Spot copper prices increased to $4/lb in mid-March—with futures trading in a $3.85–$4.00 range—as stockpiles monitored by the London Metal Exchange (LME) dropped to the lowest level in six months, spurring speculation supply will trail demand for the year. "Copper looks like the tightest market from a fundamental perspective,'' writes Barclays Bank analyst Kevin Norrish in London. Inventories may reach an all-time low and prices are sure to rise to an even higher record, he suggests.

However, some other analysts suggest that copper prices may see some downward correction because the depressed U.S. economy will reduce near-future demand for the metal and China's imports for the high-priced red metal may start declining. "Also, copper prices above $4 seem to be unattractive for Chinese investors," adds an analysis by Karvy Comtrade in Mumbai, India.

Copper prices climbed for six consecutive years as production disruptions at mines from the Asia-Pacific region to Latin America have limited supply growth while demand from China, the world's largest user of the metal, and other developing nations has expanded. A weak dollar makes industrial metals cheaper for local currency holders and boosts the appeal of commodities. So, copper was up 27% in mid-March since the start of the year.

Record high prices also have attracted purchases from pension funds and other investors. That's another reason why copper cathode stocks in LME-registered warehouses stand around 128,000 metric tons in mid-March, having fallen by 36% since early January and only enough for less than three days' of global consumption. Inventories of the red metal monitored by the LME, the Shanghai Futures Exchange and the Comex division of the New York Mercantile Exchange have fallen to 3.9 days of global consumption. The average for all of last year was 4.9 days.