I'm betting on a substantial rise in copper prices. It seems like a sure bet to me. As global manufacturing interests are attempting to excite production and governments are attempting to re-energize consumerism, warehouse supplies of copper have been declining.
Yet, this alone is not what piques my interest. Two other significant factors are converging with a reduced copper stockpile, creating what I see as an undeniable, medium-term investment opportunity.
First, Bloomberg reports that Sterlite Industries (SLT) in India, "received a court directive ... to shutter its only (copper) smelter." This is in response to government action on environmental concerns there. This crackdown will put a crimp in ready supplies of some copper-based materials and is also expected to affect aluminum production of Sterlite's parent company, Vedanta Resources (VDNRF).
Second, The U.S. Commerce Department has imposed new tariffs on copper pipe and tube issuing from Mexico and China. The new duties, reaching as high as 60%, are being imposed to curtail cheap dumping of these products on the American market.
Each of these three variables, when viewed individually, means very little to commodity copper prices. However, when taken together they create significant short-term market stress. This surge of stress likely will cause a short period of depressed overall copper production. When given the fact that warehouse stock volumes of copper are already in decline, one could expect a surge in purchase volume once the market adjusts to its new parameters.
I expect to see a significant rise in copper prices near March of 2011.