity prices and supply chain disruptions following the earthquake in Japan. The effect of some of these negative events is beginning to dissipate, as highlighted by a decline in the price of crude oil. However, tensions in Egypt remain elevated as new elections are postponed to October or November (originally set for September). In addition, power outages and political discord over reconstruction efforts in Tokyo could have negative trade implications. A potential debt disaster in Europe also poses an immediate risk to the global banking system, as balance sheets US$ per Euro

1.6 1.5 1.4 1.3 1.2

in a number of financial institutions have yet to be fully repaired, making them vulnerable to exogenous shocks. The approval of more stringent austerity measures in Athens in late June provided investors with some relief as an immediate default was avoided. Yet debt risks were soon reignited in Portugal and Ireland, which saw their ratings slashed, and increased scrutiny on Italy and Spain. Another important issue for the global economy is the threat of inflation which is being met with more urgent monetary responses, particularly in the emerging world. For these reasons, the consensus has downgraded 2011 GDP and industrial production forecasts for the US, China and Japan in recent polls (top two charts).

EXCHANGE RATES vs. US$

Consensus Forecasts Spot Rate End Oct. End Jul. % change End Jul. Jul . 11 2011 2012 from spot 2013 1.399 1.427 1.408 +0.6 1.362 Euro¹ 80.38 82.93 87.32 -7.9 90.36 Japanese yen 1.039 1.000 -5.9 0.956 Australian dollar¹ 1.063 6.341 6.148 +5.2 5.913 Chinese renminbi 6.465 0.969 0.973 0.987 -1.9 1.009 Canadian dollar 1.582 1.601 1.652 -4.3 1.755 Brazilian real

1

Renminbi per US$

5.5 6.0 6.5 7.0 7.5

1.1 1.0 0.9 0.8 Jan 01

Consensus Forecasts

8.0 8.5 9.0 Jan 01

Consensus Forecasts

Jan 04

Jan 07

Jan 10

Jan 13

Jan 04

Jan 07

Jan 10

Jan 13

US dollars per currency unit

Source: Foreign Exchange Consensus Forecasts (Survey Date: July 11, 2011)

Weak Currency Fundamentals Fear and trepidation over the global growth outlook (story above) has triggered periodic bouts of volatility among the major currencies. A catastrophic default in Athens appears to have been narrowly averted, although confidence in the euro remains fragile, hampered by concerns that the sovereign debt crisis would soon engulf larger EMU countries like

© Copyright Consensus Economics Inc. 2011

Italy and Spain. The spike in risk aversion has thus far been supportive of the US dollar ­ due to its perceived `safe haven' status ­ even though the US economy faces significant debt and structural challenges of its own. Of the major currencies covered in the table above, the consensus expects that only the Chinese renminbi will be able to maintain an uptrend over the next twelve months.

3

COMMODITY PRICE INDICES

JULY 2011

Commodity price indices are useful aggregates of individual commodity price trends. We focus here on two commodity price indices: The Economist Base Metals Index (which weights the prices of major base metals according to their share of world trade in 2005) and the Reserve Bank of Australia (RBA) Non-Rural Commodity Price Index (which weights the prices of major minerals according to their share of Australian exports in 2008/2009). Both indices are expressed as US$ prices in a given base year and track the performance of their particular subset of commodities. In addition to showing historical data from the two indices, we also show consensus forecasts for both over the next ten quarters. These are calculated from weighting consensus commodity price forecasts from this edition's survey. In the first two charts below, we also show the highest and lowest projections over the forecast horizon in order to illustrate the range of forecasts.

300

The Economist Base Metals Index (US$ price index, 2005=100)

Weights By Share of World Trade: Aluminium (47%) Zinc (7%) Copper (32%) Lead (3%) Nickel (8%) Tin (3%)

180 160 140 120 100

RBA Non-Rural Commodity Price Index (US$ price index, Fiscal Year 2008/09 = 100)

Weights By Share of Aust. Export Values: Coking Coal (21%) Alumina (10%) Steaming Coal (14%) [LNG (7%)] Gold (13%) Iron Ore ­ Lump (13%) Aluminium (11%) Copper (4%) Zinc (2%) Nickel (4%) Lead(1%)

Consensus High Low Q1 2007 Q1 2009 Q1 2011 Q1 2013

240

180

120 Consensus High Low Q1 2007 Q1 2009 Q1 2011

60

Consensus Forecasts

80 60 40 20

Consensus Forecasts

0 Q1 2005 Q1 2013

Q1 2005

The Economist Base Metals Index is a sub-index of

the headline Economist Commodity Price Index, containing six base metals: Aluminium, Copper, Lead, Nickel, Tin and Zinc. The index base year is 2005 =100, and the headline index is available in sterling and euros, as well as US dollars. It is published on a weekly basis. Energy & Metals Consensus Forecasts then converts this week-by-week data into quarterly averages and calculates the index forecasts by using our panellists' projections for the individual metals.

The RBA Non-Rural Commodity Price Index is a

sub-index of the RBA's Headline Index of Commodity Prices. The index uses an Australian fiscal base year (July `08-June `09). The RBA Non-Rural Commodity Price Index weights major minerals (list above) according to their share of Australian export values. Oil is excluded while liquified natural gas (LNG) is included (it is some 7% of the index, but is not included in Energy & Metals Consensus Forecasts calculations, as we do not survey for LNG forecasts).

Recent Historical Data and Consensus Forecast Projections

2010 2011

Q4 Q1 Q2 Q3 Q4

2012

Q1 Q2 Q3 Q4

2013

Q1 Q2 Q3 Q4

Economist Base Metals Index 176.0 196.8 191.8 194.1 196.9 198.5 200.7 200.3 198.3 196.3 196.0 195.5 195.5 RBA Non-Rural Commodity Price Index 123.4 134.9 153.0 154.2 150.9 148.9 148.7 147.5 145.8 143.0 140.6 139.6 138.2 (all index values are quarterly averages)

Changes in the Consensus:

230 210 190 170 150 130 110 90 70 50

Q1 2005 Q1 2006 Q1 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1 2013

Changes in the Consensus:

160 150 140 130 120 110 100 90 80 70 60 50 40

Q1 2005

The Economist Base Metals Index

RBA Non-Rural Commodity Price Index

Historical Data Jan 2011 Survey Apr 2011 Survey Jul 2011 Survey

Historical Data Jan 2011 Survey Apr 2011 Survey Jul 2011 Survey

Q1 2006 Q1 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1 2013

4

© Copyright Consensus Economics Inc. 2011

JULY 2011

LONG-TERM FORECASTS

Long-term price forecasts provide a foundation for expected returns from both existing production facilities and those under development. In addition to their individual annual 2012 to 2016 forecasts, the table below summarises our panel's Long-Term 5-10 year average estimates (2017-2021) in nominal and real (inflation adjusted) 2011 dollar terms. Individual nominal forecasts are available in the Excel spreadsheet.

See individual commodity pages for mineral specifications

Spot US$ Actual Price 2010 (July 25) 91.48 93.63 2.113 678.1 4.375 0.411 190.6 90.57 46.07 2176 333.0 7553 21846 2146 2159 20.70 20418 7.629 15.89 537.0 74.76 866.0 704.9 633.5 647.7 195.9 173.6 165.5 1227 20.19 1611 527.6

(Nominal)

Consensus Forecasts

(Nominal, Annual Averages)

Long-Term

(2017-2021 Average)

2012 101.8 114.5 3.172 985.0 4.950 0.613 255.8 127.4 59.52 2605 394.5 10041 24446 2686 2522 16.45 27115 6.625 18.70 1410 175.3 2540 825.4 781.0 754.3 287.7 250.4 246.5 1504 33.06 1883 902.0

2013 103.0 112.8 3.367 1059 5.311 0.633 227.9 122.6 65.00 2687 408.3 9157 23598 2708 2645 16.47 23777 6.272 18.49 1433 175.8 2510 802.9 789.9 753.5 255.5 226.4 235.9 1383 28.95 1851 855.5

2014 103.5 110.3 3.450 1093 5.541 0.720 200.3 112.0 70.60 2574 400.9 8029 22537 2518 2496 15.73 20539 6.025 17.60 1213 148.8 2081 807.0 771.9 732.0 210.5 189.5 200.9 1258 25.00 1818 912.2

2015 104.5 108.5 3.567 1145 5.694 0.975 183.8 105.4 68.57 2585 399.8 7223 21136 2354 2405 14.89 18892 5.604 16.40 1044 141.9 1739 778.6 751.1 719.0 185.3 167.1 168.7 1090 20.50 1747 831.7

2016 105.3 110.3 3.583 1155 5.699 1.000 170.7 98.40 67.60 2642 404.9 6823 20890 2301 2334 15.14 17680 5.491 15.57 919.7 138.5 1571 757.4 733.0 718.0 173.3 149.4 155.7 1087 19.42 1782 914.6

(Nominal)

Nominal 111.0 120.6 4.300 1280 6.282 0.935 185.8 107.1 68.28 2755 400.1 6333 20802 2157 2291 16.21 14826 5.279 15.54 890.6 155.0 1525 889.0 787.7 697.4 156.9 136.0 121.7 1139 19.00 1810 721.5

Real 90.33 94.58 3.265 1000 5.353 0.753 144.9 83.33 60.85 2350 344.7 5707 18063 1845 1991 13.43 12909 4.680 12.75 771.2 125.7 1274 749.9 702.1 623.4 134.3 115.7 101.9 910.8 14.56 1492 636.6

Crude Oil - WTI - Brent RBOB Gas (US) Gas Oil (Europe) Natural Gas - US - UK, UK£ Coking Coal Steaming Coal Uranium Aluminium Alumina Copper Nickel Lead Zinc Cobalt Tin Manganese Molybdenum Rutile Ilmenite Zircon Steel - HRC, Europe - HRC, USA - HRC, Asia Iron Ore - Lump (Aust) - Fine (Aust) - Fine (Brz) Gold Silver Platinum Palladium

98.97 116.62 3.161 988.8 4.465 0.554 305.5 126.76 53.50 2573 415.0 9620 23780 2670 2426 16.55 28145 5.400 14.65 725.0 130.0 1748 803.8 779.0 697.7 307.2 272.7 259.2 1616 40.78 1787 806.0

% Change Between Spot Price and 2016

Crude Oil (WTI) Coking Coal Steaming Coal Aluminium Copper Nickel Lead Zinc Steel (Europe) Steel - (USA) Iron Ore-Lump (Aus) Iron Ore - Fine (Aus) Gold Silver -60% -50% -40% -30% -20% -10% 0% 10% 20%

% Change Between 2016 and Long-Term Average

Crude Oil (WTI) Coking Coal Steaming Coal Aluminium Copper Nickel Lead Zinc Steel (Europe) Steel - (USA) Iron Ore-Lump (Aus) Iron Ore - Fine (Aus) Gold Silver -10% -5% 0% 5% 10% 15% 20%

© Copyright Consensus Economics Inc. 2011

5

CRUDE OIL

Survey Date Spot Price (July 25): US$98.97

P K Verleger BNP Paribas National Australia Bank Barclays Capital ANZ Oxford Economics Macquarie Bank Societe Generale Deutsche Bank HWWI BoA Merrill Lynch Wilson HTM Commonwealth Bank Econ Intelligence Unit Citigroup Morgan Stanley Deloitte Access Economics Investec GKI Research RBS UBS Consensus (Mean) High Low Standard Deviation

JULY 2011

West Texas Intermediate Crude Oil Forecasts, US$/barrel

Sep '11 Dec '11 Mar '12 Jun '12 % change Sep '12 Dec '12 Mar '13 Jun '13 Sep '13 Dec '13 from spot

100.00 102.00 98.00 99.00 97.71 99.13 99.00 101.83 100.00 94.00 92.00 100.00 116.62 99.00 95.00 94.41 98.20 86.00 98.00 89.50 97.00 97.92 116.62 86.00 5.85 120.00 110.00 106.00 102.00 102.50 103.60 102.00 101.33 103.00 91.00 88.00 100.00 112.00 98.00 90.00 94.41 99.20 86.00 95.00 86.50 87.00 98.93 120.00 86.00 9.02 120.00 111.00 110.00 101.00 107.50 106.09 103.00 101.33 105.00 93.00 94.00 100.00 102.00 101.00 95.00 93.84 96.00 91.00 95.00 86.00 87.00 99.94 120.00 86.00 8.34 120.00 115.00 113.00 112.00 110.50 107.06 105.00 101.33 101.00 101.00 100.00 100.00 98.00 95.95 95.00 93.84 92.70 91.00 90.00 89.00 87.00 100.88 120.00 87.00 9.27

21.2% 16.2% 14.2% 13.2% 11.6% 8.2% 6.1% 2.4% 2.1% 2.1% 1.0% 1.0% -1.0% -3.1% -4.0% -5.2% -6.3% -8.1% -9.1% -10.1% -12.1% 1.9%

135.00 118.00 114.00 107.00 112.00 107.01 109.00 na 104.00 104.00 102.00 100.00 102.00 90.93 95.00 93.84 89.40 91.00 90.00 95.00 87.00 102.31 135.00 87.00 11.77

135.00 122.00 112.00 118.00 113.00 106.35 107.00 na 106.00 107.00 112.00 100.00 108.67 93.88 95.00 93.84 86.10 91.00 90.00 94.00 87.00 103.89 135.00 86.10 12.81

135.00 na 110.00 125.00 112.50 105.25 108.00 na 110.00 109.00 na 100.00 113.00 92.92 91.00 90.00 82.80 95.00 95.00 93.00 90.00 103.19 135.00 82.80 13.48

135.00 na 110.00 125.00 112.00 104.87 108.00 na 110.00 115.00 na 100.00 109.00 90.90 91.00 90.00 80.90 95.00 95.00 95.00 90.00 103.15 135.00 80.90 13.75

135.00 na 110.00 125.00 112.00 102.63 110.00 na 110.00 117.00 na 100.00 101.59 90.90 91.00 90.00 79.90 92.00 100.00 99.00 90.00 103.11 135.00 79.90 13.83

135.00 na 110.00 125.00 111.00 101.36 108.00 na 110.00 117.00 na 100.00 100.02 88.87 91.00 90.00 78.90 92.00 100.00 97.00 90.00 102.51 135.00 78.90 14.01

Survey Date Spot Price (July 25): US$116.62

Consensus (Mean)

1

Brent Crude Oil Forecasts, US$/barrel

Sep '11 Dec '11 Mar '12 Jun '12 % change Sep '12 Dec '12 Mar '13 Jun '13 Sep '13 Dec '13 from spot 112.88 113.80 113.39 114.00 -2.2% 114.46 115.96 113.88 113.27 112.44 111.77

127.27 91.80 7.01 135.00 100.00 8.69 140.00 100.00 9.72 140.00 95.00 10.11 150.00 90.03 12.58 150.00 92.95 12.68 150.00 90.00 15.27 150.00 90.00 15.73 150.00 90.00 16.06 150.00 87.99 16.33

High Low Standard Deviation

1

Individual forecasts available in the Excel spreadsheet.

