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Laggard lead underperformed against the base metals complex despite gaining 3.3% of value to post an LME price $2373/t at the month end. Lead traded within the confines of $2300 2400/t during August except for a one day price spike up to an eight month high just over $2450/t prompted by mine supply worries stemming from UN sanctions against North Korea. These actions against the pariah state include a ban on lead ore exports of which China is the only taker. This followed on the tails of news that an earthquake in China's Sichuan region could restrict concentrate output. These gains in price were offset from the affects of geopolitical tension again centred on North Korea as increasing bellicose language was exchanged between the leaders of that country and the United States. Worries over the availability of refined metal persisted with stocks continuing to fall on the London and Shanghai metal exchanges although the former has seen a brief levelling off but which is unlikely to persist. Pressure remains on raw materials supply too with a further tightening of North American and Chinese scrap supply just before the peak refined metal demand in the lead up to the seasonal high of the northern hemisphere winter. Evidence for the anxieties affecting smelters' supply worries comes from a further slight fall in treatment charges to range $30 40/t CIF MCP flat for low medium silver concentrate and $20 30/t for high silver material. The current positive arbitrage of $76/t between the LME and SHFE prices equates to an additional $43/t of concentrate in revenue for Chinese smelters. Lead key forecasts 2016 % 2017 % 2018 % 2019 % Global (kt) Mine production 5329 0.5 5288 0.8 5592 5.7 5972 6.8 Refined production 12263 3.8 12409 1.2 12874 3.7 13510 4.9 Consumption 12286 4.1 12544 2.1 12910 2.9 13497 4.5 Concentrate balance 6 123 10 20 In days of requirement 33 24 24 24 Refined market balance 23 135 35 13 In days of requirement 42 38 36 34 Prices Cash LME Price ($/t) 1870 2304 2425 2350 (c/lb) 84.8 104.5 110.0 106.6 Realised TCs ($/t conc) 184 132 132 144 Source Wood Mackenzie

What s changed? The main changes since the March 2017 LTO centres on an upward revision to global demand growth and lower short term growth in Chinese smelter output. These adjustments further reduces our projections for global market balance. We now expect the market to be in a balanced position over the next few years with a move to a slight deficit in 2019. However it should be noted that the market still continues to carry a high level of inventory over the medium term. Our global demand growth estimate for 2017 has been revised up to 5% versus 4.8% previously. 2018 growth is also slightly higher than the Q1 LTO. Higher demand growth in the world ex China is the main driver for our upward adjustment to short term demand expansion. Better than expected offtake in Europe Asia ex China and Latin America more than offsets slightly weaker growth in North America We maintain our China primary aluminium demand growth for 2017 at 7.3% with growth decelerating to 5.7% by 2019. Our forecast for China s long term trend growth is slightly lower at 1.9% over the 2016 2035 period compared with 2% previously. Between 2017 2035 we project the market to add 24.7 Mt of additional primary metal demand. China s conflicting signals on primary metal output suggests some uncertainty for the near term supply outlook. A clampdown on unauthorised smelters and the possibility of future environmental related restrictions in output continues to be met with a still healthy pipeline of new projects and still firm reported output growth. High LME prices are either incentivising potential restarts and/or keeping high cost smelters in operation. The above translates to a global market surplus of just around 400 kt in 2017 followed by 220 kt in 2018 and a nominal deficit of 200 kt in 2019. In short the market is now much tighter than our Q1 LTO projection. Moving forward the risk is that if China fully executes planned output restrictions the global balance could well move into a larger deficit position than we are currently showing. Since the start of 2017 LME prices have continued to build upward momentum on China cutbacks and better than expected demand conditions. We expect this generally positive tone to be maintained over the remainder of 2017 with prices expected to average $1867/t for the year up $263/t on the 2016 annual average. Prices are finding good support currently at levels around $1850/t supported by value buying . The still high level of global inventories will cap any significant push in prices above $2000/t on an annual average basis for the next few years. We now expect the annual average price to hit $2000/t in 2020 two years earlier than in our previous LTO