It’s been a rough summer for mining stocks.

It’s true that prices of major metals from gold and platinum to copper remain well above year-ago levels, as global demand remains robust and low-cost supplies ever more scarce. Mining stocks, however, have acted as though it were 2008 all over again. Shares of Metals and Mining Portfolio foundation holding BHP Billiton (NYSE: BHP), for example, have slipped from nearly $100 in late spring to the low $80s.

Xstrata (London: XTA, OTC: XSRAY)–a company with a USD49 billion market cap–is off by more than one-third over that same period. Freeport McMoRan Copper & Gold (NYSE: FCX) is down 20 percent in a month, despite announcing solid second-quarter earnings. And the carnage is worse still for smaller miners.

Metals are an unforgiving business for anyone who makes the wrong bet. And every commodity bull market eventually comes to an end, as high prices encourage development of new supplies, adoption of alternatives and conservation. Even corrections within bull markets–such as the 2008-09 slide–are vicious events hardly worth holding on through.

That being said, the current slide in mining stocks does not yet resemble 2008, let alone the end of the bull market that began in the early 2000s. The main reason for this is emerging Asia.

The key catalyst for the steep slide in resources in 2008 was the meltdown of the US banking system, and fear that demand would slide to depression-like levels for years. As it’s turned out, materials demand in the US is still weak three years later, as strength in manufacturing has been offset by weakness in housing.

Like other commodities, however, most metals bottomed with the market in early 2009 and have been on a tear ever since. That’s because Asian demand quickly picked up the slack, and it hasn’t slowed down.

No longer is a weak US economy enough to keep metals prices at low levels. That now requires a severe slowdown in emerging economies as well, particularly China and India. In his Aug. 17, 2011, article “Outperformance: Asia Holds the Key,” my colleague Yiannis Mostrous reaffirmed his forecast that “emerging markets, particularly in Asia, will outperform developed markets in 2011.” Implicit in that forecast is continued robust performance of Asian economies–which contrary to popular belief–are less dependent than ever before on both global credit markets and exports to developed nations.

China, for example, now relies on exports for just 28 percent of its gross domestic product (GDP). India is only 20 percent reliant on exports, while Indonesia is just 26 percent dependent. Meanwhile, China’s public debt-to-GDP ratio is less than 50 percent, giving the government plenty of flexibility should economic growth slip below the targeted annual rate of 8 to 10 percent.

However, China consumes more than 40 percent of the world’s copper and last year it was the fastest growing user of oil-related products. India, on the other hand, is the third-largest user of coal and home to a rapidly expanding market for automobiles.

The upshot: Asia’s demand for natural resources is set to remain robust for the rest of 2011 and beyond, despite the recent turmoil in the markets. And as long as that’s the case, it’s very hard to imagine a 2008-style meltdown in metals prices.

For now, metals have been recovering, as demonstrated in the chart below. Precious metals and copper remain at the forefront of the action, with copper prices occupying the center point of significant speculation.

Many analysts are looking for year-end copper prices of US11,000 to USD12,000 per tonne, as supply disruptions keep the market tightly balanced. Our outlook remains a little more benign–a price of USD9,000 per tonne seems more attainable. Portfolio holding Freeport McMoRan Copper & Gold, remains our favorite way gain exposure to copper. Freeport McMoRan Copper & Gold is a buy up to USD60.

Source: Bloomberg