Crude Oil (WTI) Spot Price and WTI/Brent Differential

US$

160 140 120 100 80 60 40 20 0 -20 -40 Ja n 1993

WTI Consensus Forecasts v Futures Prices

US$

120 110 100 90 80 70 60 50 40 30 20 10 0 -10 -20 -30

US$/barrel Price on Survey Date: WTI: US$98.97/bbl Brent: US$116.6/bbl

Prices and Forecasts as of Survey Date US$/bbl Energy Information 105 Admin.,USA (Jul. 11)

103 101

NYMEX Futures

W T I S p o t p r ic e ( lh s )

Consensus

99 97 Spot

W T I - B r e n t s p o t p r ic e d if f e r e n tia l p e r b a r r e l Ja n 1995 Ja n 1997 Ja n 1999 Ja n 2001 Ja n 2003 Ja n Ja n 2005 2007 Ja n 2009 Ja n 2011

Dec 2011 Jun 2012 Dec 2012 Jun 2013 Dec 2013

Crude Oil Futures ­ Sep. 2011 Contracts

US$

US$/bbl, Daily High/Low/Close

130 Brent, Daily Close, 125 Sep. 2011 Contract (ICE) 120 115 110 105 100 95 WTI, Sep. 2011 Contract 90 (NYMEX) Daily High/Low/Close 85 80 Jan 2011 Feb 2011 Mar 2011 Apr 2011 May 2011

Jun 2011

Jul 2011

Recent Drop in Prices Likely Temporary Since we last conducted this survey, prices for WTI have dropped below the US$100-perbarrel level while Brent has slipped, too (though the differential remains marked). Concerns over the faltering US recovery and Beijing's tightening of monetary policy left some traders envisioning lower oil demand in the near future. Moreover, Saudi Arabia moved to expand production while the International Energy Agency released strategic crude reserves in a bid to temper price surges on the back of the Libyan conflict.

© Copyright Consensus Economics Inc. 2011

6

JULY 2011

Survey Date Spot Price (July 25): US$3.161

1

U.S. GASOLINE & HEATING OIL

RBOB1Gasoline (US) Forecasts, US$/gallon

Reformulated Blendstock for Oxygenate Blending

Sep '11 Dec '11 Mar '12 Jun '12 % change Sep '12 Dec '12 Mar '13 Jun '13 Sep '13 Dec '13 from spot

P K Verleger GKI Research Societe Generale Cntr for Global Energy Std Deutsche Bank Consensus (Mean) High Low Standard Deviation

3.250 3.180 2.900 2.930 2.950 3.042 3.250 2.900 0.161

3.250 3.320 2.770 2.720 3.000 3.012 3.320 2.720 0.272

3.550 3.320 2.890 2.700 3.050 3.102 3.550 2.700 0.338

3.670 3.180 3.010 2.980 2.950 3.158 3.670 2.950 0.300

16.1% 0.6% -4.8% -5.7% -6.7% -0.1%

3.800 3.180 na 2.810 2.950 3.185 3.800 2.810 0.437

3.600 3.180 na na 2.950 3.243 3.600 2.950 0.330

3.600 3.180 na na 3.050 3.277 3.600 3.050 0.287

3.800 3.180 na na 3.050 3.343 3.800 3.050 0.401

4.000 3.320 na na 3.050 3.457 4.000 3.050 0.490

3.800 3.320 na na 3.050 3.390 3.800 3.050 0.380

RBOB Gasoline (US), Spot Price

US$

4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 Jan 1993 Jan 1995 Jan 1997 Jan 1999 Jan 2001 Jan 2003 Jan 2005 Jan 2007 Jan 2009 Jan 2011

Consensus Forecasts for RBOB Gasoline

US$

3.5 3.4

US$/gallon

Prices and Forecasts as of Survey Date

US$/gallon

Consensus

Prior to July 2004, unleaded gasoline/ regular non-oxygenated

3.3 3.2 3.1 3.0 2.9 2.8 2.7 Spot

RBOB NYMEX Futures

Dec 2011 Jun 2012 Dec 2012 Jun 2013 Dec 2013

RBOB/Heating Oil #2 Futures ­ Sep. 2011 Contracts (NYMEX)

US$

3.4 3.2 3.0 2.8 2.6 2.4 2.2 Jan 2011

Futures Prices For RBOB and Heating Oil

US$

3.4

US$/gallon, Daily High/Low/Close Heating Oil #2, Daily Close, Sep. 2011 Contract

Prices as of Survey Date US$/gallon

3.3 3.2 3.1 3.0

Heating Oil #2 NYMEX Futures

RBOB Gasoline, Sep. 2011 Contract, Daily High/Low/Close

Feb 2011 Mar 2011 Apr 2011 May 2011 Jun 2011 Jul 2011

2.9 2.8 2.7 Spot

RBOB NYMEX Futures

Dec 2011 Jun 2012 Dec 2012 Jun 2013 Dec 2013

US$ per barrel

40 30 20 10 0 Jan 2005

US Crack Spread

Jul 2005

Jan 2006

Jul 2006

Jan 2007

Jul 2007

Jan 2008

Jul 2008

Jan 2009

Jul 2009

Jan 2010

Jul 2010

Jan 2011

Jul 2011

Crude oil is refined into numerous saleable products including gasoline and heating oil. The crack spread is used to estimate the profitability of refining the raw material. When the spread is positive, the price of the refined products is above that of crude oil, helping profitability. The chart above shows a commonly used 3:2:1 crack spread, reflecting a ratio of refinery output of 2 barrels of RBOB gasoline and 1 barrel of heating oil from 3 barrels of WTI crude oil.

© Copyright Consensus Economics Inc. 2011

US Debt Concerns Affect Prices High gasoline costs have weighed on the US consumer, contributing to concerns over the strength of the recovery there. Summer driving season is also acting as a spur to prices. US gasoline stockpiles rose for the first time in five weeks, gaining 757,000 barrels to 212.5 million, according to the Energy department. Meanwhile, crude oil supplies dropped, most recently to a four-month low, boosting prices for heating oil as well. Despite gasoline being buoyed recently by signs that US policymakers could reach a compromise on public spending, concerns remain with no agreement in sight. 7

EUROPEAN GAS OIL

Survey Date Spot Price (July 25): US$988.75

P K Verleger GKI Research Societe Generale Deutsche Bank Cntr for Global Energy Std Consensus (Mean) High Low Standard Deviation

JULY 2011

Gas Oil (Europe, Rotterdam) Forecasts, US$/tonne

Sep '11 Dec '11 Mar '12 Jun '12 % change Sep '12 Dec '12 Mar '13 Jun '13 Sep '13 Dec '13 from spot

980.0 950.0 947.4 930.0 950.0 951.5 980.0 930.0 18.0 1080.0 990.0 948.6 960.0 970.0 989.7 1080.0 948.6 52.7 1050.0 990.0 956.1 970.0 918.0 976.8 1050.0 918.0 48.6 1040.0 950.0 948.6 930.0 929.0 959.5 1040.0 929.0 46.1

5.2% -3.9% -4.1% -5.9% -6.0% -3.0%

1100.0 950.0 na 940.0 925.0 978.8 1100.0 925.0 81.5

1180.0 950.0 na 945.0 na 1025.0 1180.0 945.0 134.3

1100.0 950.0 na 1075.0 na 1041.7 1100.0 950.0 80.4

1120.0 950.0 na 1075.0 na 1048.3 1120.0 950.0 88.1

1110.0 990.0 na 1075.0 na 1058.3 1110.0 990.0 61.7

1200.0 990.0 na 1075.0 na 1088.3 1200.0 990.0 105.6

US$

1400 1200

Gas Oil, Rotterdam, Spot Price

US$/tonne

Gas Oil Consensus Forecasts v Futures Prices

US$

1100

Prices and Forecasts as of Survey Date US$/tonne

1075

1000 800 600 400

1000 1050

Consensus

1025

200 0 Ja n 1993 Ja n 1995 Ja n 1997 Ja n 1999 Ja n 2001 Ja n 2003 Ja n 2005 Ja n 2007 Ja n 2009 Ja n 2011

975

Gas Oil Futures (ICE)

De c 2 0 1 1 Ju n 2 0 1 2 De c 2 0 1 2 Ju n 2 0 1 3 De c 2 0 1 3

950 Spot

Gas Oil & Heating Oil Futures ­ Sep. 2011 Contracts (ICE/NYMEX)

US$

1100 1050 1000 950 900 850 800 750 700 Jan 2011 Feb 2011 Mar 2011 Apr 2011 May 2011 Jun 2011 Jul 2011

US Heating Oil and Gas Oil Futures Prices

US$

1010

US$/tonne, Daily High/Low/Close Gas Oil, Sep. 2011 Contract (ICE) Daily High/Low/Close

Prices as of Survey Date US$/tonne

1000

Gas Oil Futures (ICE)

990

Heating Oil, Daily Close, Sep. 2011 Contract (NYMEX)

980

US Heating Oil #2 NYMEX Futures

Dec 2011 Jun 2012 Dec 2012 Jun 2013 Dec 2013

970 Spot

OIL & DISTILLATE FUTURES SPECIFICATIONS

WTI: Futures Market: NYMEX Low Sweet Crude Pricing: US$/ bbl Contract Size: 1,000bbl (42,000 gallons) Delivery Dates: Consecutive months for the first 6 years, June and December for the 7th to 9th years. Contracts Traded: 168,652,144 (2010). Brent: Futures Market: ICE (IntercontinentalExchange) Pricing: US$/bbl Lot Size: 1,000bbl (42,000 gallons) Delivery Options: 72 consecutive months then June and December for a further 3 years. Contracts Traded: 100,022,169 (2010) Page 6 Heating Oil #2: Futures Market: NYMEX Pricing: US$/gallon Contract Size: 1,000 bbl (42,000 gallons) Delivery Dates: 36 Consecutive months Contracts Traded: 26,970,106 (2010). The heating oil futures contract may also be used to hedge diesel fuel and jet fuel, both of which trade in the cash market at an often stable premium to New York harbor heating oil futures. Page 7

JULY 2011

RBOB Gasoline: Futures Market: NYMEX Reformulated Blendstock for Oxygenate Blending Pricing: US$/gallon Contract Size: 1000 bbl (42,000 gallons) Delivery Dates: 36 consecutive months on a rolling basis. Contracts Traded: 27,898,698 (2010). RBOB is a wholesale non-oxygenated blendstock traded in the New York Harbor barge market that is ready for the addition of 10% ethanol at the truck rack. Page 7 Gas Oil: Futures Market: ICE (IntercontinentalExchange) Pricing: US$/tonne Contract Size: 100 tonnes Delivery Dates: 36 consecutive months, then quarterly to 48 months, then half-yearly to 60 months Contracts Traded: 52,296,582 (2010). ICE Gasoil Futures are used as a pricing reference for distillate trading in Europe and beyond. Page 8

© Copyright Consensus Economics Inc. 2011

8

JULY 2011

Survey Date Spot Price (July 25): US$4.465

NATURAL GAS

Natural Gas (US, Henry Hub) Forecasts, US$/MMBtu

Sep '11 Dec '11 Mar '12 Jun '12 % change Sep '12 Dec '12 Mar '13 Jun '13 Sep '13 Dec '13 from spot

RBS Investec Credit Suisse CIBC Deutsche Bank UBS Econ Intelligence Unit Commonwealth Bank Macquarie Bank BNP Paribas Wilson HTM Barclays Capital GKI Research P K Verleger Societe Generale Consensus (Mean) High Low Standard Deviation

4.379 5.000 4.450 4.500 4.000 4.700 4.600 4.308 4.100 4.020 4.250 4.300 4.410 4.500 4.180 4.380 5.000 4.000 0.266

4.379 5.000 4.670 4.750 4.750 5.000 5.000 4.748 4.400 4.450 4.250 4.500 4.600 4.800 3.860 4.610 5.000 3.860 0.314

5.500 5.250 4.900 5.000 5.250 5.000 5.400 4.798 5.300 4.810 4.500 4.500 4.600 5.000 4.500 4.954 5.500 4.500 0.337

5.500 5.250 5.100 5.000 5.000 5.000 4.850 4.733 4.700 4.620 4.500 4.400 4.400 4.200 4.200 4.764 5.500 4.200 0.384

23.2% 17.6% 14.2% 12.0% 12.0% 12.0% 8.6% 6.0% 5.3% 3.5% 0.8% -1.5% -1.5% -5.9% -5.9% 6.7%

5.500 5.250 5.300 5.250 5.250 5.000 5.000 4.814 5.200 4.340 4.750 4.400 4.400 4.200 na 4.904 5.500 4.200 0.423

5.500 5.250 5.400 5.400 5.500 5.000 5.800 5.254 5.800 5.030 4.750 4.900 4.400 4.500 na 5.177 5.800 4.400 0.436

6.000 5.500 5.500 na 5.500 5.500 6.000 5.278 5.500 5.410 5.000 na 4.400 5.000 na 5.382 6.000 4.400 0.437

6.000 5.500 5.500 na 5.500 5.500 5.400 5.110 5.000 5.130 5.000 na 4.400 4.000 na 5.170 6.000 4.000 0.540

6.000 5.500 5.500 na 5.500 5.500 5.600 5.193 5.500 4.820 5.250 na 4.600 4.100 na 5.255 6.000 4.100 0.516

6.000 5.500 5.500 na 5.500 5.500 5.800 5.625 6.000 5.560 5.250 na 4.600 4.400 na 5.436 6.000 4.400 0.490

Survey Date Spot Price (July 25): UK£0.554

Barclays Capital GKI Research Deutsche Bank BNP Paribas Societe Generale Consensus (Mean) High Low Standard Deviation

UK Natural Gas Forecasts, UK£/therm

Sep '11 Dec '11 Mar '12 Jun '12 % change Sep '12 Dec '12 Mar '13 Jun '13 Sep '13 Dec '13 from spot

0.500 0.610 0.564 0.570 0.480 0.545 0.610 0.480 0.054 0.700 0.640 0.604 0.640 0.550 0.627 0.700 0.550 0.055 0.675 0.640 0.643 0.600 0.600 0.632 0.675 0.600 0.032 0.675 0.610 0.582 0.520 0.500 0.577 0.675 0.500 0.071

21.8% 10.1% 5.1% -6.1% -9.7% 4.2%

0.675 0.610 0.601 0.510 na 0.599 0.675 0.510 0.068

0.675 0.610 0.710 0.580 na 0.644 0.710 0.580 0.059

na 0.610 0.760 0.560 na 0.643 0.760 0.560 0.104

na 0.610 0.760 0.490 na 0.620 0.760 0.490 0.135

na 0.640 0.760 0.470 na 0.623 0.760 0.470 0.146

na 0.640 0.760 0.540 na 0.647 0.760 0.540 0.110

US Natural Gas (Henry Hub); UK Natural Gas

US$/MMBtu

16.0 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0 Jan 1997 Jan 1999 Jan 2001 Jan 2003 Jan 2005 Jan 2007 Jan 2009 Jan 2011 US Natu r al Gas (lh s ) UK Natu r al Gas (r h s )

US$/MMBtu; UK£/therm

UK£/therm

2.0 1.8 1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0.0

US Natural Gas Consensus Forecasts v Futures Prices

US$

5.50 5.25 5.00 4.75 4.50 4.25 4.00 3.75 3.50 Spot

Prices and Forecasts as of Survey Date US$/MMBtu Consensus NYMEX Futures

Energy Information Admin., USA (July 11)

Dec 2011 Jun 2012 Dec 2012 Jun 2013 Dec 2013

US$/MMBtu

5.0 4.8 4.6 4.4 4.2 4.0

Natural Gas Futures

US$/MMBtu, Daily High/Low/Close

UK£/therm

0.66 0.63 0.60 0.57 0.54

3.8 Jan 2011 Feb 2011 Mar 2011 Apr 2011 May 2011 Jun 2011 Jul 2011

NYMEX Sep. 2011 Futures Daily High/Low/Close (lhs)

UK Natural Gas, 1Month Forward Close (UK£/therm, rhs)

0.51 0.48 0.45

© Copyright Consensus Economics Inc. 2011

Shale Raises Hopes for US Natural Gas The US natural gas industry could be heading for a boom on the back of shale gas extraction. Despite concerns over the economics of developing this unconventional fuel source, the US is well-positioned to become an even more sizeable natural gas producer. Prices between US crude and natural gas have diverged in recent years as a result of shale output which has pushed down prices. Natural gas is seen as a cheaper source of fossil-fuel energy and the disparity in prices could last over the foreseeable future.

