The base metals were all in positive territory on Tuesday. Copper started up in the pre-dawn hours and rose straight through to late morning, coming just off its intraday high late to finish at $3.9782/lb., up 6 cents. 

Nickel followed a similar pattern, poking above $13 in the late morning and holding there, to close at $13.0408/lb., up 22 2/3 cents. Zinc clawed its way back over the $1 mark, ending at $1.01/lb., up more than a penny and a half. Aluminum was a modest gainer, adding a penny, to $1.3706/lb., while lead pushed steadily upward to its intraday high of $1.289/lb., up 2½ cents.

Copper rebounded strongly after three days in the red, as supply worries trumped demand fears, at least for the time being.

On the demand side, traders had been hoping that China would pick up any slack from the worsening U.S. economy. However, some of that optimism was dampened as the price differential between copper traded on the LME, as opposed to the Shanghai Futures Exchange, suggests that Chinese demand may be softening.

“The market realized that Chinese consumers are not buying copper at the elevated levels, and that the spread between copper in Shanghai and at the LME widened to around $938 (per tonne) last week,” said Peter Fertig of Dresdner Kleinwort.

Nevertheless, the Chilean situation is not getting any better. All but one of state-owned Codelco’s mines are now closed, as El Tienente joined the Andina and Salvador operations in shutting down, after an employee was injured in violence there. That left Norte, Codelco’s biggest division, as the only one running.

“The prospect of spreading Chilean strikes, across both worker classes and facilities, will keep the markets on edge until they are fully resolved,” wrote Edward Meir.

And Frank Holmes, CEO of the highly successful U.S. Global Investors funds, is unabashedly bullish.

“The demand side for copper is going to be very strong,” boosted by usage in China and other emerging markets, Holmes said. “We could see $8 a pound for copper,” he predicted.

In company news, diversified Canadian miner Teck Cominco is expecting business to continue to boom. Teck CEO Don Lindsay says he expects no demand falloff, and that, “There’s more than a reasonable chance that …our copper and coal businesses alone will generate record earnings…so the next 12 months look pretty good.”