1. China is not going to stop buying copper just 'cos some idiot in New York invented a new way of ripping off the Europeans and then watched all his pals jump on the bandwagon and cause the whole toxic mass to disappear up their own recta.
2. The dollar has been, is, and will be in the crapper for a while. This means the dollar won't be able to buy so much stuff in the future. Copper is a good example of a "stuff".
3. The rise in demand from China and the Asia satellites beats out the softening in US demand by an order of magnitude.
4. China's copper demand is not...I repeat is NOT export market related. If you don't believe me, tough. I'm right. You're wrong. Now go away and read what I've read (which is lotsa stuff, including the Chinese gov't 5 year plan 2005-2010). China uses 4.7 times more copper than it produces, and it uses it on electricity infrastructure and copper pipes for houses.
5. And you don't think there's any room left for upside in China copper demand? Well, lessee. The US uses 6.6kg of copper per capita. Western Europe uses 9.7kg per capita. Japan uses 10.2kg per capita. Taiwan and South Korea uses a chunky 19.9kg per capita.
China uses 3.5kg per capita. That's up from 0.45kg in the period 1990 to 2007. Got it?
6. Copper supply is tight, and it doesn't matter if the LME adds or subtracts 10,000MT on its notoriously fakey inventory levels. New mines aren't coming on line. Production problems keep on coming via strikes in Peru, weather in China, droughts in Chile, idiots in Zambia.
7. Copper is not going back to U$2. Ever. Again. Amen. If it goes under U$3 for any length of time before my 4yo girl gets to university I'll be shocked'n'awed, too.
8. Wanna know what it WILL do? Well you should really be paying me for that kind of info, but in a nutshell it'll bounce around the U$3.50 to U$4 range, breaking U$4 some time this year. It'll consolidate at or above U$4 in 2009 and then we may or may not see U$5 depending on what the dollar decides to do. No point trying to go too crystalball at this stage.
9. Wanna know about Zn, Pb, Al, Mo, Ni, U too? Aaaaaaah, well....that you can pay me for.