9

COAL

Consensus Price for Q3 2011: US$305.5e

Macquarie Bank Citigroup Investec Deloitte Access Economics BoA Merrill Lynch Morgan Stanley Credit Suisse Deutsche Bank ANZ National Australia Bank Commonwealth Bank Wilson HTM BREE Societe Generale RBS UBS Consensus (Mean) High Low Standard Deviation

JULY 2011

*free-on-board.

Australian Coking Coal Forecasts (Contract Prices*), US$/metric tonne, fob

Sep '11 Dec '11 Mar '12 Jun '12 % change Sep '12 Dec '12 Mar '13 Jun '13 Sep '13 Dec '13 from spot

315.0 320.0 307.0 280.0 315.0 307.5 280.0 292.5 315.0 312.0 315.0 315.0 289.0 325.0 285.0 315.0 305.5 325.0 280.0 14.9 285.0 300.0 307.0 280.0 300.0 307.5 260.0 262.5 290.0 280.0 268.4 260.0 289.0 259.9 265.0 250.0 279.0 307.5 250.0 18.7 280.0 280.0 280.0 275.0 290.0 268.8 265.0 262.5 270.0 270.0 270.0 260.0 246.0 259.9 245.0 210.0 264.5 290.0 210.0 18.8 290.0 280.0 280.0 275.0 270.0 268.8 265.0 262.5 260.0 260.0 257.3 250.0 246.0 233.9 225.0 205.0 258.0 290.0 205.0 22.1

-5.1% -8.3% -8.3% -10.0% -11.6% -12.0% -13.3% -14.1% -14.9% -14.9% -15.8% -18.2% -19.5% -23.4% -26.4% -32.9% -15.5%

260.0 270.0 260.0 270.0 250.0 268.8 265.0 262.5 250.0 250.0 256.8 250.0 246.0 na 225.0 190.0 251.6 270.0 190.0 20.7

260.0 270.0 260.0 270.0 250.0 268.8 265.0 262.5 260.0 230.0 248.7 240.0 246.0 na 225.0 180.0 249.1 270.0 180.0 23.7

245.0 250.0 250.0 265.0 200.0 253.8 270.0 190.0 260.0 230.0 241.9 240.0 na na 220.0 185.0 235.8 270.0 185.0 27.3

255.0 250.0 250.0 265.0 200.0 253.8 270.0 190.0 265.0 230.0 236.4 180.0 na na 180.0 180.0 228.9 270.0 180.0 35.2

240.0 250.0 250.0 260.0 200.0 253.8 270.0 190.0 270.0 230.0 228.1 180.0 na na 180.0 170.0 226.6 270.0 170.0 35.6

225.0 240.0 250.0 na 200.0 253.8 270.0 190.0 270.0 230.0 217.1 180.0 na na 180.0 160.0 220.5 270.0 160.0 36.1

Consensus Price for Q3 2011: US$126.8e

Citigroup BoA Merrill Lynch Deutsche Bank Investec ANZ Morgan Stanley BIPE Credit Suisse Commonwealth Bank Macquarie Bank National Australia Bank Wilson HTM BREE Econ Intelligence Unit RBS Consensus (Mean) High Low Standard Deviation

Australian Steaming Coal Forecasts (Contract Prices*), US$/metric tonne, fob

Sep '11 Dec '11 Mar '12 Jun '12 % change Sep '12 Dec '12 Mar '13 Jun '13 Sep '13 Dec '13 from spot

130.00 130.00 130.00 130.00 130.00 129.85 125.00 124.00 127.45 129.85 130.00 120.00 130.00 120.30 115.00 126.76 130.00 115.00 4.85 130.00 130.00 130.00 130.00 130.00 129.85 127.00 128.00 140.00 129.85 130.00 120.00 130.00 115.00 105.00 126.98 140.00 105.00 8.13 130.00 130.00 130.00 137.50 130.00 129.85 130.00 132.00 140.00 129.85 130.00 120.00 130.00 110.00 100.00 127.28 140.00 100.00 10.17 142.00 140.00 140.00 137.50 135.00 135.00 132.00 132.00 130.00 120.00 120.00 120.00 117.00 112.00 95.00 127.17 142.00 95.00 12.97

12.0% 10.4% 10.4% 8.5% 6.5% 6.5% 4.1% 4.1% 2.6% -5.3% -5.3% -5.3% -7.7% -11.6% -25.1% 0.3%

142.00 140.00 140.00 137.50 135.00 135.00 135.00 132.00 135.00 120.00 120.00 125.00 117.00 115.00 95.00 128.23 142.00 95.00 12.82

142.00 140.00 140.00 137.50 135.00 135.00 137.00 132.00 120.00 120.00 120.00 125.00 117.00 110.00 95.00 127.03 142.00 95.00 13.34

142.00 140.00 140.00 132.50 135.00 140.00 na 141.00 125.00 120.00 120.00 125.00 na 105.00 95.00 127.73 142.00 95.00 14.80

150.00 110.00 120.00 132.50 140.00 140.00 na 141.00 110.00 100.00 120.00 115.00 na 110.00 90.00 121.42 150.00 90.00 18.02

150.00 110.00 120.00 132.50 140.00 140.00 na 141.00 115.00 100.00 120.00 115.00 na 105.00 90.00 121.42 150.00 90.00 18.13

150.00 110.00 120.00 132.50 140.00 140.00 na 141.00 100.74 100.00 120.00 115.00 na 100.00 90.00 119.94 150.00 90.00 19.35

US$

350 300 250 200 150 100 50

Coking Coal and Steaming Coal Prices

US$/metric tonne Australian Coking Coal

(Japanese Contract Prices)

Consensus Forecasts and Futures Prices

Prices and Forecasts as of Survey Date

325

US$/tonne

275

Australian Coking Coal Consensus

Australian Steaming Coal

(Monthly Spot Prices)

225

175

Australian Steaming Coal

(Japanese Contract Prices)

125

Australian Steaming Coal

75

0 Ja n 1993 Ja n 1995 Ja n 1997 Ja n 1999 Ja n 2001 Ja n 2003 Ja n 2005 Ja n 2007 Ja n 2009 Ja n 2011

25 Spot

Central Appalachian US Coal Futures (US$/short ton, NYMEX)

Dec 2011 Jun 2012 Dec 2012 Jun 2013 Dec 2013

Baltic Capesize Index of Shipping Rates

2000 0 1500 0 1000 0 500 0 0 Ja n 2001 Jan 2002 Jan 2003 Ja n 2004 Jan 2005 Jan 2006 Ja n 2007 Jan 2008 Jan 2009 Ja n 2010 Jan 2011

Note: Shipping costs can add US$24-34 per metric tonne to the delivered cost of coal on some routes.

Coal ­ Energy Information Agency (US) World Demand Forecasts (July 27, 2010)

2005 2010 2015 2020 2025 2030 2035 Total OECD Consumption

(Quadrillion Btu) 46.7 43.1 44.5 44.8 45.4 46.4 48.3 Total World Consumption (Quadrillion Btu) 122

130 139 152 168 186 206

10

© Copyright Consensus Economics Inc. 2011

JULY 2011

Survey Date Spot Price (July 25): US$53.50

BoA Merrill Lynch Credit Suisse Deutsche Bank Wilson HTM Morgan Stanley Macquarie Bank ANZ Commonwealth Bank Investec RBS Citigroup UBS Consensus (Mean) High Low Standard Deviation

URANIUM

Uranium U3O8 Forecasts, US$/lb

Sep '11 Dec '11 Mar '12 Jun '12 % change Sep '12 Dec '12 Mar '13 Jun '13 Sep '13 Dec '13 from spot

57.0 56.0 68.0 68.0 53.0 58.0 53.6 56.0 55.0 50.0 50.0 54.0 56.5 68.0 50.0 5.9 63.0 60.0 68.0 68.0 57.0 60.0 53.0 56.0 55.0 50.0 50.0 52.0 57.7 68.0 50.0 6.3 64.0 65.0 65.0 65.0 60.0 60.0 54.5 57.0 55.0 55.0 50.0 50.0 58.4 65.0 50.0 5.6 66.0 65.0 65.0 65.0 62.0 60.0 58.0 58.0 55.0 55.0 50.0 50.0 59.1 66.0 50.0 5.7

23.4% 21.5% 21.5% 21.5% 15.9% 12.1% 8.4% 8.4% 2.8% 2.8% -6.5% -6.5% 10.4%

68.0 65.0 65.0 65.0 64.0 52.0 62.0 60.0 55.0 60.0 50.0 54.0 60.0 68.0 50.0 5.9

70.0 65.0 65.0 65.0 65.0 52.0 65.5 61.0 55.0 60.0 50.0 54.0 60.6 70.0 50.0 6.4

72.0 80.0 70.0 70.0 67.5 45.0 68.5 62.0 58.8 65.0 50.0 60.0 64.1 80.0 45.0 9.7

74.0 80.0 70.0 70.0 67.5 45.0 71.5 63.0 58.8 65.0 50.0 60.0 64.6 80.0 45.0 10.0

76.0 80.0 70.0 70.0 67.5 45.0 74.0 64.0 58.8 70.0 50.0 60.0 65.4 80.0 45.0 10.4

78.0 80.0 70.0 70.0 67.5 45.0 76.0 66.0 58.8 70.0 50.0 60.0 65.9 80.0 45.0 10.8

Uranium U3O8, Spot Price

US$

150 125 100

Consensus Forecasts v Futures Prices

Prices and Forecasts as of Survey Date

US$

66 64 62 60

US$/lb

US$/lb

Consensus

75 50 25 0 Jan 1999 Jan 2001 Jan 2003 Jan 2005 Jan 2007 Jan 2009 Jan 2011

58 56 54 52 50 Spot

NYMEX Futures

Dec 2011

Jun 2012

Dec 2012

Jun 2013

Dec 2013

Uranium Futures ­ Sep. 2011 Contract (NYMEX)

US$ 76

72 68 64 60 56 52 48 Jan 2011 Feb 2011 Mar 2011 Apr 2011 May 2011 Jun 2011 Jul 2011

US$/lb, Closing Price

Uranium futures started trading on NYMEX in May 2007. Volume is thin due to off-market trading and its specialised and limited use.

Price Drop Expected to Reverse The price of uranium fell in Q2 on the news that both Japan and Germany are planning to phase out nuclear power over the next few years. However, China continues to expand its nuclear programme and, with the prospect of continued demand from emerging markets, long-term forecasts for the price are fairly bullish. Uranium prices are expected to climbed over the next 18 months but are not expected to reach the pre-Japan crisis level of above $70 in the near future.

Uranium futures began trading on NYMEX in May 2007 in an attempt to introduce greater price transparency. Volumes and liqudity are currently very low (see chart above left). Futures Market: NYMEX Pricing: US$/lb Contract Size: 250lbs Trading Months: 60 consecutive months. Settlement price: The final settlement price is the spot-month end price published by UxC. 11

World Nuclear Electricity Production (2008)

Producers (% share of World) USA 31% France 16% Japan 9% Russia 6% S. Korea 6% Installed Capacity (Gigawatts) USA 101 France 63 Japan 48 Russia 23 Germany 20 Nuclear power as a % of total domestic elctricity France 77% Germany 24% Japan 24% USA 20% UK 14%

© Copyright Consensus Economics Inc. 2011

ALUMINIUM

Survey Date Spot Price (July 25): US$2573

Deutsche Bank Wilson HTM Morgan Stanley BNP Paribas RBS Barclays Capital HWWI Metal Bulletin Research BIPE BoA Merrill Lynch Citigroup Societe Generale ANZ Credit Suisse Oxford Economics Investec Commonwealth Bank Econ Intelligence Unit Prometeia IHS Global Insight National Australia Bank BREE UBS Macquarie Bank Consensus (Mean) High Low Standard Deviation

US$

3500 3000 2500 2000

2600 2700

JULY 2011

Aluminium Forecasts, US$/metric tonne

Sep '11 Dec '11 Mar '12 Jun '12 % change Sep '12 Dec '12 Mar '13 Jun '13 Sep '13 Dec '13 from spot

2650 2726 2690 2535 2601 2650 2650 2650 2532 2626 2775 2700 2519 2535 2555 2535 2727 2550 2412 2523 2500 2580 2315 2646 2591 2775 2315 105 2800 2726 2734 2665 2690 2700 2700 2680 2613 2601 2750 2580 2546 2646 2564 2535 2553 2520 2353 2515 2450 2580 2205 2646 2598 2800 2205 133 2900 2976 2778 2750 2690 2650 2730 2700 2662 2551 2725 2620 2568 2535 2530 2520 2571 2520 2430 2500 2400 2330 2205 2205 2585 2976 2205 190 3050 2976 2822 2800 2800 2750 2750 2720 2712 2701 2700 2680 2546 2535 2522 2520 2508 2500 2480 2470 2350 2330 2205 2205 2610 3050 2205 217

18.5% 15.7% 9.7% 8.8% 8.8% 6.9% 6.9% 5.7% 5.4% 5.0% 4.9% 4.2% -1.0% -1.5% -2.0% -2.1% -2.5% -2.8% -3.6% -4.0% -8.7% -9.4% -14.3% -14.3% 1.4%

3000 2901 2734 2840 2756 2700 2750 2750 2815 3001 2675 na 2469 2535 2505 2520 2559 2480 2500 2428 2300 2330 2205 2425 2616 3001 2205 219

2800 2901 2778 2910 2866 2900 2800 2750 2834 2601 2650 na 2392 2535 2479 2520 2606 2465 2513 2375 2300 2330 2293 2425 2610 2910 2293 210

2800 2800 2976 2950 2998 2850 2820 2760 na 2901 2625 na 2337 2535 2454 2756 2746 2450 2510 2391 2300 na 2535 2646 2673 2998 2300 215

2800 2800 2976 2950 2998 2850 2850 2760 na 3001 2600 na 2304 2535 2441 2756 2780 2450 2414 2390 2300 na 2535 2646 2673 3001 2300 232

2800 2800 2976 2950 3395 2850 2850 2760 na 3001 2590 na 2282 2535 2417 2841 2795 2400 2451 2395 2300 na 2535 2646 2694 3395 2282 277

2800 2800 2976 2950 3395 2850 2850 2760 na 3001 2575 na 2260 2535 2412 2841 2818 na 2470 2405 2300 na 2535 2646 2709 3395 2260 277

Aluminium Spot Price, London Metal Exchange (LME)

US$/metric tonne

US$

2800

Consensus Forecasts v Futures Prices

Prices and Forecasts as of Survey Date LME Futures

Consensus

1500 1000 Jan 1993 Jan 1995 Jan 1997 Jan 1999 Jan 2001 Jan 2003 Jan 2005 Jan 2007 Jan 2009 Jan 2011

2500 Spot Dec 2011 Jun 2012

US$/metric tonne

Dec 2012 Jun 2013 Dec 2013

Aluminium 3-Month Forward Prices and Warehouse Stocks, LME

US$ 2850

2750 2650 2550 2450 2350 2250 2150 Oct 2010 Nov 2010 Dec 2010 Jan 2011

US$/metric tonne, Daily High/Low/Close 3-Month Forward Daily High/Low/Close (lhs)

LME Warehouse Stocks, Daily (rhs)

Feb 2011 Mar 2011 Apr 2011 May 2011 Jun 2011 Jul 2011

tonnes, 000s 4775 4725 4675 4625 4575 4525 4475 4425 4375 4325 4275 4225

Aluminium Production (2009)

Production 1. 2. 3. 4. 5. China Russia Canada Australia USA World mn tn 12.84 3.82 3.03 1.94 1.73 36.90 % of world 34.8% 10.3% 8.2% 5.3% 4.7% 1. 2. 3. 4. 5.

