Yes, totally bizarre, the silly season, apparently geared around the "China slowdown" story, Grasberg returning some production, and a major flush out of the hedge fund longs, all at about the same time. Duh, does anybody not think China is slowing down? Is that really news? Grasberg getting back on line, a surprise? Not to me, they had to slow down as the Train Wreck takes hold.
Fundamentally though, the question is this: are they going to slow down enough to eliminate a 600,000-1,000,000 MT copper annual deficit (5-8% of world copper consumption)? China accounts for about 2,500,000 MT of the use, so if I do the math correctly, they would have to slow down by about 30% pretty darn quickly, and that's nonsense. Even if they eliminated overnight 10% of their use (a depression, by any measure), the drawn-down would continue at a slightly slower pace. The US is of course the other big user, and in the short term there isn't a slowdown at all. Plus I think $1.20 copper, may just delay some of the marginal new supply the market is now expecting, so I'd say the 5-8% deficit, may be low at this price. So it appears the copper market is already pricing in not just a slowdown, but a bust. Yet, nothing else is even remotely pricing a bust, look at housing stocks for example.
Meanwhile back in the real world there was about a two day hiatus in the draw-down, and then back to business as usual. Mostly coming out of Comex now, and yet the talk is about LME stabilizing, BS.:
4-15: LME: 159,900 Comex: 193,316 = 353,216
4-19 157,325 191,622 = 348,947
4-20 155,050 189,855 = 344,905
4-21 160,300 188,409 = 348,709
4-22 159,575 185,152 = 344,727
4-23 158,250 182,692 = 340,942
4-26 156,625 180,130 = 336,755
4-27 155,175 178,251 = 333,426
4-28 153,450 |