report. We maintain our long run incentive price for alumina at $360/t and aluminium at $2000/t. Despite the cross currents of smelter news emerging from China since the start of 2017 the thrust of our forecast has remained relatively unchanged. China is expected to add capacity and increase year on year production over the foreseeable term. Output is forecast to increase from 32.5 Mt in 2016 to 42 Mt in 2021. World ex China output is forecast to increase from 26.8 Mt in 2016 to 31.6 Mt in 2021 up 18% on the back of strong growth mainly in India and the Middle East. Output is relatively steady at all time highs in 2017 (74.4 ktpd) but is expected to move higher near term as Vedanta fully commissions the 1.25 Mt/a Jharsuguda II smelter. Beyond 2018 Aluminium Bahrain's Line 6 expansion will add about 500 ktpa capacity. At current aluminium prices the pressure to curtail output has been diminished. Global aluminium output is set for a period of modest near term synchronised growth. Alumina output curtailments coupled with a surge in Chinese demand (restocking and rising metal output) had the desired effect in May arresting the long global price decline since January. Prices turned sharply upward and currently reside around RMB2631/t (US$386/t) in China domestic market and US$305/t in Australia or 16.4% of the LME aluminium cash price up from US$272/t or 14.4% in May. The prospect of smelter curtailments in China is weighing on the alumina market and making buyers suddenly more cautious. Alumina prices are not expected to reach the recent highs seen in December/January due to a supply overhang in China while a similar situation is seen ahead in the World ex China region. We have raised our outlook for China's import requirement of bauxite following confirmation that two new refineries are advancing towards starting late this decade or early 2020s. This sees our prediction for China's import requirement rise a modest 10 Mt from the 75 Mt to 85 Mt. Demand update We project global primary long run demand growth at 2% p.a. unchanged from our previous LTO. China s share of global demand is expected to fall from 53% in 2016 to 52% by 2035 demand growth there will increasingly be driven by greater use of secondary metal. We also expect lower shares for mature markets such as North America and Europe over the forecast period. In contrast Asia ex China will see its share of the global demand pie rise from 13% in 2016 to 16% driven my newly emerging markets and rising intensity of use. For 2017 we expect global demand to increase by 5% (4.8% previously) and to remain above 4% over the next three years. Transportation construction and consumers durables will be the main drivers on a sectoral basis. Prospects for demand growth in Europe have surprised on the upside over the past 6 months. Uncertainty over political events in the region have dissipated with (for now) the trend towards rising populism being kept in check. The return to some semblance of political normality has triggered greater business and investor confidence and feeding through to better than expected offtake. We estimate European demand to grow by 2.1% versus 1.7% previously driven by the automotive and construction sectors as well by greater confidence in pipeline restocking. We expect this momentum to be maintained through 2018 with growth reaching 1.9% (1.7% previously). In contrast our 2017 outlook for North American growth has been trimmed from 1.7% to 1.3%. Political uncertainty surrounding the Trump administration has dented investor confidence coupled with question marks over the much promised spending plans for infrastructure. Nevertheless we do expect demand growth to show some resilience further out driven in particular by the automotive sector. Between 2016 2021 we project growth at 1.7% p.a. We have adjusted up our 2017 demand growth prospects in Asia ex China from 3.1% to 3.5%. Much of this is driven by an upward revision to Indian demand. The main risk to the region comes from rising protectionism which could slow demand growth in the region given its dependence on global trade. Though this should be tempered to some extent by rising internally generated economic growth and aluminium demand especially in end use sectors such as construction power and consumer durables. By end use we maintain a positive outlook for the transportation power and consumer durables sector. Aluminium continues to make gains against steel across a range of applications in the transportation sector driven by greater weight reduction opportunities and recyclability. It is not just demand from the automotive sector that will benefit but also in trucks buses and mass transit systems. In power distribution aluminium continues to gain market share at the expense of copper in the high voltage sector particular in developing economies