Consumption (2008)

Consumption China USA Japan Germany S. Korea World mn tn 12.41 5.62 2.25 1.95 1.31 37.80 % of world 32.8% 14.9% 6.0% 5.2% 3.5%

Positive Industrial Production Outlook Aluminium hit a recent high of US$2803 in early May but, since then, the market has seen a retrenchment. The weakness is the result of easing oil prices, the ongoing Euro zone debt crisis and slowing US recovery. In addition, Shanghai future exchange inventories fell by 56.7% in the year to end-June 2011. China accounts for 40% of global aluminium output and has seen rising production recently, but Beijing is also planning to close 22 aluminium smelters by the end of the year, countering increases in supply. World demand for the metal is expected to expand.

Aluminium: Futures Market: LME Pricing: US$/ tonne Contract Size: 25 tonnes Delivery Dates: Daily for cash to 3 month contracts, Wednesdays for 3 month to 6 month contracts; then every third Wednesday for 7 months out to 123 months. Contracts Traded: 46,540,000 (2010).

© Copyright Consensus Economics Inc. 2011

12

JULY 2011

Survey Date Spot Price (July 25): US$415.0

Deutsche Bank Morgan Stanley BREE Citigroup RBS ANZ Commonwealth Bank Credit Suisse BoA Merrill Lynch UBS Investec Macquarie Bank Consensus (Mean) High Low Standard Deviation 439.0 424.8 403.0 415.6 390.0 415.6 411.0 390.0 352.0 365.0 350.0 400.0 396.3 439.0 350.0 28.3 493.0 431.8 403.0 411.9 390.1 407.3 384.9 395.0 348.5 340.0 350.0 400.0 396.3 493.0 340.0 41.3

ALUMINA & ALUMINIUM ALLOY

Alumina Forecasts, US$/metric tonne

Sep '11 Dec '11 Mar '12 Jun '12 % change Sep '12 Dec '12 Mar '13 Jun '13 Sep '13 Dec '13 from spot

512.0 450.0 410.0 408.1 403.3 410.8 391.0 395.0 341.8 345.0 344.0 310.0 393.4 512.0 310.0 54.4 539.0 457.2 410.0 404.4 403.3 394.6 385.1 385.0 361.9 350.0 344.0 310.0 395.4 539.0 310.0 58.9

29.9% 10.2% -1.2% -2.6% -2.8% -4.9% -7.2% -7.2% -12.8% -15.7% -17.1% -25.3% -4.7%

530.0 442.9 410.0 400.7 419.9 382.6 395.3 375.0 402.1 350.0 347.0 340.0 399.6 530.0 340.0 51.4

493.0 450.0 410.0 396.7 413.3 358.7 404.0 365.0 348.5 350.0 347.0 340.0 389.7 493.0 340.0 47.4

488.0 485.2 na 399.1 429.8 350.4 428.0 370.0 388.7 365.0 364.0 370.0 403.5 488.0 350.4 48.4

488.0 485.2 na 395.3 449.6 345.5 433.2 380.0 402.1 365.0 364.0 370.0 407.1 488.0 345.5 49.8

488.0 485.2 na 393.7 449.6 342.2 437.5 390.0 402.1 365.0 367.0 370.0 408.2 488.0 342.2 49.8

488.0 485.2 na 391.5 509.1 338.9 442.6 400.0 402.1 365.0 367.0 370.0 414.5 509.1 338.9 57.8

Alumina, Metallurgical Grade, Spot Price

US$

700 600 500

410

Alumina Consensus Forecasts

Prices and Forecasts as of Survey Date

US$

420

US$/metric tonne

Consensus

400 300 200

390 400

100 0 Jan 1999

380 Spot

US$/metric tonne

Jan 2001 Jan 2003 Jan 2005 Jan 2007 Jan 2009 Jan 2011

Dec 2011 Jun 2012 Dec 2012 Jun 2013 Dec 2013

Alumina is derived from bauxite ore and is used to produce primary aluminium at a ratio of two tonnes of alumina per tonne of aluminium. Prices can be linked to the LME primary aluminium price. Aluminium Alloy prices provide a reference basis for the secondary aluminium market. Futures Market: LME Pricing: US$/tonne Contract Size: 20 tonnes Delivery Dates: Daily for cash to 3 month contracts, Wednesdays for 3 month to 6 month contracts; then every third Wednesday for 7 months out to 27 months. Contracts Traded: 582,398 (2008).

World Production of Alumina (2009, world total was 76.8 million tonnes) Producer

1. China 2. Australia 3. Brazil 4. USA US$/metric tonne

% of world total

31.0% 26.0% 11.2% 4.0%

Aluminium Alloy, Spot Price, LME

US$

3000

Aluminium vs Aluminium Alloy, Spot Price Differential

US$

900 700 500

US$/metric tonne Price on Survey Date: US$2355

2500 2000

300

1500 1000 500 Jan 1995

100 -100 -300 Jan 1995

Jan 1997

Jan 1999

Jan 2001

Jan 2003

Jan 2005

Jan 2007

Jan 2009

Jan 2011

Jan 1997

Jan 1999

Jan 2001

Jan 2003

Jan 2005

Jan 2007

Jan 2009

Jan 2011

© Copyright Consensus Economics Inc. 2011

13

COPPER

Survey Date Spot Price (July 25): US$9620

Macquarie Bank Barclays Capital Deutsche Bank Wilson HTM BIPE BoA Merrill Lynch Econ Intelligence Unit BNP Paribas Morgan Stanley RBS Credit Suisse BREE ANZ HWWI Metal Bulletin Research Oxford Economics Prometeia Citigroup Investec Societe Generale IHS Global Insight National Australia Bank Commonwealth Bank UBS Consensus (Mean) High Low Standard Deviation

JULY 2011

Copper, Grade A, Forecasts, US$/metric tonne

Sep '11 Dec '11 Mar '12 Jun '12 % change Sep '12 Dec '12 Mar '13 Jun '13 Sep '13 Dec '13 from spot

11023 10500 9500 9703 9726 9182 9547 9650 9811 9744 9259 9544 9557 9750 9200 9562 9552 9750 9149 8900 9575 9250 9278 8708 9559 11023 8708 472 11023 12000 9900 9703 10103 9352 9922 10675 10141 10009 9700 9544 9865 9800 9700 9584 9440 9650 9149 9280 9585 9200 9400 9039 9824 12000 9039 650 12125 10800 11000 11503 10868 9902 10142 11000 10141 10009 10141 10050 10086 9900 9800 9670 9473 9575 9370 9470 9475 9150 9047 8488 10049 12125 8488 826 12125 12000 12000 11503 11230 10702 10583 10500 10362 10251 10141 10050 10030 10000 10000 9761 9541 9500 9370 9300 9235 9100 9063 8488 10202 12125 8488 991

26.0% 24.7% 24.7% 19.6% 16.7% 11.3% 10.0% 9.1% 7.7% 6.6% 5.4% 4.5% 4.3% 4.0% 4.0% 1.5% -0.8% -1.2% -2.6% -3.3% -4.0% -5.4% -5.8% -11.8% 6.0%

11023 12800 10500 10253 11573 11503 10363 9500 9921 10251 9700 10050 9810 10500 10500 9634 9496 9400 9590 na 8975 9000 9238 8157 10076 12800 8157 996

11023 12400 10000 10253 11865 9502 9922 9000 10141 10494 9259 10050 9645 11000 9800 9290 9391 9175 9590 na 8617 8800 9571 7496 9838 12400 7496 1056

8818 11200 9500 9502 na 9002 9701 8750 8378 11023 8377 na 9424 11000 9200 8935 9445 8965 9149 na 8525 8800 10052 7275 9287 11200 7275 945

8818 11200 9500 9502 na 9502 9922 8750 8378 11023 8377 na 9038 11000 9400 8580 9204 8755 9149 na 8383 8800 9700 7055 9240 11200 7055 984

6614 11200 9500 9502 na 9502 9260 8750 8378 12015 8377 na 8708 11000 8800 8488 9252 8540 9149 na 8180 8800 9600 7055 9080 12015 6614 1239

6614 11200 9500 9502 na 9502 na 8750 8378 12015 8377 na 8487 11000 8600 8496 9349 8325 9149 na 8141 8800 9400 6834 9021 12015 6614 1300

US$

10000 9000 8000 7000 6000 5000 4000 3000 2000 1000

Copper, Spot Price, London Metal Exchange (LME)

US$/metric tonne

US$

Consensus Forecasts v Futures Prices

Prices and Forecasts as of Survey Date US$/metric tonne

10250 10500

Consensus

10000

9750

COMEX Futures

9500

LME Futures

9250

Jan 1993

Jan 1995

Jan 1997

Jan 1999

Jan 2001

Jan 2003

Jan 2005

Jan 2007

Jan 2009

Jan 2011

9000 Spot

Dec 2011

Jun 2012

Dec 2012

Jun 2013

Dec 2013

Copper 3-Month Forward Prices and Warehouse Stocks, LME

US$ 10250

US$/metric tonne, Daily High/Low/Close

tonnes, 000s 500

9750 9250

475 450 425

8750 8250

400

LME Warehouse Stocks, Daily (rhs)

3-Month Forward, Daily High/Low/Close (lhs)

375 350

7750 Jan 2011 Feb 2011 Mar 2011 Apr 2011 May 2011 Jun 2011 Jul 2011

Steady Gains over the Next Year Chinese copper imports were up 9.9% (y-oy) in June, a sign that the country may be returning to the external market having reduced inventories in H1. However, LME warehouse stockpiles have risen 36% since December which, if released on to the market, would dampen price growth. Meanwhile, recent debt fears in the US and Euro zone have raised fears of developed world growth stagnating, dampening the cost of copper. Our panel expects copper to gain over the next year before falling back to just above the $9000 mark.

Copper: Futures Market: LME Pricing: US$/tonne Contract Size: 25 tonnes Delivery Dates: Daily for cash to 3 month contracts, Wednesdays for 3 month to 6 month contracts; then every third Wednesday for 7 months out to 123 months. Contracts Traded: 29,960,000 (2010). US Futures Market: COMEX Pricing: USc/lb Lot Size: 25,000lbs Deliverability: 24 consecutive months.

© Copyright Consensus Economics Inc. 2011

World Production of Copper (2009, world production was 15.8 million tonnes)

Mine Production % of world total 34.1% 8.1% 7.6% 6.5% Smelter Production % of world total 1. 2. 3. 4. China Chile Japan India 21.2% 12.2% 10.4% 5.6%

1. Chile 2. Peru 3. USA 4. China

14

JULY 2011

Survey Date Spot Price (July 25): US$23780

Deutsche Bank Wilson HTM Metal Bulletin Research Citigroup HWWI BIPE National Australia Bank RBS Prometeia ANZ IHS Global Insight Societe Generale Morgan Stanley Investec Barclays Capital BoA Merrill Lynch Oxford Economics Commonwealth Bank BREE Econ Intelligence Unit BNP Paribas Macquarie Bank Credit Suisse UBS Consensus (Mean) High Low Standard Deviation

NICKEL

Nickel Forecasts, US$/metric tonne

Sep '11 Dec '11 Mar '12 Jun '12 % change Sep '12 Dec '12 Mar '13 Jun '13 Sep '13 Dec '13 from spot

24000 25257 23400 27560 25000 24452 25000 23038 23171 23547 23668 22500 23149 23148 25000 24994 23234 28400 24733 22162 23400 23149 22487 22156 24025 28400 22156 1547 26500 25257 25000 28000 25500 25043 25500 24471 23029 24084 24850 23830 23700 23148 27000 23505 23546 25973 24733 21758 24350 22597 22487 24471 24514 28000 21758 1479 28000 29008 26700 27500 26000 26211 26000 26014 24503 24911 25577 25670 24251 24251 25000 21505 23293 23708 22875 22125 23000 21495 22046 22046 24654 29008 21495 2099 30000 29008 29000 27250 27000 26543 26500 26014 25664 25131 24850 24500 24471 24251 24000 23505 23336 23061 22875 22676 22000 21495 20944 20723 24783 30000 20723 2536

26.2% 22.0% 22.0% 14.6% 13.5% 11.6% 11.4% 9.4% 7.9% 5.7% 4.5% 3.0% 2.9% 2.0% 0.9% -1.2% -1.9% -3.0% -3.8% -4.6% -7.5% -9.6% -11.9% -12.9% 4.2%

30000 29008 28000 27000 27800 27522 25500 26014 26204 24580 23529 na 24361 24251 23000 22505 23373 22913 22875 21648 20750 20393 19841 20723 24426 30000 19841 2891

28000 29008 25000 26875 28000 28270 25000 27998 26434 24029 23933 na 23920 24251 21500 17504 23428 22281 22875 21795 20250 20393 18739 20723 23922 29008 17504 3239

27000 27007 24000 26415 28000 na 25000 27998 26255 23478 25841 na 23810 24251 22000 18004 23142 21897 na 21684 20000 19290 19841 20723 23602 28000 18004 2992

27000 27007 27000 25560 29000 na 25000 27998 25106 23147 26030 na 23810 24251 22000 18504 22654 21240 na 21280 20000 19290 19841 20723 23640 29000 18504 3100

27000 27007 23000 24690 29000 na 25000 31967 25768 22817 24710 na 23810 25353 22000 18504 22361 21118 na 21243 20000 19290 19841 20723 23581 31967 18504 3400

27000 27007 22000 23825 29000 na 25000 31967 26310 22265 25012 na 23810 25353 22000 18504 21938 20524 na na 20000 19290 19841 20723 23568 31967 18504 3523

Nickel Spot Price, London Metal Exchange (LME)

US$

60,000 50,000 40,000 30,000 20,000 10,000 0 Jan 1993 Jan 1995 Jan 1997 Jan 1999 Jan 2001 Jan 2003 Jan 2005 Jan 2007 Jan 2009 Jan 2011

Consensus Forecasts v Futures Prices

US$ Prices and Forecasts as of Survey Date

25000 24750 24500 24250 24000 23750 23500 23250 23000 Spot

US$/metric tonne

Consensus

LME Futures US$/metric tonne

Dec 2011 Jun 2012 Dec 2012 Jun 2013 Dec 2013

Nickel 3-Month Forward Prices and Warehouse Stocks, LME

US$ 30000

US$/metric tonne, Daily High/Low/Close

tonnes 140000

28000 26000 24000 22000

135000 3-Month Forward Daily High/Low/ Close (lhs) 130000 125000 120000

LME Warehouse Stocks, Daily (rhs)

115000 110000 105000 100000

20000 Jan 2011 Feb 2011 Mar 2011 Apr 2011 May 2011 Jun 2011 Jul 2011

Marked Decline in Nickel Prices The price of nickel has slumped by over 25% since its three-year high of US$29425 in February and has become the worst-performing base metal on the London Metal Exchange thus far this year. This is somewhat due to the unwinding from a boom in values driven by the failure of mines to meet buoyant Chinese demand at the time. Since then, though, output has risen strongly this year to flood the market, and futures (and our panellists) suggest lower prices to come. Purchasing patterns in the stainless steel industry also dominate nickel values.

