My basic in-a-nutshell bear call when the price stood at $1.75/lb or so was “copper won’t go up because the price move so far has been monetary in nature and not driven by demand.” I can still happily stick with that call, even though China imported a large amount of copper in February. This is because China is clearly stockpiling the metal and it’s not satisfying final end-user demand.
However, it’s clearly not the whole story. My best guess is that large funds have moved back into copper and are buying on speculation. That strikes me as my own bad excuse for calling the move badly, though….it’s so darned easy to “blame the hedgies/PTB/WallSt crooks” etc for any market move that goes against you, isn’t it?
Whatever it is, although I’m not comfortable with my mistake I have to stick by my call for the time being as fundamental analysis (my baseline) cannot see any reason for higher copper prices going forward. But be clear, that’s more my personal analytical weakness showing than any particular table-banging. Any comments either left below or via mail from people with a view on copper very appreciated.
UPDATE: Heather Walsh is one of the better reporters at Bloomie. She filed a report from the CRU conference today that goes under the title “Freeport Says Rally Unlikely To Spark Investment Jump”. The contents from no lesser name than FCX CEO Adkerson back up my own position.
UPDATE 2: Tyler Durden at Zero Hedge throws another dos centavos into the debate. I agree here, too. What is it about Sundays and musings on copper, anyway?