where there is room for a build out of basic infrastructure. Demand will also benefit from the growth in consumer durables particularly in the computer and mobile technology sector. Longer term we expect the metal to be under threat from new materials such as composites plastics and ceramics across a range of end use applications. Here we expect aluminium to be a complimentary metal used in conjunction with other materials. Supply update Global smelter output is estimated at 62.5 Mt in 2017 up 5.4%. World ex China comprises 27.6 Mt up 3%. China is estimated to contribute 34.9 Mt up 7% from 2016. China s aluminium output prospects have been swayed by strong cross currents so far in 2017. Efforts to curb pollution in key regions around Beijing resulted in a plan to limit smelter production in the major production zones of Shandong and Shanxi provinces. Ramped up environmental inspections and stricter enforcement of rules against unauthorised project construction also threaten capacity and production growth. At the same time the drumbeat of producer plans to add capacity projects marches on. Producers have increased capacity addition plans to about 5Mtpa in 2017 of which 2 Mtpa is scheduled for completion through Q2 2017. Monthly output appears set to trend higher after being relatively flat since Q4 2016 (91.5 ktpd) through the first five months of 2017 (91.3 ktpd / 33.3 Mt/a). However the authorities have announced a new round of inspections in Xinjiang and Shandong provinces which could result in additional cuts. Hence uncertainty in the market environment due to new expectations of added cuts. We are maintaining (for now) our original estimate of 2017 output at 34.9 Mt up 7% given that we earlier anticipated some cuts and the possibility of some capacity completions that may be mothballed. Further out we project Shandong Xinjiang and Inner Mongolia to contribute most of China s total output increase (9.6 Mtpa) by 2021. Most notable is Weiqiao's plans to raise output from 5.8 Mt to 9.6 Mt by 2021. World ex China output is forecast to increase from 26.8 Mt in 2016 to 31.6 Mt in 2021 up 16% on the back of strong growth mainly in India and the Middle East. Output is relatively steady at all time highs in 2017 (74.4 ktpd) but is expected to move higher near term as Vedanta commissions three 312 ktpa lines of the Jharsuguda II smelter while it evaluates the start up date of the fourth line. Beyond 2018 Aluminium Bahrain's Line 6 expansion will add 500 ktpa to output growth. At current LME/SHFE prices the pressure to curtail output has been diminished. Global aluminium output is set for a period of modest near term synchronised growth. Global aluminium prices will provide support for new output and re starts through 2017 and into 2018. Better than expected metal demand in China will also provide the incentive for output gains over the next few years. We estimate that global alumina output will reach 128.5 Mt in 2017 up 6.1% from the year ago level. World ex China production is seen at 61.5 Mt up 3.8% while China output is pegged at 67 Mt up 8.3%. World ex China 2017 output growth is supported by startup of the 1 Mtpa Ketapang refinery in Indonesia and the 600 ktpa NhanCo refinery in Vietnam as well as restart of the 1.65 Mtpa Alpart refinery in Jamaica. The seaborne bauxite market is heading towards oversupply as new projects chiefly in Guinea more than meet China s growing demand. We see no need for new capacity from highly probable and probable projects until the early 2020s. Supply demand balances update We now expect a significantly reduced global surplus over the next two years with 2019 likely to show a nominally deficit market. If China follows through with proposed output cuts and curbs on new capacity the market could easily tip into a more significant deficit in 2018 and 2019. We anticipate a market surplus of around 400 kt this year followed by an essentially balanced market in 2018 and 2019. Despite the positive fundamental tone global inventories still remain at elevated levels with stocks in terms of days of consumption at 85 days in 2017 and falling to 78 days in 2020. Our long term average is 70 days. Against the background of better fundamentals and the possibility that China output cuts could tip the market into a more defined deficit LME prices have continued to build upward momentum over the past 6 months. A weaker US dollar has also helped to keep prices elevated. We now expect the LME cash price to average $1867/t in 2017 rising to $1916/t by 2020. However with prices trading at well above the $1800/t level the incentive to re start idled capacity or even to reactivate previously idled plans for new capacity additions may be too tempting. Either in China or outside there are no shortages of projects that could be activated. Alumina output