Nickel prices are closely related to demand from stainless steel producers who account for about two-thirds of total demand. Futures Market: LME Pricing: US$/tonne Contract Size: 6 tonnes Delivery Dates: Daily for cash to 3 month contracts, Wednesdays for 3 month to 6 month contracts; then every third Wednesday for 7 months out to 63 months. Contracts Traded: 7,340,000 (2010). 15

Nickel Production and Consumption by World Share (2008)

Production 1. 2. 3. 4. 5. Russia Canada China Japan Australia World 000s tn 264 176 171 156 108 1368 % of world 19.3% 12.9% 12.5% 11.4% 7.9% Consumption 000s tn 1. 2. 3. 4. 5. China Japan USA Germany S. Korea World 305 185 121 90 73 1295 % of world 23.6% 14.3% 9.3% 6.9% 5.6%

© Copyright Consensus Economics Inc. 2011

LEAD

Survey Date Spot Price (July 25): US$2670

BNP Paribas Deutsche Bank Metal Bulletin Research Wilson HTM BIPE Credit Suisse Barclays Capital Morgan Stanley HWWI Commonwealth Bank BoA Merrill Lynch Investec BREE Macquarie Bank RBS National Australia Bank ANZ Citigroup Econ Intelligence Unit Societe Generale IHS Global Insight Prometeia Oxford Economics UBS Consensus (Mean) High Low Standard Deviation

JULY 2011

Lead Forecasts, US$/metric tonne

Sep '11 Dec '11 Mar '12 Jun '12 % change Sep '12 Dec '12 Mar '13 Jun '13 Sep '13 Dec '13 from spot

2715 2600 2600 2701 2601 2535 2750 2690 2600 2817 2563 2535 2630 2447 2359 2550 2636 2650 2425 2380 2593 2567 2658 2315 2580 2817 2315 124 2830 2800 2700 2701 2665 2646 3000 2734 2620 3139 2651 2535 2630 2579 2491 2575 2623 2600 2447 2450 2696 2422 2532 2425 2645 3139 2422 172 2950 2900 2920 2951 2778 2866 2850 2778 2650 3082 2401 2646 2630 2601 2491 2600 2623 2560 2469 2535 2550 2403 2384 2315 2664 3082 2315 210 3000 3000 3000 2951 2889 2866 2750 2712 2700 2673 2651 2646 2630 2601 2601 2600 2568 2515 2514 2465 2450 2360 2336 2315 2658 3000 2315 208

12.4% 12.4% 12.4% 10.5% 8.2% 7.3% 3.0% 1.6% 1.1% 0.1% -0.7% -0.9% -1.5% -2.6% -2.6% -2.6% -3.8% -5.8% -5.9% -7.7% -8.2% -11.6% -12.5% -13.3% -0.4%

3025 3000 3100 2951 3041 3086 2800 2646 2700 2580 2501 2866 na 2579 2690 2650 2502 2465 2558 na 2352 2327 2338 2315 2685 3100 2315 262

3125 2900 3300 2951 3143 3086 3000 2778 2700 2817 2751 2866 na 2646 2800 2650 2436 2420 2602 na 2280 2321 2344 2315 2738 3300 2280 298

3225 2850 3350 2851 na 3527 3200 2579 2650 2864 2501 2866 na 2756 3086 2650 2370 2375 2315 na 2121 2331 2340 1984 2704 3527 1984 414

3225 2850 3600 2851 na 3527 3200 2579 2650 2876 2901 2866 na 2756 3086 2650 2315 2325 2205 na 1911 2315 2344 1984 2715 3600 1911 462

3225 2850 3200 2851 na 3527 3200 2579 2630 2838 2901 2756 na 2756 3307 2650 2271 2280 2150 na 1850 2539 2354 1984 2700 3527 1850 447

3225 2850 3050 2851 na 3527 3200 2579 2630 2814 2901 2756 na 2756 3307 2650 2227 2230 na na 1887 2475 2363 1984 2713 3527 1887 436

US$

4000 3500 3000 2500 2000 1500 1000 500 0 Jan 1993

Lead Spot Price, London Metal Exchange (LME)

US$/metric tonne

US$

2800

Consensus Forecasts v Futures Prices

Prices and Forecasts as of Survey Date LME Futures

2700

Consensus

2600

US$/metric tonne

Jan 1995 Jan 1997 Jan 1999 Jan 2001 Jan 2003 Jan 2005 Jan 2007 Jan 2009 Jan 2011

2500 Spot Dec 2011 Jun 2012 Dec 2012 Jun 2013 Dec 2013

Lead 3-Month Forward Prices and Warehouse Stocks,LME

US$

3000 2750 2500 2250

US$/metric tonne, Daily High/Low/Close LME Warehouse Stocks, Daily (rhs)

tonnes, 000s 340

320 300 280 260 240 220 200 180

3-Month Forward Daily High/Low/Close (lhs)

2000 Jan 2011 Feb 2011 Mar 2011 Apr 2011 May 2011 Jun 2011 Jul 2011

Prices Steady China consumes around 40% of the world's lead, with 80% used in the manufacture of car batteries. With the Chinese auto industry expected to expand 5% this year and continue growing, lead is likely to gain in the medium term. The price of lead slackened in June, due to slower demand in the US and Western Europe, however this tends to be a seasonal trend and the fall in demand is no more than has been seen in past summers. Our panel expects lead prices to remain consistent, with forecasts over the next 3 years remaining at or below US$2750.

Lead prices can be related to zinc prices as the metals are co-produced. Demand is currently led by increased demand for batteries in Asia. Futures Market: LME Pricing: US$/tonne Contract Size: 25 tonnes Delivery Dates: Daily for cash to 3 month contracts, Wednesdays for 3 month to 6 month contracts; then every third Wednesday for 7 months out to 63 months. Contracts Traded: 6,000,000(2010).

© Copyright Consensus Economics Inc. 2011

Lead Production and Consumption (2009)

Production 1. China 2. Australia 3. USA 4. Peru 5. Mexico % of world total 41.3% 14.5% 10.4% 7.7% 3.7% Consumption % of world total 1. China 44% 2. EU 17% 3. USA 16% 4. South Korea 3% 5. Japan 2%

16

JULY 2011

Survey Date Spot Price (July 25): US$2426

Deutsche Bank Metal Bulletin Research Wilson HTM BIPE HWWI Credit Suisse Prometeia BNP Paribas Morgan Stanley Investec BREE National Australia Bank Citigroup Macquarie Bank UBS ANZ Commonwealth Bank BoA Merrill Lynch Barclays Capital RBS Econ Intelligence Unit Societe Generale Oxford Economics IHS Global Insight Consensus (Mean) High Low Standard Deviation

ZINC

Zinc, Special High Grade, Forecasts, US$/metric tonne

Sep '11 Dec '11 Mar '12 Jun '12 % change Sep '12 Dec '12 Mar '13 Jun '13 Sep '13 Dec '13 from spot

2400 2340 2476 2283 2480 2425 2331 2360 2337 2315 2385 2400 2250 2249 2205 2317 2452 2258 2400 2050 2293 2145 2298 2325 2324 2480 2050 101 2550 2500 2476 2451 2500 2425 2432 2440 2381 2315 2385 2400 2200 2381 2425 2304 2384 2200 2500 2161 2271 2215 2234 2225 2365 2550 2161 114 2700 2650 2776 2555 2600 2646 2577 2550 2425 2535 2513 2450 2375 2403 2381 2348 2422 2351 2250 2205 2249 2300 2198 2150 2442 2776 2150 170 2850 2800 2776 2754 2650 2646 2645 2600 2535 2535 2513 2500 2475 2403 2381 2381 2352 2351 2350 2293 2260 2250 2189 2100 2483 2850 2100 203

17.5% 15.4% 14.4% 13.5% 9.2% 9.0% 9.0% 7.2% 4.5% 4.5% 3.6% 3.1% 2.0% -0.9% -1.9% -1.9% -3.0% -3.1% -3.1% -5.5% -6.8% -7.3% -9.8% -13.4% 2.3%

3100 2900 3001 2883 2650 2646 2665 2650 2425 2646 2513 2550 2550 2381 2381 2359 2557 2501 2600 2491 2227 na 2185 2125 2565 3100 2125 245

2900 3000 3001 2920 2700 2646 2677 2800 2535 2646 2513 2600 2600 2601 2315 2315 2673 2401 2700 2690 2205 na 2193 2175 2600 3001 2175 244

2750 3040 2751 na 2720 2866 2663 2950 2535 2866 na 2600 2525 2646 2315 2271 2857 2451 3000 2998 2205 na 2196 2200 2638 3040 2196 281

2750 3200 2751 na 2720 2866 2534 2950 2535 2866 na 2600 2475 2646 2205 2227 2857 2751 3000 2976 2260 na 2200 2180 2645 3200 2180 300

2750 3000 2751 na 2750 2866 2619 2950 2535 2756 na 2600 2450 2646 2205 2193 2879 2751 3000 3197 2315 na 2205 2225 2650 3197 2193 295

2750 2800 2751 na 2750 2866 2626 2950 2535 2756 na 2600 2425 2646 2094 2171 2885 2751 3000 3197 na na 2211 2175 2647 3197 2094 300

US$

5000 4500 4000 3500 3000 2500 2000 1500 1000 500 0 Jan 1993

Zinc, Special High Grade Spot Price (LME)

US$/metric tonne

Consensus Forecasts v Futures Prices

US$

2700

Prices and Forecasts as of Survey Date US$/metric tonne Consensus

2600

2500

LME Futures

2400

Jan 1995

Jan 1997

Jan 1999

Jan 2001

Jan 2003

Jan 2005

Jan 2007

Jan 2009

Jan 2011

2300 Spot

Dec 2011

Jun 2012

Dec 2012

Jun 2013

Dec 2013

Zinc 3-Month Forward Prices and Warehouse Stocks, LME

US$

2700 2600 2500 2400 2300 2200 2100

US$/metric tonne, Daily High/Low/Close 3-Month Forward Daily High/Low/Close (lhs)

tonnes, 000s 900

850 800 750 700

LME Warehouse Stocks, Daily (rhs)

Jul 2011

650 600

2000 Jan 2011 Feb 2011 Mar 2011 Apr 2011 May 2011 Jun 2011

Gains Expected on Japanese Recovery Demand for zinc ­ for use in steel production ­ should strengthen as Japanese rebuilding picks up following the March earthquake and tsunami disaster. Despite this, overall fundamentals are weak in comparison to other industrial metals such as copper and nickel. Warehouse stocks have steadily risen this year, though this may be in anticipation of mine closures scheduled for 2013 that may tighten the supply of the metal. Our panel forecasts steady gains in the price of zinc over the next two years, before levelling out at around $2640 in 2013.

Zinc's primary use is in galvanising steel. Futures Market: LME Pricing: US$/tonne Contract Size: 25 tonnes (+/- 2%) Delivery Dates: Daily for cash to 3 month contracts, Wednesdays for 3 month to 6 month contracts; then every third Wednesday for 7 months out to 63 months. Contracts Traded: 18,070,000 (2010) 17

Zinc Production and Consumption (2009)

Production % of world total 1. China 27.1% 2. Peru 13.2% 3. Australia 11.3% 4. USA 6.5% 5. Canada 6.1% Consumption % of world total 1. China 40% 2. EU 17% 3. USA 8% 4. Japan 4% 5. South Korea 4%

© Copyright Consensus Economics Inc. 2011

STEEL

Consensus Price for Q3 2011: US$803.8 e

MEPS Macquarie Bank BIPE Citigroup IHS Global Insight Deutsche Bank Morgan Stanley Consensus (Mean) High Low Standard Deviation

OCTOBER 2011 JULY 2007

Hot Rolled Coil (Europe, Domestic) Forecasts, US$/metric tonne

Sep '11 Dec '11 Mar '12 Jun '12 % change Sep '12 Dec '12 Mar '13 Jun '13 Sep '13 Dec '13 from spot 11.3% 900.0 885.0 915.0 970.0 960.0 920.0 805.0 780.0 820.0 895.0

825.0 801.9 785.3 725.5 840.0 844.0 803.8 844.0 725.5 40.5

800.0 826.0 820.4 727.0 833.0 844.0 804.3 844.0 727.0 40.2

845.0 850.7 829.8 756.1 790.0 783.0 810.7 850.7 756.1 35.1

880.0 867.8 826.7 812.1 790.0 783.0 836.4 895.0 783.0 44.7

9.5% 8.0% 2.8% 1.0% -1.7% -2.6% 4.0%

810.0 876.4 823.6 844.5 790.0 783.0 832.5 900.0 783.0 43.7

780.0 885.2 820.5 811.6 790.0 783.0 822.2 885.2 780.0 45.4

815.0 na 813.9 749.1 700.0 787.0 796.7 915.0 700.0 72.6

835.0 na 805.4 728.5 700.0 787.0 804.3 970.0 700.0 95.2

825.0 na 796.9 760.6 700.0 787.0 804.9 960.0 700.0 87.0

825.0 na 788.5 813.4 700.0 787.0 805.7 920.0 700.0 71.2

Consensus Price for Q3 2011: US$779.0 e

Consensus (Mean)1 High Low Standard Deviation

Hot Rolled Coil (USA, Domestic) Forecasts, US$/short ton

Sep '11 Dec '11 Mar '12 Jun '12 % change Sep '12 Dec '12 Mar '13 Jun '13 Sep '13 Dec '13 from spot

779.0 921.8 657.0 91.3 767.3 881.8 623.3 98.5 788.2 866.8 650.0 82.7 796.3 895.0 590.0 97.1

2.2%

776.9 856.8 498.3 116.9

762.6 856.8 525.0 105.1

780.4 870.0 621.7 90.0

785.8 870.0 646.7 86.9

786.8 870.0 650.0 78.6

806.6 870.0 736.2 51.7

Consensus Price for Q3 2011: US$697.7 e

Consensus (Mean) 1 High Low Standard Deviation

1

Hot Rolled Coil (Asia, Domestic) Forecasts, US$/metric tonne

Sep '11 Dec '11 Mar '12 Jun '12 % change

697.7 830.0 555.3 86.1 699.0 790.0 557.1 74.5 748.0 829.8 559.0 83.8 761.2 837.0 560.9 91.4

Sep '12 Dec '12 Mar '13 Jun '13 Sep '13 Dec '13

759.4 823.6 594.8 76.8 748.7 820.5 596.8 70.2 757.2 830.0 598.7 72.0 759.5 880.0 600.7 82.3 755.2 870.0 584.8 84.1 741.9 860.0 586.8 91.8

9.1%

Individual forecasts available in the Excel spreadsheet.

