Market Briefing - May 18, 2009

Copper has enjoyed healthy gains in the recent past, particularly over April with monthly average prices rising by 17.5% on the previous monthto $4,407/tonne. The positive sentiment has continued into May, and stimulated by fund buying, which has allowed copper to hold onto most of its recent gains, the cash quote is trading around $4,700/tonne in mid May. Copper prices have also received support from the decline in inventories. Stocks on the LME, although still relatively high have now declined to around 374,000 tonnes, 32% below the cycle peak.

Market surplus expands in January
Last year the copper market was in an oversupply position on the back of falling demand. As we have highlighted in previous reports the supply response was not only late, but when it did come (gradually), it had little impact on “pulling back” inventories, which increased to cycle peaks; this saw the market register a surplus of 363,000 tonnes. More recent data by the International Copper Study Group (ICSG) suggests that the copper market saw a surplus of 155,000 tonnes in January. This compares with a 22,000 tonnes deficit in the same month last year. However we believe that the ICSG figures overstate the extent of the surplus.

> This article gives the introduction to our latest detailed analysis on the market. To access a full version of a recent detailed monthly report on the base metals markets plus a recent briefing update, click on the links below.

> Base Metals Market Briefing - December 9, 2008.

> Base Metals Market Briefing Update - December 16, 2008.

Disclaimer: Whilst every effort has been made to ensure the accuracy of the information used in this document, GFMS Metals Consulting cannot guarantee such accuracy and GFMS Metals Consulting does not accept responsibility for any losses or damages arising directly, or indirectly, from the use of this information.