Copper is often referred to as a bellwether commodity that reflects business activity in such industries as housing and autos. This past year, both industries have been beaten down, and so too has the price of copper. According to the Wall Street Journal (subscription required), nearby copper prices fell 6.40 cents to settle at $1.2530 per pound. The most active March contract fell 6.45 cents to $1.2810 per pound. The poor housing numbers recently released were just another catalyst in the price decline.

Copper, like many other commodities, has been in a liquidation phase where market participants are selling their inventories to raise cash. Traders have often looked to China for an indication that buying there will spark a rally. However, this did not happen. There was no follow through after a gain in the Chinese market last week.

Very much like the supply situation in oil, there is an 87,000 metric ton surplus of copper, when adjusted on a seasonal basis.

Last week was an interesting week for Chinese stocks. While I wrote about PetroChina's debut and its subsequent record-setting $1 trillion market cap, my colleague and fellow-BloggingStocks blogger, Aaron Katsman, wrote about the potential bursting of the Chinese bubble.

With growth and excitement like this, we shouldn't be surprised to read today that China published inflation numbers that matched its own decade-long record high of 6.5%. This will put additional pressure on the Chinese Central Bank to raise interest rates, something it has already done 5 times this year alone.

The Bank blamed rising food prices in general for the inflation run-up and said that prices for pork, in particular, had skyrocketed 55%. October's record $27 billion trade surplus injected even more cash into the economy, stoking inflation that's twice the 3% pace that is the central bank target. Chinese trade surplus reached an all-time high this month -- in spite of the Central Bank's pledge to rein in export growth. BloggingStocks reported yesterday that Henry Paulson, Secretary of the US Treasury, is expected to continue lobbying the Chinese to relax restrictions on the Chinese yuan to allow for faster appreciation of the Chinese currency.