Steel ­ Hot Rolled Coil (HRC) Prices (MEPS)

US$/tonne

US$/tonne

1400 1200

1 metric tonne = 1.1023 short tons

1000 800 600 400 200 Steel Scrap - USA (short ton) 0 Jan 1993 Jan 1995 Jan 1997 Jan 1999 Jan 2001 Jan 2003 Jan 2005 Jan 2007 Jan 2009 Jan 2011

HRC - USA (short ton) HRC - Europe (metric tonne) HRC - Asia (metric ton)

China Keeps Prices Afloat Recent highs in steel prices have been attributed to China under-reporting the amount of steel it produces. For example, the authorities announced that steel output was 627mn tonnes last year, but independent sources claim the figure was closer to 672mn. The discrepancy is because Beijing initially planned to close heavily polluting plants and reorganise its steel industry, but local demand for the commodity has kept the plants open. Moreover, the China Iron & Steel Association has announced that steel demand will remain strong in the second half of this year on the back of plans for social housing construction. Meanwhile, the World Steel Association announced that all major steel-producing regions showed increases in output.

Steel prices are generally set in contracts between major producers and their clients. However, the London Metal Exchange in April 2008 launched two steel billet contracts, one for Mediterranean delivery and the other for delivery in the Far East. Whilst there are many varieties of steel, Hot Rolled Coil (HRC) is a commonly referenced price, but regional complexities prevent the emergence of a clear benchmark at present.

© Copyright Consensus Economics Inc. 2011

Steel Production and Consumption (2009)

Producers % of world total 1. China 44.3 2. Japan 7.8 3. United States 5.7 4. Russia 4.7 5. India 4.7 Consumers % of world total 1. China 48.4 2. United States 5.1 3. India 4.9 4. Japan 4.7 5. South Korea 4.0

18

JULY 2011

1

IRON ORE

Individual forecasts available in the Excel spreadsheet.

Consensus Price for Q3 2011: US¢272.65 e

Australian Fine Iron Ore (Contract Prices) Forecasts, US¢/dmtu, fob

Sep '11 Dec '11 Mar '12 Jun '12 % change Sep '12 Dec '12 Mar '13 Jun '13 Sep '13 Dec '13 from spot

Macquarie Bank Deutsche Bank Morgan Stanley BoA Merrill Lynch UBS Wilson HTM Credit Suisse National Australia Bank RBS Citigroup Commonwealth Bank BREE Consensus (Mean) High Low Standard Deviation

272.90 269.40 285.93 282.26 274.53 281.50 269.35 273.00 268.99 273.02 272.34 248.60 272.65 285.93 248.60 9.36

255.16 285.50 285.93 272.10 235.90 250.00 259.68 242.00 264.73 265.08 261.45 234.00 259.29 285.93 234.00 17.10

290.65 277.40 276.21 233.87 247.70 250.00 259.68 242.00 248.60 257.14 239.81 234.00 254.75 290.65 233.87 18.23

280.81 277.40 276.21 266.13 260.08 260.00 253.23 242.00 237.03 236.51 235.01 234.00 254.87 280.81 234.00 17.76

3.0% 1.7% 1.3% -2.4% -4.6% -4.6% -7.1% -11.2% -13.1% -13.3% -13.8% -14.2% -6.5%

240.48 277.40 276.21 274.19 247.08 260.00 220.97 234.00 228.96 236.51 238.71 234.00 247.38 277.40 220.97 19.65

269.52 277.40 276.21 274.19 234.73 250.00 211.29 234.00 220.90 212.70 242.06 234.00 244.75 277.40 211.29 24.53

280.81 180.60 288.06 225.81 246.46 250.00 211.29 234.00 220.90 212.70 247.00 na 236.15 288.06 180.60 31.15

272.74 180.60 288.06 258.06 246.46 210.00 212.90 234.00 201.26 185.71 244.53 na 230.40 288.06 180.60 35.22

256.61 180.60 288.06 258.06 234.14 210.00 212.90 234.00 201.26 185.71 207.35 na 224.43 288.06 180.60 33.15

256.61 180.60 288.06 241.94 210.73 160.00 209.68 234.00 201.26 185.71 192.40 na 214.64 288.06 160.00 37.37

Consensus Price for Q3 2011: US¢307.2 e

Consensus (Mean)1 High Low Standard Deviation

Australian Lump Iron Ore (Contract Prices) Forecasts, US¢/dmtu, fob

Sep '11 Dec '11 Mar '12 Jun '12 % change Sep '12 Dec '12 Mar '13 Jun '13 Sep '13 Dec '13 from spot

307.2 349.1 284.4 19.4 296.4 322.5 285.1 12.4 291.2 320.6 259.6 19.8 294.0 322.4 257.9 23.4

-4.3%

284.9 322.4 245.3 28.0

280.7 315.3 234.0 32.1

266.4 310.0 198.4 38.0

261.4 309.7 198.4 42.8

253.9 309.7 198.4 38.4

240.3 290.3 198.4 36.8

Consensus Price for Q3 2011: US¢259.2 e

Consensus (Mean) 1 High Low Standard Deviation

Brazilian Fine Iron Ore (Contract Prices) Forecasts, US¢/dmtu, fob

Sep '11 Dec '11 Mar '12 Jun '12 % change Sep '12 Dec '12 Mar '13 Jun '13 Sep '13 Dec '13 from spot

259.16 266.13 249.69 8.51 242.75 255.97 225.12 15.89 241.80 287.48 217.74 39.58 254.01 279.85 232.18 24.09

-2.0%

242.48 258.06 227.71 15.19

247.52 269.16 215.34 28.42

235.61 278.17 209.68 37.15

245.10 270.53 222.83 24.01

237.32 255.27 214.75 20.65

225.47 255.27 195.34 29.96

Iron ore is traded in world markets under contracts. Prices are set by negotiation between iron ore producers and steel manufacturers. Three suppliers, Vale, Rio Tinto and BHP Billiton accounted for 75% of ocean trade in iron ore in 2006. Fines are the most heavily traded category (60% of global trade) while lump iron ore trades at a higher price due to its higher iron content. Producers dropped the annual benchmark price system in April 2010 in favour of quarterly prices based on prior average daily spot prices.

Consensus Forecast Prices

US¢ Prices and Forecasts as of Survey Date

320

US¢/dmtu

300 280 260 240

Au stralian Lum p

Fine and Lump Iron Ore Prices

US¢

Brazilian Fine

220 200

US¢ per dry long ton unit/dry metric tonne unit

180 Spot

Australian Fine

325 300 275 250 225 200 175 150 125 100 75 50 25 0

1.016 metric tonnes = 1 long tonne

Australian Lump

Dec 2011

Jun 2012

Dec 2012

Jun 2013

Dec 2013

Brazilian Fine

Baltic Capesize Index of Shipping Rates

20000 15000

Australian Fine

10000 5000

Q1 1991

Q1 1993

Q1 1995

Q1 Q1 1997 1999

Q1 2001

Q1 2003

Q1 Q1 2005 2007

Q1 2009

Q1 2011

Annual contract prices prior to April 2010

© Copyright Consensus Economics Inc. 2011

0 Jan 2001

Jan 2003

Jan 2005

Jan 2007

Jan 2009

Jan 2011

19

ADDITIONAL METALS

OCTOBER 2011 JULY 2007

Forecasts for the metals shown on this and the next page were provided by the following leading forecasters:

ANZ BNP Paribas Deutsche Bank IHS Global Insight Metal Bulletin Research Prometeia UBS

Bank of America ­ Merrill Lynch Barclays Capital Citigroup Credit Suisse Economist Intelligence Unit HWWI Investec Macquarie Bank Morgan Stanley Oxford Economics RBS SG Commodity Research Wilson HTM

Individual panellist forecasts for these minerals are available as part of our Excel spreadsheet service. Please enquire at [email protected]

TIN

% US$/metric Consensus change tonne (Mean) from spot Spot price Sep 2011 Dec 2011 Mar 2012 Jun 2012 Sep 2012 Dec 2012 Mar 2013 Jun 2013 Sep 2013 Dec 2013 28145 27252 27651 27436 27625 26947 26450 24499 24008 23520 23080

US$

Forecast Range

35000

Tin, Spot Price, LME

US$/metric tonne

High 33000 34300 34000 36000 38000 40000 34000 34000 34000 34000

Low

30000

Tin has its physical spot market centred in Kuala Lumpur with the LME recognised as the principal hedging market. Futures Market: LME Pricing: US$/tonne Contract Size: 5 tonnes (+/- 2%) Delivery Options: Daily for cash to 3 month contracts, Wednesdays for 3 month to 6 month contracts; then every third Wednesday for 7 months out to 15 months. Contracts Traded: 1,550,000 (2010).

-3.2% -1.8% -2.5% -1.8% -4.3% -6.0% -13.0% -14.7% -16.4% -18.0%

17967 18519 17637 17637 16535 16535 13228 13228 10141 10141

25000 20000 15000 10000 5000 0 Jan 1993

Jan Jan 1996 1999

Jan 2002

Jan 2005

Jan Jan 2008 2011

COBALT

US$/lb

Spot price Sep 2011 Dec 2011 Mar 2012 Jun 2012 Sep 2012 Dec 2012 Mar 2013 Jun 2013 Sep 2013 Dec 2013 % Consensus change (Mean) from spot 16.55 17.58 17.64 16.29 16.43 16.56 16.52 16.74 16.46 16.30 16.39 Forecast Range High 20.00 20.00 20.00 20.00 20.00 20.00 22.00 22.00 20.00 20.00 Low 15.00 15.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00

US$

60 50

Cobalt, Spot Price

US$/lb

Colbalt is principally used as a super alloying agent because of its anti-corrosive properties. It is

6.2% 6.6% -1.5% -0.7% 0.1% -0.2% 1.2% -0.5% -1.5% -1.0%

40 30 20 10 0 Jan 1993

commonly a by-product of nickel and used in the production of alloys, catalysts and batteries. The LME launched futures contracts in cobalt in February 2010. Futures Market: LME Pricing: US$/tonne Contract Size: 1 tonne Delivery Options: 1 tonne lots in 100-500kg drums of uniform size and weight. Manganese is not exchangetraded so prices are established by negotiation between buyers and sellers. Negotiations occur in line with the beginning of the Japanese fiscal year in April. Following the setting of prices with Japanese manufacturing companies, similar settlement prices are set worldwide. The price is based upon a benchmark ore of 48-50% manganese content.

Jan 1996 Jan 1999 Jan 2002 Jan 2005 Jan 2008 Jan 2011

Jan 1996

Jan 1999

Jan 2002

Jan 2005

Jan 2008

Jan 2011

MANGANESE

% US$/metric Consensus change tonne unit (Mean) from spot Spot price Sep 2011 Dec 2011 Mar 2012 Jun 2012 Sep 2012 Dec 2012 Mar 2013 Jun 2013 Sep 2013 Dec 2013 5.400 5.926 6.026 6.417 6.524 6.795 6.767 6.308 6.308 6.236 6.236

US$ Manganese, Spot Price

Forecast Range

18.0

High 7.382 7.382 8.366 8.366 8.366 8.366 7.000 7.000 7.000 7.000

Low

15.0

US$/Metric Tonne Unit (1/100 of a tonne) of 48-50% Manganese Ore

9.7% 11.6% 18.8% 20.8% 25.8% 25.3% 16.8% 16.8% 15.5% 15.5%

5.000 5.300 5.300 5.300 5.300 5.300 5.750 5.750 5.750 5.750

12.0 9.0 6.0 3.0 0.0 Jan 1993

20

© Copyright Consensus Economics Inc. 2011

JULY 2011

MOLYBDENUM

US$ Molybdenum, Spot Price

US$/lb

40 35 30

ADDITIONAL METALS

Molybdenum is principally used as an alloying agent in steel because of its anti-corrosive properties. As a by-product of copper production costs are low and prices can be influenced by the price and demand for nickel and stainless steel, as well as molybdenum roasting capacity. Futures Market: LME (since February 2010) Pricing: US$/tonne Contract Size: 6 tonnes Mo (+/-5% (Mo content 57-63%) Delivery Options: 10 tonnes (RMC), deliverable in 200 or 250kg drums.

US$/lb

Spot price Sep 2011 Dec 2011 Mar 2012 Jun 2012 Sep 2012 Dec 2012 Mar 2013 Jun 2013 Sep 2013 Dec 2013

% Consensus change (Mean) from spot 14.65 17.34 17.82 18.03 18.68 19.06 19.05 18.70 18.50 18.55 18.22

Forecast Range High 20.00 20.00 22.00 24.00 24.00 22.00 22.70 22.70 23.60 23.60 Low 15.00 15.00 15.00 15.00 15.00 15.00 14.00 14.00 14.00 14.00

18.3% 21.6% 23.1% 27.5% 30.1% 30.0% 27.6% 26.3% 26.6% 24.4%

25 20 15 10 5 0 Jan 1993

Jan 1996

Jan 1999

Jan 2002

Jan 2005

Jan 2008

Jan 2011

RUTILE

% US$/metric Consensus change tonne (Mean) from spot Spot price Sep 2011 Dec 2011 Mar 2012 Jun 2012 Sep 2012 Dec 2012 Mar 2013 Jun 2013 Sep 2013 Dec 2013 725.0 1254.3 1276.7 1390.4 1399.3 1424.3 1424.3 1455.7 1457.0 1457.0 1363.2 Forecast Range High 1348.0 1400.0 1600.0 1600.0 1700.0 1700.0 1700.0 1700.0 1700.0 1600.0 Low

US$

800

Rutile, Spot Price

US$/metric tonne

700

73.0% 76.1% 91.8% 93.0% 96.5% 96.5% 100.8% 101.0% 101.0% 88.0%

745.0 894.0 894.0 983.4 983.4 983.4 983.4 995.6 995.6 750.0

600

Mineral sand prices are principally determined by derived demand. Rutile is used to make titanium dioxide (it is approximately 95% TiO2 in its mineral form), which can be used to make titanium or as a white pigment in papers, plastics and paints. Prices are set under long-term contracts between producers (many of which will produce from mine to end use) and consumers.

500

400

300 Jan 1993

Jan 1996

Jan 1999

Jan 2002

Jan 2005

Jan 2008

Jan 2011

ILMENITE

% US$/metric Consensus change tonne (Mean) from spot Spot price Sep 2011 Dec 2011 Mar 2012 Jun 2012 Sep 2012 Dec 2012 Mar 2013 Jun 2013 Sep 2013 Dec 2013 130.00 146.5 150.5 169.7 175.2 178.2 178.2 179.8 178.8 173.8 170.8 Forecast Range High 250.0 250.0 300.0 300.0 325.0 325.0 300.0 300.0 250.0 250.0 Low 105.0 105.0 105.0 105.0 110.0 110.0 110.0 110.0 110.0 100.0

US$

160 150 140

Ilmenite, Spot Price

US$/metric tonne

12.7% 15.8% 30.5% 34.8% 37.1% 37.1% 38.3% 37.5% 33.7% 31.4%

130 120 110 100 90 80 70 60 Jan 1993 Jan 1996 Jan 1999 Jan 2002 Jan 2005 Jan 2008 Jan 2011

Ilmenite is mined alongside rutile and is also used to make titanium dioxide (it is approximately 54% TiO2 in its mineral form). Prices are set under long-term contracts. The price of ilmenite is substantially lower than that of rutile and is therefore often used to produce synthetic rutile. 90% of titanium metal is sourced from ilmenite. Australia is the world's largest producer (55%) of ilmenite and rutile followed by South Africa (24%) and Ukraine (16%).

