Base Metals Outlook
The Evaporating Copper Surplus - Fundamentals
Support Higher Prices

Over the past few weeks we have continued our review of the copper
market in light of strong prices, sustained demand, ongoing real and
potential supply disruptions, and increased uncertainty over the timing of
future supply increases.

While funds flow has clearly supported the rapid price rise in recent weeks
due to the low U.S. dollar and the inflation hedge trade, we are now of the
view that higher copper prices for the 2008-2010 period can at least be
supported by fundamentals as well.

While we still anticipate a late spring/summer price correction, our new
supply demand forecasts suggest the copper market is heading for further
deficits in 2009, and the small surplus in 2008 could easily swing to deficit if
operating disruptions continue at current levels, despite a U.S. slowdown.

We have increased our 2008, 2009 and 2010 copper price forecasts
materially to US$3.65/lb; US$4.00/lb; and US$3.50/lb, respectively. We
have also adjusted our EPS and CFPS estimates and our price targets for
those companies with exposure to copper. Upgrading EQN to SP as of 4/20.