I totally agree with you Swinter on all your points.

I don't get why so many analyst are saying that there is an oversupply of copper - I don't see an abundance of copper inventories to back up those statements. I see a balanced market. Low prices would make sense then. It seems like it is just a matter of time before those absolute copper numbers kick in.

I think one reason is the amount of shorting that is happening. The following commentory is from someone who normally only comments on gold but this time he speaks on copper as well.

http://seekingalpha.com/article/3829286-speculative-gold-traders-hold-positions-copper-shorts-build-extreme-positions

The Copper Market Corner?

We pointed out last week that the most surprising part of that report was the large speculative positions in copper. This week saw another increase in speculative shorts in copper:

Click to enlarge

Source: CFTC

As we stated last week, anybody familiar with the COT report will know we usually see producers and merchants being net short of their commodity, while speculative (represented in this report by "Managed Money" traders) tend to be net long with much bigger fluctuations in their positioning. The reason why we see producers net short the majority of the time is because they are already net long via their production, and thus use the commodity future markets to hedge their production or to lock-in a price.

What we see here is that speculative are EXTREMELY bearish on copper with over 60,000 short contracts outstanding and further adding to their positions as copper crossed below $2.00/lb. On the other hand producers are actually net long - which is also extremely rare.

Interestingly enough, Bloomberg also published an article titled, "Copper's Crowd of Bears Punished by Trader Squeezing the Market" where they essentially said that it looks like there is so many traders short copper, one or two very large traders are trying to corner the market by owning half the copper in London warehouses. With that much metal under control, the trader can help drive up the fees associated with rolling forward a short position, making it tougher for speculators to keep their bearish bets. Not surprisingly the costs to short copper have risen to the highest in three years.

Could we see a copper rally despite the bearish Chinese data? We sure think so.