China and Copper Prices

It was reported that the copper inventory on the London Metals Exchange (LME) declined by 4.1% last week, the latest weekly fall, indicating that Copper inventories in London have are reduced by about 50% since September 2011.

A couple of related reasons come to mind; the shortage of Copper, and China buying all the Copper they can.

Analysts suggest that Chinese Copper inventories have grown to include some where in the neighborhood of 50%+ of the World's supply, say 3-M tons.

Copper is extremely important to the Chinese economy, as it is used throughout its industrial and infrastructure development, including; new buildings, new train lines and roads, plumbing, construction, electronics, white goods, electric cars, etc, etc, wherever there is wire or the need to efficiently conduct electricity, this all comes down to Copper, often referred to as the nerves of modern civilization.

So, it makes good long term business sense for China to stockpile Copper, China thinks long term and there is widely thought that there is a shortage of Copper.

I just read that Shanghai Copper inventory fell by 3% last just last week.

I will be watching Copper prices going forward, because the Chinese inventory levels may be signaling a further rise in Copper's price, up about 33% over the past 4 months. Good news for Copper miners I believe.

Paul A. Ebeling, Jnr.

Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster's Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.

Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.