Copper prices have recently climbed by approx 10% in two weeks. Why? Many comments are available and many are viable so I will share my perspective and let you the reader decide whether or not my comments today are valuable.

We have seen a general trend downward in the US Dollar as it has fallen recently again several major currencies specifically the EURO. A result of the US Fed pumping billions of $$ into the system. Additionally, we have seen a shift in copper demand in China. China has been stockpiling copper in increasing amounts making one wonder if they see commodities as a better investment than US ‘T’ bills.

However, in spite of the above comments speaking to reasons for a rise in copper. factors remain pressuring future copper prices down. The Exchange Warehouse inventories though having declined, current levels remain comfortable and are not seen as worrisome with the LME at 303,200 tons and COMEX up to 56,814 short tons. When one considers the massive stockpiling by China and continued bad (as opposed to bad, BAD!) economic data coming out; it hardly seems likely that there is a near term shortage of copper. So why the climb?  Could it be investor driven?

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Copper surged 3 percent to hit 4-1/2 month highs on Thursday, boosted by a rise in U.S. durable goods orders and a jump in new home sales which lifted the outlook for the economy and demand (as noted by Reuters 3/26/09.)

We have seen a slight retreat today less than 2 cents/lb. It appears this might be in response to Industry News that 2009 will see a worldwide surplus in copper production of 500,000 tons. Continued uncertainty regarding the macro US economic outlook and a falling dollar all served to nudge Copper down. Recent data from analysts  have copper exchange prices dropping to an average of $1.30 in 2010.

From my perspective until US demand steadies and the general economic outlook improves I see price pressure on the downside for base metals especially copper. However, given the current markets volatile tendencies any efforts toward restocking would seem premature. http://www.forbes.com/feeds/reuters/2009/03/26/2009-03-26T172656Z_01_LQ244746_RTRIDST_0_MARKETS-METALS-UPDATE-6.html?loomia_ow=t0:s0:a41:g29:r2:c0.001800:b23294074&partner=loomia