Market Briefing - July 21, 2008

Copper prices continued to reach new heights in early July, finding support from a number of factors including the low level of LME stocks, currently around 128,000 tonnes. Global exchange stock levels at the end of June – LME, SHFE and COMEX – were well down on the start of the year at 164,766 tonnes, down 31% y-t-d. Higher power costs, supply disruptions and dollar weakness also supported the price. However, in mid-July, there was a correction on the back of concerns about the impact of higher oil prices and the credit crunch on economic growth. We expect that demand weakness rather than supply tightness will be the dominant factor that will affect prices during the remainder of the year.

Prices reached a new all-time high of $8,985/tonne on July 3, with further support coming from strike action in Mexico and Peru. The most recent of which was a week-long national strike in Peru, which ended on July 6. However, the new high proved unsustainable and as such prices have now dropped back towards $8,000/tonne in mid-July.

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