Copper On The Rise

Andy Xie was talking last week about a China driven oil price bust. I find the argument less and less convincing. China's growth rate may well slacken, but other important economies are also growing rapidly and could well take up some of the slack. Meanwhile commodity prices show no sign of imminent collapse:

"Copper futures rose in Shanghai after global inventories fell to their lowest in three decades, fueling concern about scarce supplies and driving prices higher in New York and London. Cash copper prices also rose.

Inventories monitored by the London Metal Exchange fell 600 metric tons to 33,900 tons, the exchange said yesterday. That's the lowest since July 1974 and equals less than one day of global consumption, forecast at 17.4 million tons this year by the Lisbon-based International Copper Study Group. Stockpiles have fallen 69 percent in the past 12 months.

``Low stockpiles are the main reason for the price rally,'' Gu Yuan, a metals trader with Shenzhen Star Futures Co., said by telephone from Shanghai."