Copper demand still strong

Copper is reaching multi-year highs and is now above the levels reached during the summer of 2008 during what some believed to be the great commodity bubble. There are at least four key short-term demands in the market which are driving copper prices:

1. The new copper ETF's may further increase demand for this key industrial metal. There is the anticipation that even if copper ETF's are even marginally successful prices will react to this new investment demand.
   
2. A single trader, JP Morgan may have had control of a majority of LME warehouse stocks. In the short-run, warehouse stocks will have impact on short-term prices. When inventory is high, the copper futures market is often in contango. When inventory is low, the markets will usually be in backwardation.
   
3. In the longer-run, forget warehouse supplies. The mining data says that Chile is not producing more copper. Mining is expensive and hard to develop. If there is less mined prices will have to rise to have capital drawn into these markets.
   
4. By 2025 China will use more copper in a year than the entire world production today. With China growing at double digits and building still being important, the demand for industrial metals is unlikely fall significantly. Demand will be strong in other emerging markets will also not decline anytime soon.

Of course, copper prices can easily see revisions of over 20 percent, but the bias is still upward.