General comment on commodities:
Gleaned this comment from the NXG call:
"Management stated that they have observed that the Chinese have been pulling back, letters of credit have become more difficult for the Chinese to obtain, so the buying of copper likewise has become more difficult."
This suggests to me that there are two primary reasons why the Chinese have pulled back from the commodities, and neither has anything to do with need, or inventories, or even economic activity. First, credit is tight, making transactions difficult. I think this also suggests supplies within China are getting run down to critical levels.
Secondly, I think the Chinese are trying to cool off (so far unsuccessfully) the shipping market,
quote.bloomberg.com
and are using shipping in areas where the crisis is most severe, like coal and oil.
Message 20359909
They are also in a desperation allocation, rationing mode. Food has been put on the backburner for now, as they roll the dice on big crops this year. If crops come up short, look out there will be an explosion. Commercials in grains are now making pretty large upside bets against specs, especially in corn. In metals the worldwide inventory level is absolutely shocking. We are now down to 160,117 MT of copper,
kitcometals.com
credit lines or no credit lines the Chinese are screwed. We are down to 37,175 MT of lead, and 10,158 MT of nickel:
kitcometals.com
They will run out because they don't have any money, or will run out because they can't find product, either way they're dead: it's the Train Wreck, a story scarcely being reported. |
