Network Metals LLC

***Many analysts are saying that Rio Tinto (LON:RIO) and Alcoa (NYSE:AA), among others, are inevitably going to have to institute further production cuts across the board, which is something we have been inclined to agree with over the past few weeks. The needs for continuing cuts only justifies the position that demand is just not there, and will not be for the near future. An independent study we saw yesterday said that copper should average $3,400 per metric ton in 2Q09 (its April 3 close was just over $4,300). Even still, copper is continuing its climb up the charts today and is approaching $2.00 per pound; however the fundamentals are just not there and three-month futures are beginning to fall off. Gold jumped up yesterday
with the shaky equities, and a further fall for copper is likely as more investors come around to what one analyst told us was a “foregone conclusion” – that the fundamentals for base metals and steel are still unsound, and do not justify the sustained climb that copper has recently seen.

***Reports out of Hunan Province in China suggest that aluminum smelters throughout the province have been ‘persuaded’ to restart idled furnaces in order to reach local GDP growth projections for 2009. The Chinese government will in turn help out the smelters with tax breaks and loan interest subsidies, which should keep them profitable in the short term. This amounts to a metals industry version of water torture for the rest of the world’s aluminum producers; it is really amazing what a little ‘persuasion’ from the Chinese government can do, and at the expense of the rest of the world…

***Please note that this will be the last newsletter this week due to the Easter and Passover holidays.