RE:RE:Copper leaving warehouses, heading to ChinaA week ago I speculated that the Chinese want to take over copper pricing. Right on cue:
Shanghai Copper Contract. And it immediately proved to be very popular:
LINK. I think London and New York traders have a problem. Even with the recent run-up there is still a significant arbitrage between London/NY and Shanghai where copper is selling for $3.25/lb:
LINK. The LME copper stocks dropped by another 10kT last week.
Hedgies are starting to cover, for the first time in month the short position dropped significantly (by 12K contracts).
I can see that the paid basher succeeded in destroying this board because 80% of the posts are replies to him/her. Sad.
Riggedmkts wrote: The last month was like watching paint dry: the short interest on copper, copper price, copper stocks trading in a narrow range with low volume. Like surface of the ocean on a calm day.
Copper peaks in April/May and bottoms out in October. A few weeks away.
Under the surface things are quietly happening. The Chinese bought Nevsun and their copper mine in Serbia for $1.4B, Mitsubishi paid $600mm for a stake in AA's copper mine in Peru, bidders lining up for a stake in Teck's Quebrada Blanca copper mine, Lundin Mining lined up a $3B war chest to buy copper assets. They still didn't get the memo that copper is oversupplied.
Now, the warehousing situation is getting interesting. LME warehouse levels are dropping faster than hooker's underwear - down 43kT in just two weeks, from 268kT to 225kT. I guess those cancelled warrants (see below) were real, the Chinese are shipping copper home. Warehouse levels don't matter until they get really low - can't write contracts when you ain't got the metal to back it up. What's low? Under 200kT is low, 150kT is the lowest in modern era. At this rate, we'll set a new low in a month. And there is only one way for LME to stop the arbitrage trade - reduce the price difference or watch Chinese take over. He who has the metal sets the price.
Seems like a few things will be coming to a head in late October. Until then, probably more paint drying.
Back in a week or two. Whenever I visit this board, the majority of the posts are responses to the paid basher and his/her multiple handles. Bor-r-ring.
RM
Riggedmkts wrote: Someone forgot to tell the Chinese that they no longer need copper ;) Link "Cancelled warrants or metal earmarked for delivery in warehouses registered with the LME have surged to a one-year high at 132,200 tonnes, nearly 50 percent of the total at 268,175 tonnes. Cancelled warrants on Aug. 16 were below 25,000 tonnes. Traders say the cancelled metal is heading for China as prices in Shanghai Futures Exchange at around $7,150 a tonne are much higher than on the LME."