Neil I want to get into the supply-demand picture in just a moment, but before we get into that, perhaps you could just explain the reports that have been going around about the single trader that apparently holds around 50% to 80% of the LME's copper stocks.

NEIL BUXTON: Yes it would appear to be linked with the likely launch of an ETF which would be backed by physical copper. So at some stage the people behind the ETFs are going to have to go in and secure that material - the most obvious place is securities from LME warehouses rather than necessarily direct from a producer.

GEOFF CANDY: What is that likely to do to the price?

NEIL BUXTON: You have to bear in mind that it's been imposed on a market that is firm already - incredibly tight from a fundamental standpoint, particularly at this relatively early stage of the economic cycle. The situation would be very different for example in the aluminium markets where it could probably be quite easily absorbed by the sort of buying that we're seeing in copper.

GEOFF CANDY: Has there been a structural shift in the level of investment demand for copper?

NEIL BUXTON: The ETFs are probably more symptomatic of the greater increase in investment factors across the whole of the base and precious metals sector. It's still not clear whether the ETF is going to bring a lot of people into the market, when a lot of the investment funds are quite happy to invest on Comex and the LME and various indices that are already available. So the success or otherwise of the ETF is certainly not guaranteed.

Eoin Treacy's view When one thinks about passive funds holding majority stakes in a market which was not designed for such purposes, one has to ask why this is not treated as an attempted corner. I assume this is because there are large numbers of investors holding the positions so that the process is legitimised by its popularity.

Gold has been tracked by physically backed ETFs longest and these have been a key investment vehicle for those wishing to access the market. However copper is different because it is an essential industrial commodity and higher prices act as a tax on all consumers. Against this background complacency towards regulatory inaction is likely to be costly. The CFTC demonstrated in October that they can dampen investor spirits by raising margin requirements. They are likely to continue to increase margins as prices rise and additional interference cannot be ruled out. In the meantime, commodities remain in a sweet spot. Copper continues to hold above $4 and a sustained move below $3.70 would be required to question potential for some additional upside.