ZIRCON

% US$/metric Consensus change tonne (Mean) from spot Spot price Sep 2011 Dec 2011 Mar 2012 Jun 2012 Sep 2012 Dec 2012 Mar 2013 Jun 2013 Sep 2013 Dec 2013 1748.0 2110.2 2298.5 2495.1 2537.6 2557.6 2570.1 2595.1 2587.6 2507.6 2350.1 Forecast Range High 2240.0 2650.0 3200.0 3300.0 3400.0 3500.0 3500.0 3400.0 3300.0 3200.0 Low 1452.0 1875.0 1875.0 2000.0 2000.0 2024.8 2024.8 2050.0 1800.0 1500.0

US$

2000 1800 1600

Zircon, Spot Price

US $/metric tonne

Zircon prices are set under longterm contracts between producers and consumers. Zircon prices have risen steadily in recent years following the move from spot-trading to contract-trading. Iluka Resources are the world's largest zircon miner and as a result the most influential in setting a benchmark prices. Its Eucla basin in Australia is mined principally for zircon unlike the majority of other mines, for which zircon is a coproduct of rutile and ilmenite. 21

20.7% 31.5% 42.7% 45.2% 46.3% 47.0% 48.5% 48.0% 43.5% 34.4%

1400 1200 1000 800 600 400 200 0 Jan 1993 Jan 1996 Jan 1999 Jan 2002 Jan Jan 2005 2008 Jan 2011

© Copyright Consensus Economics Inc. 2011

GOLD

Survey Date Spot Price (Jul. 25): US$1616.5

Deutsche Bank Societe Generale Wilson HTM ANZ BNP Paribas Morgan Stanley BoA Merrill Lynch Barclays Capital BREE Credit Suisse Investec National Australia Bank UBS Oxford Economics Citigroup Macquarie Bank RBS Econ Intelligence Unit Commonwealth Bank Consensus (Mean) High Low Standard Deviation 1630.0 1580.0 1690.0 1570.2 1545.0 1565.0 1492.2 1560.0 1503.0 1560.0 1500.0 1508.0 1530.0 1611.7 1450.0 1575.0 1325.0 1480.0 1639.6 1542.9 1690.0 1325.0 79.9 1750.0 1650.0 1690.0 1660.0 1610.0 1585.0 1450.0 1580.0 1503.0 1545.0 1500.0 1444.0 1575.0 1579.7 1450.0 1475.0 1325.0 1390.0 1401.7 1534.9 1750.0 1325.0 111.7 1750.0 1700.0 1800.0 1700.0 1645.0 1605.0 1650.0 1550.0 1550.0 1550.0 1500.0 1427.0 1470.0 1450.0 1350.0 1375.0 1300.0 1300.0 1249.1 1522.2 1800.0 1249.1 162.4

JULY 2011

Gold Forecasts, US$/Troy Ounce

Sep '11 Dec '11 Mar '12 Jun '12 % change Sep '12 Dec '12 Mar '13 Jun '13 Sep '13 Dec '13 from spot

1850.0 1800.0 1800.0 1675.0 1645.0 1615.0 1600.0 1550.0 1550.0 1550.0 1500.0 1410.0 1400.0 1381.9 1350.0 1350.0 1275.0 1270.0 1251.9 1517.0 1850.0 1251.9 185.8

14.4% 11.4% 11.4% 3.6% 1.8% -0.1% -1.0% -4.1% -4.1% -4.1% -7.2% -12.8% -13.4% -14.5% -16.5% -16.5% -21.1% -21.4% -22.6% -6.2%

2000.0 na 2000.0 1590.0 1595.0 1625.0 1510.0 1550.0 1550.0 1550.0 1450.0 1393.0 1350.0 1300.1 1300.0 1350.0 1300.0 1220.0 1329.0 1497.9 2000.0 1220.0 220.5

2000.0 na 2000.0 1515.0 1515.0 1650.0 1370.0 1550.0 1550.0 1550.0 1450.0 1376.0 1300.0 1263.5 1300.0 1325.0 1325.0 1200.0 1408.1 1480.4 2000.0 1200.0 224.1

1700.0 na 1700.0 1455.0 na 1550.0 1560.0 na na 1475.0 1350.0 1360.0 1200.0 1228.8 1250.0 1275.0 1350.0 1150.0 1476.3 1405.3 1700.0 1150.0 172.9

1700.0 na 1700.0 1415.0 na 1550.0 1430.0 na na 1475.0 1350.0 1360.0 1200.0 1194.3 1250.0 1225.0 1350.0 1100.0 1476.3 1385.0 1700.0 1100.0 178.0

1700.0 na 1700.0 1390.0 na 1550.0 1430.0 na na 1475.0 1300.0 1360.0 1200.0 1162.5 1200.0 1200.0 1400.0 1000.0 1404.8 1364.8 1700.0 1000.0 196.1

1700.0 na 1700.0 1370.0 na 1550.0 1430.0 na na 1475.0 1300.0 1360.0 1200.0 1134.7 1200.0 1175.0 1400.0 na 1300.0 1378.2 1700.0 1134.7 181.0

US$

1700 1550 1400 1250 1100 950 800 650 500 350 200 Jan 1993

Gold, Spot Price (PM Fixing), London Bullion Market Association (LBMA)

US$/troy ounce

Consensus Forecasts v Futures Prices

Prices and Forecasts as of Survey Date

US$

1650 1625 1600 1575 1550 1525 1500 1475 1450 1425 1400

COMEX Futures Consensus

Jan 1995

Jan 1997

Jan 1999

Jan 2001

Jan 2003

Jan 2005

Jan 2007

Jan 2009

Jan 2011

1375 1350 Spot

US$/troy oz

Dec 2011 Jun 2012 Dec 2012 Jun 2013 Dec 2013

US$

Gold Futures ­ Oct. 2011 Contract (COMEX)

US$/troy oz, Daily High/Low/Close US$ Index (rhs, inverted scale)

Index

1650 1600 1550 1500 1450 1400 1350 1300 Jan 2011 Feb 2011 Mar 2011 Apr 2011 May 2011 Jun 2011 Jul 2011

72 74 76 78

Gold Futures Oct. 2011 Daily High/Low/Close (lhs)

80 82

Gold Price Reaching Peak Uncertain growth in the US and Western Europe has led investors to seek out gold as a safe haven. This, combined with the weak US dollar pushed the price to a nominal high of $1628 in July. However, gold is overvalued in comparison to other precious metals such as platinum and there is a risk of correction in the market. Our consensus suggests gold has peaked and the price will fall over the next two years. However, a number of our forecasters still expect significant near-term gains.

Gold prices are fixed twice daily by the LBMA providing a benchmark price for trades on various exchanges and over-the-counter trades. US Futures Market: COMEX Pricing: US$/troy ounce Contract Size: 100 troy ounces Deliverability: Next 3 calendar months; any February, April, August and October within 23 months; and any June and December within 72 months. Contracts Traded: 44,730,345 (2010).

© Copyright Consensus Economics Inc. 2011

Gold Supply and Demand (2009)

Production 1 2 3 4 5 tonnes % of world 13.0% 9.1% 9.0% 8.3% 8.0% Consumption tonnes 1. 2. 3. 4. 5. India China USA Germany Turkey World 579 458 265 134 107 2503 % of world 23.1% 18.3% 10.6% 5.3% 4.3% China 320 USA 223 Australia 222 Russia 205 South Africa 198 World 2460

22

JULY 2011

Survey Date Spot Price (Jul. 25): US$40.78

SILVER

Silver Forecasts, US$/Troy Ounce

Sep '11 Dec '11 Mar '12 Jun '12 % change Sep '12 Dec '12 Mar '13 Jun '13 Sep '13 Dec '13 from spot

Societe Generale Deutsche Bank ANZ Wilson HTM BNP Paribas BoA Merrill Lynch Morgan Stanley BREE Econ Intelligence Unit Credit Suisse Investec UBS Barclays Capital Citigroup Macquarie Bank RBS Commonwealth Bank Consensus (Mean) High Low Standard Deviation

42.00 37.00 37.59 39.00 38.30 42.98 36.50 34.25 36.00 37.00 35.00 34.70 37.00 33.00 33.00 26.00 29.21 35.80 42.98 26.00 4.14

45.00 41.00 41.79 39.00 42.55 30.00 38.00 34.25 33.81 34.50 35.00 39.00 39.50 30.25 29.00 25.00 25.39 35.47 45.00 25.00 5.99

46.00 42.00 44.17 43.39 45.30 35.00 36.48 34.25 31.62 30.00 30.00 30.00 29.00 27.00 26.00 24.00 23.03 33.96 46.00 23.03 7.69

47.00 45.00 44.08 43.39 43.35 39.00 36.70 34.25 30.89 30.00 30.00 30.00 29.00 27.00 23.00 23.00 21.89 33.97 47.00 21.89 8.37

15.3% 10.3% 8.1% 6.4% 6.3% -4.4% -10.0% -16.0% -24.2% -26.4% -26.4% -26.4% -28.9% -33.8% -43.6% -43.6% -46.3% -16.7%

na 50.00 41.58 50.00 35.70 34.10 36.93 na 29.68 30.00 29.00 30.00 29.00 25.00 22.00 24.00 21.89 32.59 50.00 21.89 8.96

na 50.00 39.10 50.00 28.00 30.20 37.50 na 29.19 30.00 29.00 30.00 29.00 25.00 22.00 25.00 21.89 31.73 50.00 21.89 8.79

na 38.00 37.08 37.78 na 39.00 32.98 na 27.97 25.00 27.00 25.00 na 23.25 21.00 26.00 21.89 29.38 39.00 21.00 6.65

na 38.00 35.60 37.78 na 35.70 32.98 na 26.76 25.00 27.00 25.00 na 23.25 20.00 26.00 21.89 28.84 38.00 20.00 6.30

na 38.00 34.75 37.78 na 35.70 32.98 na 24.32 25.00 26.00 25.00 na 21.50 19.50 30.00 21.89 28.65 38.00 19.50 6.53

na 38.00 34.25 37.78 na 35.70 32.98 na na 25.00 26.00 25.00 na 21.50 19.00 30.00 21.89 28.92 38.00 19.00 6.71

US$

50.0 45.0 40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.0 0.0 Jan 1993

Silver, Spot Price (Fixing), London Bullion Market Association (LBMA)

US$/troy ounce Gold/Silver Spot Price Ratio (rhs)

Consensus Forecasts v Futures Prices

Ratio

100 90

41.00

US$

45.00 43.00

Prices and Forecasts as at Survey Date

COMEX Futures

80 70 60 50 40

39.00 37.00 35.00 33.00 31.00 29.00 27.00 Spot

Consensus US$/troy oz

Silver Spot Price (lhs)

Jan 1995 Jan 1997 Jan 1999 Jan 2001 Jan 2003 Jan 2005 Jan 2007 Jan 2009 Jan 2011

30

Dec 2011

Jun 2012

Dec 2012

Jun 2013

Dec 2013

Silver Futures ­ September 2011 Contract (COMEX)

US$

US$/troy oz, Daily High/Low/Close

53.0 49.0 45.0 41.0 37.0 33.0 29.0 25.0 21.0 Jan 2011 Feb 2011 Mar 2011 Apr 2011 May 2011 Jun 2011 Jul 2011

Volatile Recent Performance Silver has endured a volatile second quarter, with prices falling by 30% in one week in May before recovering to $40/troy oz in July. The volatility is due to a high proportion of the market made up of speculative investors rather than industrial buyers. Recent gains have been tentative, with investors wary of May's price plummet being repeated. Our panel's forecasts are mixed, although the overall consensus points to a sustained drop in price over the next year. Most of our panellists believe silver to be overvalued and see it falling below $30/troy oz in the long term.

Silver, like gold, has a price set by members of the LBMA which is used as a benchmark for over-thecounter trades. US Futures Market: COMEX Pricing: US$/troy ounce Contract Size: 5,000 troy ounces Deliverability: Next 3 calendar months; any January, March, May and September within 23 months; and any July and December within 60 months. ContractsTraded: 12,826,666 (2010). 23

World Production and Uses of Silver (2010) Producer Millions of Ounces Use % of total demand

1. 2. 3. 4. 5. Mexico Peru China Australia Chile 128.6 116.1 99.2 59.9 41.0 1. 2. 3. 4. 5. Industrial Applications Jewellery Coins and Metals Photography Silverware 46.1 15.8 9.6 6.9 4.8

© Copyright Consensus Economics Inc. 2011

PLATINUM

Survey Date Spot Price (Jul. 25): US$1787

Deutsche Bank Wilson HTM RBS BNP Paribas Credit Suisse UBS ANZ Morgan Stanley BoA Merrill Lynch Citigroup Macquarie Bank Societe Generale Barclays Capital Investec IHS Global Insight Econ Intelligence Unit Commonwealth Bank Consensus (Mean) High Low Standard Deviation

JULY 2011

Platinum Forecasts, US$/Troy Ounce

Sep '11 Dec '11 Mar '12 Jun '12 % change Sep '12 Dec '12 Mar '13 Jun '13 Sep '13 Dec '13 from spot

1750 1850 1850 1810 1835 1815 1781 1750 1810 1850 1850 1830 1810 1745 1750 1725 2113 1819 2113 1725 87 1950 1850 1900 1870 1885 1862 1876 1800 1750 1850 1900 1840 1850 1745 1725 1700 1807 1833 1950 1700 69 2000 2025 1925 1925 1950 1950 1943 1911 1800 1900 2000 1845 1835 1788 1700 1650 1614 1868 2025 1614 123 2050 2025 1975 1970 1950 1950 1936 1911 1900 1900 1850 1850 1835 1788 1675 1650 1599 1871 2050 1599 129

14.7% 13.3% 10.5% 10.2% 9.1% 9.1% 8.3% 7.0% 6.3% 6.3% 3.5% 3.5% 2.7% 0.1% -6.3% -7.7% -10.5% 4.7%

2200 2225 2000 1985 1950 1950 1849 1911 2000 1900 1800 na 1835 1800 1650 1650 1683 1899 2225 1650 169

2250 2225 2100 1985 1950 1950 1772 1911 1800 1900 1750 na 1835 1800 1680 1600 1783 1893 2250 1600 182

1850 1850 2200 na 2200 1950 1712 1952 1900 1775 1750 na na 1812 1640 1550 1874 1858 2200 1550 184

1850 1850 2200 na 2200 1950 1675 1952 1859 1775 1750 na na 1812 1600 1550 1870 1849 2200 1550 189

1850 1850 2300 na 2200 1940 1655 1952 1859 1775 1750 na na 1762 1575 1550 1794 1844 2300 1550 210

1850 1850 2300 na 2200 1960 1641 1952 1859 1775 1750 na na 1762 1550 na 1658 1854 2300 1550 212

US$

Platinum, Spot Price (PM Fixing), London Platinum and Palladium Market (LPPM)

US$/troy ounce

Platinum Spot Price (lhs)

Consensus Forecasts v Futures Prices

Ratio 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 US$ Prices and Forecasts as of Survey Date

1910 1890 1870 1850 1830 1810 1790 1770 1750 Spot

2500 2250 2000 1750 1500 1250 1000 750 500 250 0 Jan 1993

Consensus

Platinum/Gold Spot Price Ratio (rhs)

NYMEX Futures

US$/troy oz

Dec 2011 Jun 2012 Dec 2012 Jun 2013 Dec 2013

Jan 1995

Jan 1997

Jan 1999

Jan 2001

Jan 2003

Jan 2005

Jan 2007

Jan 2009

Jan 2011

Platinum Futures ­ October 2011 Contract (NYMEX)

US$

1900

US$/troy oz, Daily High/Low/Close

1800

1700

1600 Jan 2011

Feb 2011

Mar 2011

Apr 2011

May 2011

Jun 2011

Jul 2011

Gains on Industrial and Investor Demand Demand for platinum is robust both as an investment and for industrial usage. Strong growth in the global auto industry fuelled by emerging economies has increased demand for the metal due to its use in catalytic converters. The metal has underperformed gold and silver this year and there is potential for stronger growth as investors see it as a viable alternative investment which, when combined with a tightening global supply, will lead to price rises. Our panel forecasts steady growth in the price of platinum in the medium term.

