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The copper market remains well bid in the overnight action despite some market closures due to May Day and also despite ongoing swine flu slowing fears. However, the Chinese have posted some favorable economic readings this week and that in conjunction with a rather impressive pattern of daily declines in LME copper stocks should leave the bulls with the edge. So far, the trade and press haven’t given the pattern of daily LME copper stocks declines that much credence, but since March 2nd, LME copper stocks have dropped by almost 140,000 tons and that should not be ignored! With news this week of additional production declines and news that US business inventories fell by a record amount in the 1st quarter, just a little improvement in the economy might seriously tighten copper stocks and in turn send copper prices sharply higher. Countervailing the existing bullish track in copper prices this morning, is a forecast from the World Bureau of Mines of a 443,000 ton surplus for 2008. However, the 2008 surplus news is old news, especially with sagging production, decline exchange stocks and an improvement in the global economic outlook going forward. Expect $2.00 to be solid support and for the $2.10 level to be very weak resistance zone in July copper. Ultimately we suspect that July copper is destined to take out the April highs, within the coming weeks of trade.
