BEIJING (Commodity Online): China is the main driver for global commodities like gold, silver, copper and aluminium. In April, China announced that the country has been stockpiling gold reserves. It is not just gold that China is piling up. Copper is another hot commodity that China is buying hard these days.

China is already the world’s largest user of the red metal. And then why is China buying a lot of copper these days?

Here are two interesting explanations for China's craze for copper. First from Commodity Online Senior Editor Geena Paul, that we published sometime back. And the second one from C Shanti of TG Daily. Read to know why China is buying and buying lots of copper these days.

By Geena Paul
Why should China buy so much of the metal now? There are reasons like the very secretive Dragon nation wants to make maximum use of the low prices compared to last year. China’s copper imports in the first two months of 2009 were up 71% on last year.

Then, why should China buy so much of the metal now? There are reasons like the very secretive Dragon nation wants to make maximum use of the low prices compared to last year. China’s copper imports in the first two months of 2009 were up 71% on last year.

And most of the buying by China is to stockpile by the State Reserves Bureau. SRB is in the process of securing 300,000 tonnes — 2% of world copper output.

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So, copper prices are going up just because of the Chinese demand or their ‘secret’ plan to stock the metal.

Can investors bank on that factor only and invest in the red metal. That will be foolish that is what experts are advising.

According to researchers in base metals, copper bull run cannot sustain too long unless the US construction and housing sector witnesses major surges, which is almost unlikely now. This is despite the $1.1 trillion stimulus package announced by the G20.

And, if copper demand is up that means a country’s economy is in a strong position, that is what experts say because copper price tends to be a leading indicator of trends in the global economy.

As one of the most important and widely used base metals in construction, demand rises and falls along with the health of the wider economy.

Copper prices soared by 50% since December, sending cheer among miners and copper investors. But the creeping question now is whether the red metal continue its rally like gold.

When you talk about copper you can’t ignore the US. So, it’s not yet clear if US demand has bottomed out, the housing market there is still in dreadful shape, while Europe is depressed and going nowhere.

And unless the US shows some interest in buying the metal, it is difficult for copper to keep the momentum.

Another area where the investors should look to get hints on metal prices is shipping sector. Freight rates are an indicator for metals prices. While metal prices moved up, shipping costs came down 40% in the last month. That doesn’t sound good. So is it the time to book your profits in copper ? Maybe!

By C Shanti, TG Daily
The Peoples' Republic of China bought up vast stocks of copper before the credit crunch hit and now it's about to tighten its grip on the important metal as it contemplates opening a vast copper mine in Mongolia.

Just a few days ago, Mongolian legislators said they would relax the country's three year windfall tax on both gold and copper. That will take effect from the 1st of January 2011.

Mongolia has vast reserves of copper, and other important commodities and Rio Tinto and Ivanhoe Mines are pressing ahead with the development of a mine just north of the Chinese border.

Copper currently trades at over $6,000 a ton and has shown a steep rise during this year. The Rio Tinto/Invahoe Oyu Tolgoi mining project will come onstream in 2013 but this is only the first of a series of other projects in which China is taking an immense interest.

According to Tom James, an expert on mining and minerals, China will essentially own copper production by 2012, indicating its long term plan to capture important segments of the supply chain market for the IT and other industries.