curtailments coupled with a surge in Chinese demand (restocking and rising metal output) had the desired effect in May arresting the long global price decline since January. Equally predictable however was that the sharp upturn in the average China domestic price from about RMB2273/t (US$329/t) to RMB2655/t (US$391/t) in June resulted in higher alumina capacity utilization and softening prices. That and the prospect of added smelter curtailments is weighing on the alumina market and making buyers suddenly more cautious. Of course the China market sentiment feeds directly into the Australian spot alumina market where the price has also slipped modestly in recent days to about US$305/t or 16.4% of the LME aluminium cash price up from US$272/t or 14.4% in May. For the remainder of 2017 and 2018 much will depend on re start of the 1.65 Mtpa Alpart refinery under new Chinese ownership. World ex China is SGA balanced in H2 2017 and a smooth resumption of output has the potential to switch the market back into surplus by mid 2018. Likewise the 2 Mt/a Al Taweelah refinery in Abu Dhabi is expected to begin commercial production in Q3 2018 adding downward pressure to SGA prices if the start up goes well. The World ex China market could be in a 2 3 Mt surplus by 2019. Matching China s import requirement against potential supply sees Wood Mackenzie s value adjusted real 2017/t marginal supplier price to China fall from the high US$40s per tonne of bauxite to around $43/t in the longer term. The price is independent of cost and freight inflation factors. We have redesigned our Q2 and Q4 long term reports in response to client feedback. The new slidepack format will better highlight key developments and changes in the market. The new style slidepacks come attached with all the usual Excel data files and provide a more accessible summary of the changes from our main reports in Q1 and Q3 outlining the key points you need to know. The slidepack and datafiles are available in the downloads section. We hope you enjoy the new format and welcome any feedback you have.

Key Points Voluntary and involuntary mine production cuts in 2015 and 2016 have caused the rapid draw down of global inventories of zinc concentrate during 2016 and as a result global stocks of concentrate fell to minimum working levels (equivalent to 30 days of smelter requirement) by the beginning of Q3 2016. In 2017 low concentrate stocks have constrained refined production in China. These constraints together with global demand growth of 3% are depleting stocks of refined zinc which are forecast to fall to critically low levels (equivalent to 40 days of global consumption) during the second half of 2017. With constraints in the concentrate market limiting metal production stocks are forecast to remain at depressed levels until 2021. Such low stocks will provide fundamental support to higher prices which as was seen in 2016 will be amplified by investor interest. As a consequence the price is forecast to climb from current levels of close to $2500/t to a cyclical peak of $3875/t in 2018. Such high prices are forecast to encourage an increase in mine production replenishing stocks of concentrate. Elevated stocks of concentrate in 2021 will allow smelters to maximise production. Stocks of refined metal are forecast to reach more than adequate levels in 2022 The replenishment of stocks of concentrate and metal will undermine the zinc price which is forecast to fall from the cyclical peak and average $2700/t (real) in the long term. Demand what's changed? Changes to our country by country forecast consumption are listed in the accompanying downloadable file named demand_main_changes_zinc_lto_q2_2017.xls. The changes to our consumption forecasts reflect our updated forecasts for industrial production GDP and our analysis of the latest economic and trade statistics. The cumulative net impact of these changes is that global zinc consumption is forecast to be 505kt higher over the period 2017 2022 period compared with the previous forecast last quarter. The most significant changes have been in Europe and Asia. In Europe rising consumer and business confidence has lent momentum to the economic recovery and boosted zinc demand from the automotive white goods and construction sectors. In China the particularly strong start to the year has prompted us to increase our consumption forecast for 2017 this higher base is also forecast to result in higher consumption in 2018. However thereafter economic growth in China will be less zinc intensive and we have downgraded our forecasts As a consequence global zinc consumption is forecast to grow by 3.0% (2.6% previously) in 2017 to 14.7Mt. For the period 2017 2022 global growth is forecast to grow at an average annual rate of 2.4% p.a. Over the balance of the forecast period growth is forecast