Platinum prices are fixed twice daily by the LPPM to provide a benchmark price in a practice similar to that used for gold and silver. US Futures Market: NYMEX Pricing: US$/troy ounce Lot Size: 50 troy ounces Deliverability: Over 15 months including the next 3 calendar months; then a January, April, June and October cycle. Contracts Traded: 1,486,507 (2010).

© Copyright Consensus Economics Inc. 2011

Platinum Production and Consumption (2010)

Production % of world total 1. South Africa 76.5 2. Russia 13.6 3. Zimbabwe 4.6 4. North America 3.5 5. Others 1.8 Consumption % of world total 1. Europe 26.8 2. China 25.2 3. North America 19.1 4. Japan 14.6 5. Others 14.3

24

JULY 2011

Survey Date Spot Price (Jul. 25): US$806.0

Deutsche Bank Wilson HTM Credit Suisse Morgan Stanley Macquarie Bank BNP Paribas Citigroup RBS Societe Generale BoA Merrill Lynch ANZ Barclays Capital UBS Investec IHS Global Insight Econ Intelligence Unit Consensus (Mean) High Low Standard Deviation

PALLADIUM

Palladium Forecasts, US$/Troy Ounce

Sep '11 Dec '11 Mar '12 Jun '12 % change Sep '12 Dec '12 Mar '13 Jun '13 Sep '13 Dec '13 from spot

850.0 900.0 850.0 775.0 850.0 805.0 795.0 850.0 830.0 772.9 788.0 805.0 790.0 755.0 750.0 735.0 806.3 900.0 735.0 45.2 950.0 900.0 920.0 825.0 1000.0 885.0 850.0 900.0 880.0 750.0 833.7 845.0 855.0 755.0 725.0 700.0 848.4 1000.0 700.0 82.7 1000.0 1050.0 1000.0 955.6 1100.0 925.0 925.0 900.0 880.0 850.0 869.5 860.0 825.0 824.0 700.0 650.0 894.6 1100.0 650.0 117.1 1100.0 1050.0 1000.0 955.6 950.0 940.0 925.0 925.0 920.0 900.0 872.2 860.0 825.0 824.0 680.0 650.0 898.5 1100.0 650.0 117.2

36.5% 30.3% 24.1% 18.6% 17.9% 16.6% 14.8% 14.8% 14.1% 11.7% 8.2% 6.7% 2.4% 2.2% -15.6% -19.4% 11.5%

1250.0 1250.0 1000.0 955.6 850.0 970.0 975.0 975.0 na 750.0 836.5 860.0 825.0 824.0 660.0 600.0 905.4 1250.0 600.0 181.9

1250.0 1250.0 1000.0 955.6 800.0 1000.0 975.0 1000.0 na 800.0 824.2 860.0 825.0 824.0 675.0 600.0 909.3 1250.0 600.0 181.6

800.0 800.0 1200.0 976.0 750.0 na 850.0 1100.0 na 950.0 824.9 na 850.0 862.0 654.8 550.0 859.1 1200.0 550.0 171.7

800.0 800.0 1200.0 976.0 725.0 na 850.0 1100.0 na 781.0 822.9 na 850.0 862.0 647.2 550.0 843.4 1200.0 550.0 172.6

800.0 800.0 1200.0 976.0 750.0 na 850.0 1150.0 na 781.0 823.3 na 850.0 862.0 630.0 550.0 847.9 1200.0 550.0 179.7

800.0 800.0 1200.0 976.0 750.0 na 850.0 1150.0 na 781.0 820.4 na 850.0 862.0 620.0 na 871.6 1200.0 620.0 164.2

US$

1200 1000 800

Palladium, Spot Price (PM Fixing), London Platinum and Palladium Market (LPPM)

Consensus Forecasts v Futures Prices

US$

925

Prices and Forecasts as of Survey Date

US$/troy ounce

Consensus

900 875

600 400 200 0 Jan 1993

850 825 800

NYMEX Futures

775

US$/troy oz

Dec 2011 Jun 2012 Dec 2012 Jun 2013 Dec 2013

Jan 1995

Jan 1997

Jan 1999

Jan 2001

Jan 2003

Jan 2005

Jan 2007

Jan 2009

Jan 2011

750 Spot

Palladium Futures ­ September 2011 Contract (NYMEX)

US$ 900

US$/troy oz, Daily High/Low/Close

850 800 750 700 650 Jan 2011

Feb 2011

Mar 2011

Apr 2011

May 2011

Jun 2011

Jul 2011

Steady Gains Expected Industrial demand for palladium is currently strong. Like platinum, palladium is benefiting from a return to growth in the auto industry as supply concerns, caused by the Japanese earthquake crisis, begin to ease. Meanwhile, investor demand for palladium has not been as strong as with other precious metals, though this may change as investors seek a cheap alternative safe haven asset to gold and platinum. Our panel is optimistic about the price of palladium, predicting a rise of 9.4% over the next year.

Palladium prices are fixed twice daily by the LPPM to provide a benchmark price in a practice used for other precious metals. Most palladium is used in catalytic converters. US Futures Market: NYMEX Pricing: US$/troy ounce Lot Size: 100 troy ounces Deliverability: Over 15 months including the next 3 calendar months; then a March, June, September and December cycle. Contracts Traded: 901,584 (2010). 25

Palladium Production and Consumption (2010)

Production % of world total 1. Russia 51.0 2. South Africa 35.3 3. North America 8.1 4. Zimbabwe 3.0 5. Others 2.6 Consumption % of world total 1. North America 31.7 2. China 18.9 3. Europe 18.0 4. Japan 15.3 5.Others 16.1

© Copyright Consensus Economics Inc. 2011

FACTORS AFFECTING COMMODITY PRICES

JULY 2011

In this month's special survey, we asked our panellists to rank the current ­ July 2011 ­ importance of a range of different factors (namely `demand/business cycle', `supply/production constraints', `government trade policies', `FX linkages/US dollar value' and `investment funds') in determining commodity price movements. Scores were assigned to each of the factors shown in the table below on a scale of 0 (no influence) to 10 (very strong influence). The consensus results are the averages of individual panellists' scores for each factor. Given that different commodities are influenced by a wide range of factors, we limited the variables considered to a common list of five factors which we asked our panellists to assess for each.

Consensus Ranking of Commodity Price Determinants (0 to 10 highest)

Dem and/ B u sin es s P ag e C yc le S u p p ly / P r o d u c ti o n C o n s tr a i n ts G o v e rn m e n t F X L in k a g e s / T rad e P o lic ies U S d o lla r V alu e I n v e s tm e n t Funds

C ru d e O il N a tu r a l G a s Coal U ran iu m

6 7 10 11

6 .0 6 .0 7 .7 7 .0

6 .3 5 .5 7 .7 2 .0

1 .7 2 .0 2 .0 0 .0

3.0 2.0 3.3 0.0

2 .7 2 .5 1 .3 0 .0

A lu m in iu m A lu m in a Copper N ic ke l L ead Z in c T in

12 13 14 15 16 17 20

8 .0 7 .0 8 .0 7 .7 7 .4 6 .8 6 .8

5 .1 5 .5 8 .0 5 .7 6 .8 5 .8 8 .5

2 .3 2 .0 1 .7 1 .2 2 .8 1 .0 4 .8

5.6 2.5 4.5 6.0 4.0 4.0 3.8

3 .9 1 .5 6 .0 4 .0 3 .2 3 .4 3 .8

S te e l Iro n O re

18 19

7 .5 7 .3

5 .7 7 .5

3 .7 4 .3

3.3 4.0

1 .0 1 .3

G o ld S ilv er P l a ti n u m P a llad iu m

22 23 24 25

5 .0 4 .0 6 .7 8 .0

3 .3 2 .0 7 .0 7 .0

0 .7 1 .0 1 .7 2 .3

5.7 5.5 3.7 3.7

6 .7 9 .0 4 .7 4 .3

Commodity prices, which were remarkably resilient to the 2009 global slowdown, are notoriously volatile and clearly influenced by a wide range of different factors. The importance of each factor varies from commodity to commodity and, for any given one of them, over time. This special survey on `Factors Affecting Commodity Prices' asks our panellists to compare and rate the differing degrees of sensitivity with which the price of different commodities respond to a range of influences. As these factors sometimes work in opposite directions, it should also help to determine which of them are likely to dominate. The graphs on the next page illustrate the direct relationships between commodity prices and some explanatory factors. A graph of the price of gold (US$/oz.) and the US dollar index (measured against a broad range of currencies) is shown first, as the former is traditionally considered a good long-term hedge against weakness in the latter. Both variables are correlated negatively with each other (the US$ index is plotted on an inverted 26

scale) and in recent times, that inverse relationship has been reinforced by the US dollar facing significant downward pressure on the back of worries over the health of the US economy and its public debt outlook. It is not uncommon for shortterm fluctuations from trend to occur during periods of heightened uncertainty, though, as fiscal pressures continue to weigh on other currencies relative to the dollar, too. The next graph shows the price of copper (US$/MT) and volume of imported copper products in China. Chinese demand for the metal remains high, but the chart does show some faltering over the course of 2010 and this year. The Chinese authorities, worried about the economy overheating, recently tightened monetary policy in a bid to rein in price pressures. This (coupled with signs of an economic slowdown) has hit copper imports, although latest data for June suggest a modest fillip in copper products entering the country. Copper prices, meanwhile, have climbed steadily on the back of hopes for Chinese demand to remain strong ­ and on signs

© Copyright Consensus Economics Inc. 2011

JULY 2011

FACTORS AFFECTING COMMODITY PRICES

The Price of Gold and the US Dollar (end month)

US Dollar Index (inverted - right scale)

of buoyant activity in the emerging markets. By contrast, the Euro zone and US are still going through a period of economic, fiscal and financial insecurity as their respective debt crises hit market sentiment. Indices of the Standard & Poor's 500 and the Economist Base Metals Index (bottom right chart) illustrate the magnified effect of financial volatility on metals prices. Lastly, the movement in the prices of crude oil (WTI) and US natural gas have shown a decoupling over the past two years ­ crude and natural gas are viewed as substitutes of each other. WTI has been lifted partly by worries over supply constraints, a factor rated as influential on its price by our panels (averaging 6.3 out of 10). Second to supply is world demand which, despite the economic moderation in the US and softness evidenced in the Chinese economy, is expected to remain robust. The ranking is down from our panellists rating of 8.2 last year, though, underscoring the loss in momentum amongst the two most important energy consuming countries. By contrast, government trade policies and investment funds are likely to have only a small impact on the price of WTI. Interestingly, our respondents awarded an 8.0 rating to `other factors' (not shown). This could represent many things but geopolitical risks, including civil war in Libya, possibly rank highly, as do refining constraints. `Demand/business cycle' is an influential factor affecting commodity prices, according to most of those surveyed, averaging about 6.8 out of 10 in total. Indeed, for aluminium, copper, steel and palladium, respondents ranked this particular determinant 8 out of 10. `Government trade policies,' in comparison, averaged a mere 1.8 for all commodities shown, perhaps reflecting the increasingly globalized nature of the world economy today. Interestingly, the impact of `investment funds' ­ which played an important role last year in the determination of metals' prices ­ has lessened this time around, with the exception of silver where it is rated 9 out of 10 in terms of importance and gold where it is rated 6.7. Gold is usually a dominant default commodity for speculators when equities and the US dollar are suffering.

(US$/oz.)

1600 1500 1400 1300 1200 1100 1000 900 800 700 600 500 400 300 200

Index

70

80

90

100

Gold (left scale)

110

120

130

Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Chinese Copper Imports* and the Price of Copper (end month)

Tonnes

110000 100000 90000 80000 70000 60000 50000 40000 30000 20000 Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

China Copper Imports* (left scale)

US$/MT

10000 9000 8000 7000 6000 5000 4000 3000

Copper Prices (right scale)

2000 1000 0

* Source: China General Administration of Customs

US$/ Barrel

160.00 140.00 120.00 100.00 80.00 60.00 40.00 20.00 0.00

Prices of Crude Oil and US Natural Gas (end month)

US$/ MMBtu

16

% change, y-o-y

100 80 60 40 20 0 -20 -40 -60 Jan 2002

S&P 500 Index and the Economist Based Metals Index

(Annual % change)

US Natural Gas (right scale)

Crude Oil - WTI (left scale)

14 12 10 8 6 4 2 0

Economist Base Metals Index

S&P 500 Index

Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Jan 2003

Jan Jan Jan 2004 2005 2006

Jan Jan 2007 2008

Jan Jan Jan 2009 2010 2011

© Copyright Consensus Economics Inc. 2011

27

Consensus Forecasts Percentage Changes From Spot Price JULY 2011 During the Next Ten Quarters

% Change

10.0

Crude Oil (WTI)

5.0

Aluminium

0.0

Steel - HRC, US

-5.0

Copper

-10.0

Gold

-15.0

-20.0 Spot Sep-11 Dec-11 M ar-12 Jun-12 Sep-12 Dec-12 M ar-13 Jun-13 Sep-13 Dec-13

SUBSCRIPTION FORM

Please enter my subscription to Energy & Metals Consensus Forecasts. My cheque in payment (US$745 or £380 or 555) for four quarterly issues, payable to Consensus Economics Inc. is attached. My address is as shown below:

NAME COMPANY ADDRESS

COUNTRY TELEPHONE

POST/ZIP CODE EMAIL SIGNATURE

Return this form to: Consensus Economics Inc., 53 Upper Brook Street, London W1K 2LT, United Kingdom. Tel: +44 (0)20 7491 3211 Fax: +44 (0)20 7409 2331 e-mail: [email protected]

See www.consensuseconomics.com for a description of our other products and services.

07/11 EMCF

28

© Copyright Consensus Economics Inc. 2011

Information

fx1jan05

28 pages

Report File (DMCA)

Our content is added by our users. We aim to remove reported files within 1 working day. Please use this link to notify us:

Report this file as copyright or inappropriate

265273