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Metals & Resources Newsletter 3rd January 2008

Raw Material prices to hold at current levels in 2008

Strong economic activity in emerging markets and a further depreciation of the US dollar

should help commodities maintain their current prices in 2008. Further interest rate cutscan be expected in the US and inflationary pressures in Europe remain high despite a

slow growing region. This bleak outlook for developed economies contrasts strongly with

the high levels of growth in recent years experienced by emerging markets such as China,

India, Russia, Brazil and increasingly African countries such as Angola. It is indeed growth

in the BRIC countries and the rest of the emerging markets that is moving the world

economy with China growing by more than 10% in 2007, Brazil at 5.2%, Russia at over7% and India the same. China’s incessant appetite for commodities will see raw materials

and base metals remain at current levels or even experience further upward pressure in

2008. Any slowdown or recession in the US will likely affect commodity prices onlyslightly, albeit it will likely still impact exports into the US from emerging economies. In

turn, these emerging economies will see their own markets growing quickly and making

up for the slowdown in exports into North America and Europe. This trend started in 2006

with strong demand for raw materials and base metals in all emerging markets, for

example in Brazil where car production was the best ever with more than 2.4 million units

being produced in 2007, a 12.6% increase on 2006, and the construction industry surging

7% as relatively low interest rates lured millions of consumers. A further devaluation ofthe US dollar might be on the books for 2008 should monetary policy be further relaxed to

trigger growth. As we have seen in 2007, commodities would gain in light of this

devaluation in 2008 or at least maintain their current levels.

John Reeves – Metals Analyst, +353 86 811 6998

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 About Metals & Resources

Metals & Resources first started trading aluminum out of its offices in Sao Paulo, Brazil in

2004. By working closely with the leading aluminum mills in Latin America, Metals & Resources was able to develop strong relationships with North America’s and Europe’s

leading metal stockholders and distributors offering flat rolled as well as extruded

products with particular focus on quality and delivery.

By the end of 2004, Metals & Resources was responsible for monthly shipments of 100

MT. Continuing on a straightforward strategy of high quality products paired with highstandard service, the company expanded commercially into the Middle East and Asia,

and by the end of 2006 was shipping nearly 500 MT a month all over the world. In 2007,Metals & Resources commenced exporting aluminum and stainless steel from China,

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Korea and Japan. Today, Metals & Resources has offices in Sao Paulo, Brazil and Dublin,Ireland and clients in Europe, North America, Africa and Latin America.