Commodity review
	COMMODITY PRICES
	Strong commodity demand stemming from rapid economic growth in China and elsewhere in the world boosted mineral and metal prices during the last 18 months. Favourable market conditions are expected to continue in 2005, especially in terms of bulk commodities, which will generally remain in short supply.
	Steel production worldwide rose by more than 7%, both in 2003 and 2004, driven to a large degree by increased output in China of more than 20% per annum. Iron ore contract prices rose by 18,6% in April 2004 (graph below), but strong demand for ore in China resulted in spot prices in that country at times being more than double the equivalent contract prices. The shortage of iron ore is expected to continue and the first settlements for 2005 indicate significant contract price increases in the region of 71,5%.
	Contract prices for hard coking, semi-soft coking and thermal coal increased in 2004 by 25%, 43% and 64%, respectively. Further significant increases have been negotiated for 2005. Early price settlements for hard coking coal were above US$120/t, more than double the 2004 price. Prices for semi-soft coking coal have been settled at some 85% above the 2004 price and that for thermal coal at about 20%. The average RBCT spot thermal coal price was 78% higher in 2004 than in 2003, but the average for 2005 is expected to be similar to or somewhat lower than the previous year.
	The LME cash zinc price rose from about US$800/t in early July 2003 to more than US$1 200/t in December 2004, an increase of over 50%. The average price in 2004 was some 27% higher than in 2003. Zinc stocks started declining significantly in late 2004, a trend that is expected to continue in 2005. Analyst consensus suggests that this should lead to a further increase in the average price of zinc in 2005 of between 10 – 20%. However, due to extremely tight market conditions in the zinc concentrate market, treatment charges are expected to remain severely depressed in 2005, comparable to the situation in 2003 and 2004.
	Despite an estimated increase of some 8% in world titanium dioxide pigment demand in 2004, titanium dioxide feedstock prices were similar to, or lower than, the relatively depressed prices of 2003. This was due to a significantly oversupplied market. A moderate improvement in prices for titanium dioxide feedstock is possible in 2005. Unlike the other heavy mineral sands products, zircon experienced extremely tight market conditions and prices increased in 2003 and 2004 by 15 – 20% per annum. A similar increase is expected in 2005.
	Due to the weakening of the US dollar against the currencies of commodity producing countries in 2004, price increases in the currencies of these countries were significantly less than in US dollar terms. The 18,6% increase in iron ore prices in US dollars for 2004, for example, was on average only 4,7% in Australian dollar terms and 1,1% in South African rand terms. The US dollar is expected to remain weak against the currencies of the most important commodity-producing countries in 2005.
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