Watching the copper supply carefully A good way to anticipate copper price is to watch the inventories in the COMEX, LME and China. China is the big Dog, and the commentary by the pundits a month ago was that China was slowing. Hmm, maybe not.
Since my last post I have seen a very steady drop day by day in the COMEX for the last 30 days. For example the last 10 days we see a very close drop each day averaging 753 tons a day, This slope of this line is about the same going back to January 20. Prior to Jany 20, the drops were about 75% less per day, but still a downward trend. This tells me we may have a structural imbalance in North America and will transfer to more offshore buying in the enar future. The LME warehosues a relatively flat at a 5 year low. Below are the COMEX inventories on the left column and the dault drop for the past 10 days.
| 23848 | |
| 23035 | 813 |
| 22322 | 713 |
| 21664 | 658 |
| 20833 | 831 |
| 19938 | 895 |
| 19292 | 646 |
| 18614 | 678 |
| 17692 | 922 |
| 17071 | 621 |
And so we need to watch China for the complete picture. From China last night - looks like it is tightening up: SHANGHAI, Mar (SMM) – Shanghai nonferrous metals closed mostly with gains in day trading. On the macro front, the US inflation rate remained elevated and is expected to hover at highs for a while; China's official manufacturing PMI for February recorded 52.6, beating expectations of 50.5; the boom in China's manufacturing sector continued to gain momentum and market expectations for a recovery in demand were further enhanced.
SHFE copper rose 1.96%, aluminium added 1.06%, lead lost 0.13%, zinc gained 1.71%, tin edged up 0.05%, and nickel shed 1.28%.
Copper: The most-traded SHFE 2304 copper closed up 1.96% or 1,350 yuan/mt at 70,080 yuan/mt, with open interest up 4,126 lots to 154,787 lots.
In the spot market, the downstream buyers were active in making inquiries though the purchases were limited. Low-priced sources were favoured by traders as they sought to restock. But goods traders mainly held back from selling and refused to compromise on prices.
Does not seem at the moment the pundits predicting a China slow down were correct. If China continues to grow, and supply is challenged, we may have a copper spike coming. So, watch the COMEX and then watch for buyer to dip into LME warehosue inventory. It seems it is a really good time to be invested in copper (: