Network Metals LLC

Chinese imports of refined copper over the last three months have been at record levels as many private and government entities in China sought to increase their stockpiles. However, as the price of LME copper has climbed to $4500-$4600 per metric ton, Chinese importers are backing off, citing decreasing margins between domestically produced material and imported LME metal. We still believe that we are seeing two separate copper markets: one in Europe, where demand is extremely weak, and one in China where buying is based on an arbitrage game and not reflective of true demand. For now, demand out of Asia for European copper is still relatively strong, but we continue to expect a sharp decrease in demand as the Asian hoarding of copper comes to an end.