We have remained bullish towards copper and insisted in recent reports that prices will rebound due to the potential for Chinese restocking and fund short-covering. These processes are becoming increasingly evident and the price recovery now seems to be getting underway. Indeed, over the last few weeks, downward pressure has reversed as short-selling by CTA-type funds has been fought back by consumer and investor buying. Overall, we maintain that copper has overshot on the downside, just like it overshot on the upside in May 2006 when it spiked to an incredible 8,800 dollars /tonne. The low 5,000s dollars per tonne of January and February 2007 were just as incredible, especially when considering that the world's largest consumer is heavily understocked, that the recent concerns over the US economy have probably been overdone, and that global inventories are still too low to provide a safe cushion in the event of another serious supply disruption.
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