to average 1.4% p.a. This compares with the 1990 2015 average of 2.8% and reflects the fact that the emergence of China as a global economic force and driver of zinc consumption will not be replicated by any other nation for the foreseeable future. Supply what's changed? Changes to our mine and smelter production forecasts are listed in the accompanying downloadable file named Supply_main_changes_zinc_lto_q2_2017.xls. The changes include revisions to 2017 forecasts based on first quarter company data new company guidance data collected from site visits and analysis of mineral resource estimates. The net impact of these changes is that global mine production capability is forecast to be 430kt Zn higher and global smelter production capability 4Mt lower over the period 2017 2022 period compared with the previous forecast last quarter. We have included the Neves Corvo Zinc Expansion Project which will double zinc output to 150kt/a Zn at the mine in Portugal from 2020. We also now expect Suplja Stijena to close by around 2020 and include a few other minor changes to European mine production capability. In Bolivia we assume higher output at San Cristobal to 2021 as higher zinc grade ores are mined from 2016. Also in Latin America the ramp up of Castellanos in Cuba is now assumed to be slower. 2017 production at a number of Peruvian mines has been lowered as Q1 output was affected by bad weather and flooding. Output at Cajamarquilla smelter was also reduced as flooding disrupted concentrate shipments. Production guidance for Lalor Lake and Flin Flon mines has been included in North America reducing output later in the forecast period. In the USA the Red Dog mine s 2017 production has been reduced on lower expected ore grades and mill recovery as the mill treats more complex transitional ore from the Qanaiyaq pit. The China mine production capability estimate for 2016 has been reduced slightly since last quarter following inclusion of our latest mine production survey. 17 mines added. Elsewhere in Asia Duddar mine in Pakistan has resumed its ramp up. China smelter production capability has been revised down by 1Mt in 2017 based on our latest survey data. The Zhuzhou (400 kt/a) and Shuikoushan (80 kt/a) smelters are to close and be replaced by a new 300kt/a unit at Shuikoushan.

Key points The trajectory of global mine supply has been at the forefront of copper market discussions over recent months with mine output (after disruptions) set to shrink for the first time since 2011 this year. In terms of the refined market balance however the impact will be partly mitigated by a forecast draw down in concentrate and blister inventories as well as higher scrap consumption at both smelters and refineries. This will support a slight increase in refined production. The improvement in scrap availability which has materialised so far this year on the back of higher than anticipated prices has also constrained growth in refined consumption. Indeed whilst we have upwardly revised our total consumption forecast for this year the bulk of this is reflected in higher use of direct use scrap at semis fabricators rather than refined copper. Overall this year the copper market will effectively be in balance with stocks drawn down marginally to 74 days of consumption. We have kept our annual average price forecast unchanged for 2017 at $5678/t ($2.58/lb). Concerns remain about the sustainability of Chinese demand strength over H2 and coupled with an expectation of an appreciating US dollar and higher interest rates it is difficult to see copper prices rising significantly over the remainder of 2017. Our running total for identified mine disruptions for the year now stands at around 530 kt. This represents just over half of our generic 5% disruption allowance and reflects in particular losses at what were initially slated to be the three largest producing mines this year Escondida Grasberg and Cerro Verde. The conclusion of strikes at Escondida and Cerro Verde as well as the signing of a temporary agreement between PT Freeport Indonesia (PTFI) and the Indonesian government facilitating the resumption of concentrate exports from Grasberg until 10th October has helped to quell some concerns over near team supply. However several upcoming labour negotiations as well as plans of an indefinite nation wide strike in Peru in mid July to protest "anti labour" government proposals could yet see mine output curbed further over H2 2017. A return to positive growth in mine supply in both 2018 and 2019 will reflect the last wave of projects and expansions that are set to hit the market from Escondida Toquepala Kamoto/KOV restart Mopani Cobre Panama Sentinel and Bystrinskoe. This will result in no material change in cathode inventory levels over the next several years given moderate demand growth. Beyond 