Copper prices "disconnected" from fundamentals: General Cable

Washington (Platts)--2May2006

Rapidly escalating copper prices have become "disconnected" from market
fundamentals as a result of individual and institutional speculators entering
the commodities markets, copper fabricator General Cable said Tuesday.

Speaking to investors and analysts during a first-quarter conference
call, company president and CEO Gregory Kenny noted that global exchange
inventories had reached depressed levels, similar to the low levels seen in
the fall of 2005. "This alone cannot account for the roughly 100% increase in
copper prices since that time. Investors and speculators have entered the
commodities markets, encouraged by a multi-year commodities boom, including
oil, gold, silver, copper, aluminum, as well as certain agricultural
commodities," he said.

New mutual funds and exchange-traded funds have made it easier for retail
investors to enter the commodity markets, Kenny added. "I believe these new
funds and speculative investors are fueling the increase in commodities prices
as well. It appears that the price of copper and the fundamentals of supply
and demand have become disconnected over the course of the last 12 months," he
said.

Kenny added that by some estimates, the financial impact of speculator
activity on copper prices is anywhere between 70 cents/lb and $1.50/lb. "It
certainly creates a challenging environment for a company that will consume
approximately 500 million lb of copper in a year," he said, referring to
General Cable.

The company will continue to look for ways to pass on the costs of raw
materials, Kenny said. "We will continue to be diligent in our efforts to
recover raw material inflation, achieve a fair price for finished products
increasingly in limited supply, and manufactured in a very volatile sourcing
environment, as well as work with our customers to creatively reduce total
delivered costs," he said.

--Nick Jonson, nick_jonson@platts.com

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