Iron ore has been the big winner in the resources sector this year, and gold has perked up in the past few weeks, but if the flow of exploration dollars is a guide the next 12 months could see the overdue revival of an equally important mineral – copper.

Too much background noise, including the China v US trade war, and heavy-duty short-selling, means that it’s hard to see the return of copper to centre-stage in the commodities sector, but the fog should soon start to lift.

The first important date in a copper recovery is at the end of next week, June 28, when the leaders of world’s 20 biggest economies (the G20) meet in the Japanese city of Osaka, a gathering described by Citi, an investment bank, as “a critical event for commodity-market sentiment”.

It was after the last G20 in the Argentinean capital of Buenos Aires just before Christmas that commodity prices rallied in the hope that the US President, Donald Trump, and his Chinese counterpart Xi Jinping, would end their mutually destructive dispute.

Unfortunately, that rally in metal and agricultural prices was short-lived but the importance of the G20 as a meeting place where differences can be discussed face-to-face was demonstrated by the initial reaction of investors.

Hopes will be high for a repeat rally after the Osaka gathering at which the US and Chinese Presidents are expected to meet, but whether anything positive emerges is anybody’s guess.

Two days after the G20 meeting the Australian financial year ends, which means the tax-loss selling seen on the local market over the past week will have passed and investors with an interest in resources will be looking to rebuild their portfolios – perhaps by taking their iron ore and gold profits and moving into over-sold copper.

Other events will also be sparking interest in copper which is the most widely used of the industrial metals, including a copper conference scheduled to be held in Adelaide today (Tuesday, June 18) with the focus on South Australia’s world-class copper resource.

BHP’s Olympic Dam mine is the best-known of South Australia’s copper projects, along with the Carrapateena mine of OZ Minerals, but the entry of Fortescue Metals into the SA copper hunt is perhaps more interesting.

Until recently Fortescue was a pure-play iron ore miner and while being a one-trick pony in a boom commodity is a wonderful place to be, it’s also a risk for when the wheel turns, which is why it has started hunting for copper in South America and now South Australia.

The first of Fortescue’s SA deals was with Tasman Resources and its Vulcan project which has been kicked around for a few years but has only shown glimpses of potential, which is why another iron ore miner, Rio Tinto, walked away in 2014.

The other Fortescue copper move is with Strategic Energy Resources and its Myall Creek project which abuts a tenement Fortescue secured last year.

With a rock-solid cash generating business, Fortescue is well placed to diversify and the fact that copper is its number one choice sends a powerful message to other investors.

The shrinking elephant in the room

News from the copper market itself is almost as interesting as the corporate manoeuvres because some of the evidence points to copper being poised for a price break-out, especially if Trump and Xi kiss and make up in Osaka.

The people watching the Osaka event most closely are the army of short-sellers who built big positions in copper in the belief that the world is sliding into a prolonged downturn, taking copper demand with it.

The short-sellers have been a major factor in the 10% fall in the copper price since early May, a drop which defies perhaps the most important measure of a commodity price; the stockpile of surplus metal.

In the case of copper, the global stockpile has been falling all year, dropping by an estimated 85,000 tonnes over the past four weeks.

A falling stockpile and a fall price do not make much sense in any commodity where the laws of supply and demand rule.

Adding to the view that the sell-off in copper has been overdone and that some short sellers might be getting nervous ahead of the Osaka G20 conference are reports of a potential strike at one of Chile’s biggest copper mines, an ongoing dispute between the government of Zambia with its copper miners potential outages at other mines.

Rather than falling copper really ought to be rising, if not held down by the short sellers who are watching political and diplomatic events more closely than market fundamentals.

ANZ Bank is one of the institutions with an optimistic view of copper because of its strong supply and demand fundamentals.

Over the next six months ANZ reckons the copper price will rise towards $US3.10 a pound, up around US46 cents, 17.5% on its latest price of $US2.64/lb.

Macquarie Bank, despite concerns about the overall outlook for base (industrial) metals in a trade war climate is not backing down from its optimistic view of copper mines with OZ and Sandfire retaining their “buy” status, complete with strong future price forecasts.

OZ, according to Macquarie, could rise from its current $9.65 to $12.30 over the next 12 months and Sandfire could rise from $6.61 to $8.

Whether those price forecasts are accurate is not the point of taking a fresh look at a copper, a metal which looks to be oversold and poised to rebound as supply and demand fundamentals take over from political considerations.