2020 we expect a strong recovery in prices. This will provide sufficient confidence to encourage producers to reactivate shuttered mines and undertake incremental expansions mine life extensions and eventually develop greenfield projects. Scrap SRB and exchange stock releases will provide a buffer to any initial shortfall in incremental mine supply that will be slower to emerge. The long lead times (7 10 years) required to bring new capacity into production means that there will be a period of consistent supply deficits between 2021 and 2024. As a result metal inventories will have been eroded to just 55 days of consumption by 2024 and considerably below equilibrium levels of 65 days pushing prices to a peak in that year. Once new supply starts to reach the market surpluses should emerge from 2025 with prices reversing their upward trend falling to our forecast long term incentive price level of $7275/t ($3.30/lb) in constant 2017$ by 2026. Demand update Global refined copper usage is projected to grow by 1.7% in 2017. This will take refined consumption to 22.8Mt this year unchanged from our previous forecast. In China performance within a number of end use markets has been strong since the beginning of this year with the housing and appliance sectors particularly buoyant. Greater use of direct use scrap at semis plants has however partly restricted the feed through to refined copper consumption; this is a theme which has been replicated elsewhere across the globe. For the period 2016 21 global refined demand is expected to continue on a moderate growth path averaging 1.8% p.a. Longer term for the 2016 2035 period as a whole refined consumption is expected to grow by 1.2% p.a. This compares with the 2000 2015 average of 2.8% and reflects our expectation that the emergence of China as a global economic force and driver of copper demand will not be replicated by any other nation to anything like this extent for the foreseeable future. Chinese refined copper demand is expected to grow by 0.8% from 2016 2035. Consumption will remain supported by strong investment in the distribution grid before 2020 whilst the ongoing growth in the adoption of EVs will buoy demand from the mid 2020s in particular. Further forward replacement of old cables and renovation of aging buildings will play an increasingly important role for China s total copper consumption after 2030. However wider application of aluminium alloy cable will pose a threat to copper demand whilst direct use of scrap is expected to gradually increase and erode growth in refined copper consumption. Meanwhile the world ex China is expected to contribute stronger performance than that seen over the past 15 years growing by 1.6% p.a from 2016 2035. India and the ASEAN countries are expected to lead the way fuelled by ongoing economic growth urbanisation and associated infrastructure development. Compared against our previous forecast the North East Asian region has seen the most significant revisions in the world ex China. This partly reflects upward revisions to near term demand in Taiwan and South Korea where the brass mill sectors are benefitting from strong growth momentum in the electronics and auto industries. Meanwhile data for the Japanese copper semis industry has also been buoyant and consumption is expected to see support from the upcoming Tokyo 2020 Olympics. Over the medium to longer term we have taken a slightly more optimistic view of consumption in North East Asia with the region expected to continue to benefit from demand for high tech goods. Demand for copper in electric vehicles is likely to become an increasingly important driver for consumption in the region and indeed globally over the medium to longer term for copper foil in batteries and wire and cable in wiring harnesses and motors. Supply update Changes to our forecast production profiles for mines smelter and refineries are listed on the accompanying downloadable file named 'supply_main_changes_copper_lto_q2_2017.xls'. These changes are based on published statistics and production guidance together with additional information acquired during the course of research by Wood Mackenzie. Details regarding the most significant changes are summarised in the excel file. In order to be consistent with other Wood Mackenzie metals market services the highly probable category will no longer be used for copper mining projects. Six projects that were previously in this category are now included in our base case. These are Chuquicamata Underground (350kt/a) Oyu Tolgoi Expansion (500kt/a) Metalkol (75kt/a) Bystrinkoye (70kt/a) Magistral (30kt/a) and Kinsenda (20kt/a) which is targeting initial production during Q2 2017. The Etoile Phase III project (20kt/a) in the DRC reportedly developed by Shalina Resources has been demoted to our probable category with an assumed 2019 start date due to a lack of any apparent progress. Plentiful scrap has emerged so far this year on the back of higher than anticipated prices through the first half of this year which has also been reflected in our higher estimates of scrap offtake at both smelters and refineries to support a slight increase in refined production in 2017. Global mine production expanded by 5.0% during 2016 reaching 20.1Mt. This increase compares with a 3.8% rise seen in 2015. 