Along with Freeport-McMoRan’s (FCX) earnings we also got an announcement that the copper giant plans a 25% production expansion over next 3 years saying that inventories of the metal have dropped.

“Copper markets remain relatively tight,” FCX says and notes that “the outlook for copper we believe is very positive”.

Charles Bradford, of Bradford Research, says that FCX got “hurt by the copper price which they can’t control” but they “gave terrific outlook for projects ahead.”

Increasingly, however, analysts are coming out with copper projections that cast doubt on such outlook and the inventories.

Daiwa’s Jiro Iokibe says that by 2013 there will be a glut.

“We are expecting a supply glut from 2013 due to slower demand increase in China and more supply from Australian suppliers driven by huge investments during the past two years,” says Iokibe.

Iokibe may have been talking more about the iron ore rather then copper but the rationale maybe the same: China is no longer the driver of the demand for these production inputs.

“China is no longer the white knight for commodities, at least in the very short term,” said Vishnu Varathan, market economist at Mizuho Corporate Bank,

Others are talking about saturation.

“When enough bridges, railways, highways, and basic urban infrastructure have been built around each person, it will be difficult to keep finding more things to build,” Credit Suisse analyst Trina Chen said in a report.

Others yet cite Chinese transition from dependence on exports for growth to dependence on domestic consumption.

“But as Beijing remodels its economy to be less investment intensive and more consumption-orientated, there will not be a repeat of that boom in the foreseeable future,” Henry Liu, chief commodities analyst at Mirae Asset Securities.

Much of the current Chinese slowdown is a combination of deliberate domestic policies designed to curb inflation, particularly in property business, as well as the demise in European demand for Chinese products.

With signs that China’s domestic policy is turning expansionary, and assuming European issues may soon bottom, grim outlook on copper and other commodities maybe backward looking. All the cash that miners in Australia, Brazil and at FCX are dishing out on expansion is a hard bet against the grim outlook.

More clarity may emerge as we move into Q4.