<table><tr><th>From:</th><th>Daniel Sabba &lt;</th></tr><tr><td>Sent:</td><td>Tuesday, March 10, 2015 8:58 PM</td></tr><tr><td>To:</td><td>'jeevacation@gmail.com'</td></tr><tr><td>Cc:</td><td>Vahe Stepanian; Ariane Dwyer; '</td></tr><tr><td>Subject:</td><td>FW: EOD Commodities Note - 10 Mar [C]</td></tr></table>

Classification: Confidential

Prateek Jain Sent: Tuesday, March 10, 2015 4:57 PM Subject: EOD Commodities Note - 10 Mar

OIL

Brent continued its downward momentum today as USD s=rength added to the physical market weakness in the NSea.. Iraq exports we=e higher for first week of March, as weather normalized and the backed out=crude found its way back to sea. Kuwait's OPEC governor stated that they expect Opec to make no chang=s to its policy in the June meeting. Qatar's former minister of ener=y reiterated the same thing..Brent spreads remained weak, except for the p=ompt spread (+0.1) which expires this week..

On our side of Atlantic, EIA raised 2015 US oil prod=ction forecast by 50kbd while lowering the demand forecast by 30kbd. Forec=st for WTI was also lowered from $55.02 to $52.15 for 2015. Interestingly =TI spreads were trading stronger for first half of the day, but reversed the gain later on increasing produ=tion worries. Arb ended up $0.6 today, and market positioning seems to be =n the upside here..

API data just came out and WTI jumped up as data sho=ed a draw of 400kb across US. However Cushing built 2.2m bbl, which if val=dated by DOEs tomorrow is much more bearish than Genscape, and could take =rb back below $9.

Oil Vols

Vols took off today as both crudes came off and put =kew got bid again. Jun vol spread widened to about 3%. I believe it'= an attractive buy below 1.5% (buy WTI call, sell BRE call to add a synthe=ic long arb position along with vol view).

&=bsp; &nb=p; =nbsp; WTI (/change) &=bsp; &nb=p; BRE (/change) J15 &nbs=; =nbsp; 49.40% +4.00% &nbs=; =3.90% +10.0% M15 &nbs=; =nbsp; 48.35% +3.90% &nbs=; &=bsp; 45.50% +3.00%

<table><tr><th>Z15</th><th>&amp;=bsp;</th><th>&amp;nbs=;</th><th>35.60%</th><th>+2.20%</th><th>&amp;nb=p;</th><th>=35.35% +2.85%</th></tr><tr><td>Z16</td><td>&amp;nbs=;</td><td>&amp;=bsp;</td><td>27.40%</td><td>+1.75%</td><td>&amp;nbs=;</td><td>&amp;=bsp; 27.55% +1.90%</td></tr></table>

Base Metals

<table><tr><th>3m Ms</th><th>&amp;nb=p;</th><th>=nbsp;</th><th colspan="3">dod change&amp;nbs=; support</th><th>&amp;nbs=;</th><th>&amp;=bsp; resistance</th></tr><tr><td>Al $1765</td><td>&amp;n=sp;</td><td>=</td><td>-$15</td><td>&amp;nb=p;</td><td>=nbsp; $1750</td><td>&amp;n=sp;</td><td>= $1800</td></tr><tr><td>Cu $5765</td><td>&amp;n=sp;</td><td>=</td><td>-$107</td><td>&amp;n=sp;</td><td>&amp;nbs=; $5700</td><td>&amp;=bsp;</td><td>$5800</td></tr><tr><td>Zn $2022</td><td>&amp;n=sp;</td><td>=</td><td>-$20</td><td>&amp;nb=p;</td><td>= $2000</td><td>&amp;n=sp;</td><td>$203=</td></tr><tr><td>Ni $14,080</td><td>=nbsp;</td><td colspan="2">&amp;nb=p; -$425</td><td></td><td>=nbsp; &amp;n=sp;</td><td>$14,000</td><td>&amp;nb=p; $14,350</td></tr><tr><td>Pb $1813</td><td>&amp;n=sp;</td><td>=</td><td>-$25</td><td>&amp;nb=p;</td><td>= $1750</td><td>&amp;n=sp;</td><td>$185=</td></tr></table>

A strong dollar is responsible for the weakness in t=e base complex, hitting highs against the Euro and the Yen as the head of =he Dallas Fed announced that they should end loose monetary policy and hik= rates soon, contrasting with the ECB's quantative easing. Copper, Nickel and Zinc supports were=all broken, as the gains of recent days came off. There is expected =o be a ramp up in state grid tenders from April onwards and is likely to i=crease demand but in the short term demand remains weak. The State Grid Corporation of China is expected to increase investme=t by 9% this year, last year it accounted for almost half of the 8.7 mMT C=inese copper consumption. Chinese smelters have signed the first ter= deal of 2015 to buy- 300kMT of blended copper concentrate from Chile's Codelco after buying the new blend o= the spot to trial it last year. The Spot Treatment and Refining Cha=ges that the smelters receive for the contract are at $117/MT vs $115/MT l=st Friday for standard concentrates last Friday. The continuing drought in Chile is keeping concerns about copper supplies =igh. A court order to demolish part of a dam that would close the Pe=ambres mine is to be appealed as local demonstrators continue disrupt oper=tions at the mine over concerns about water usage. Rusal sees Q2 aluminum premiums stabilizing due to incr=ased industrial activity in the US EU and Asia and that a weaker arb will =imit Chinese semi finished exports. Standard Chartered sees 6.7mMT/a=num of local smelters shutting down if premiums drop to - $333. Environmental legislation could cut up to 26.2 kMT of=NPl in the next 4 months. Mitsui Mining and Smelting Co Ltd, lapan&#=217;s biggest zinc smelter sees prices recovering to -$2300 in Q2 as a glo=al deficit that is expected to last until 2017 kicks in.

Shanghai Aluminum on warrant stocks are up 1.44% to =8 kMT. LME Aluminum on warrant stocks are up 0.49% to 1766 kMT Shang=ai Copper on warrant stocks are up 2.44% to 69 kMT. LME Copper stocks are =p 1.27% to 279 kMT. LME Nickel stocks are flat at 310 kMT.

Copper Vols are down 0.75%, Ali Vols are unch, Nicke= Vols are up 1.5%, Lead Vols are unch Zinc Vols are unch<=p>

Upcoming Data

10/3- China CPI YoY- Surv 1%, Actual 1.4%, Pr=or 0.8%

Regards,

Prateek

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