2017 mine production (after disruptions) will fall for first time since 2011 down by just over 2% on 2016 levels. This reflects the announcement of lower production guidance by some producers and a focus on 'profitable tonnes' over volume . However that does not mean that there are no new mines on the horizon. The last wave of supply additions in our base case mine production forecast include Cobre Panama ( 320kt/a) Escondida 3rd Mill ( 250kt/a) Las Bambas ( 100kt/a) Sentinel ( 135kt/a) Toquepala Expansion ( 100kt/a) and Aktogay ( 80kt/a). In addition Glencore s African operations the Kamoto/KOV Restart ( 365kt/a) and Mopani ( 100kt/a) will re start. Collectively these will have a significant influence on the copper market during 2018 and 2019 pushing growth in mine supply back into positive territory. Base case growth is forecast to continue until 2020 and will see global production capability (before disruptions) exceed 21Mt for the first time by 2018. Beyond 2020 base case copper mine production growth will decline unless new or expanded capacity is brought into production. Given the long lead times (7 10 years) required to bring new capacity into production producers should be positioning themselves now for the anticipated recovery. Indeed even without any growth in global demand the market still needs more supply particularly given the marked reduction in average global ore grades in the medium term. However despite many mining companies now seeing improvements in their balance sheets investor appetite for miners to take on large capital projects remains low. Many of the next generation of projects are situated in more remote locations with limited access to power and water. Soft issues too are proving more costly with would be developers needing to satisfy the heightened expectations of local stakeholders. The combination of these issues along with lower grades mean that many projects will have to be larger than before to achieve economies of scale requiring high capital investment. It is likely that that partnerships joint ventures and/or M&A will support development of the additional supply requirement. This is not new to the sector with Japanese trading houses historically co investing in world class assets. Given these elevated capital requirements we expect the pipeline will be revised. Projects are likely to be re scoped to adopt a more phased approach. Supply demand balances update Post 2026 our supply/demand balances and price forecasts revert to trend levels with additional mine production assumed to come on stream over and above what is available from our base case scenario which includes probable projects to ensure that unsustainable metal deficits are avoided over this period. However in contrast to the March 2017 LTO no additional smelting and refining capacity over and above what we have identified in our probable project category will be required in order to process the additional raw material that will come through. This of course assumes that all the smelting and refining capacity currently in our base case continues to operate. As things stand and without the commitment to further investment in additional copper mine capacity we estimate that the perceived supply gap will stand at 4.5Mt by 2027. This reflects not only the revisions to our global refined demand outlook but also some minor adjustments to the scrap volumes that should be available to smelters and refineries over the longer term. Taking all of these factors into account we remain confident that our long term incentive price of $7 275/t ($3.30/lb) in constant 2017$ will be sufficient to bring on adequate mine output in order to satisfy market requirements. We have redesigned our Q2 and Q4 long term reports in response to client feedback. The new slide pack format will better highlight key developments and changes in the market. The new style slide packs come attached with all the usual Excel datafiles and provide a more accessible summary of the changes from our main reports in Q1 and Q3 outlining the key points that clients need to know. The slide pack and data files are available in the downloads section. Tables that normally appear within the report are also available in the downloads section named 'Copper_LTO_Document_Tables_Q2_2017.xls'. We hope you enjoy the new format and welcome any feedback you have.