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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Wyätt Gwyön who wrote (12463)	4/22/2004 4:59:46 PM
From: gregor_us	Read Replies (1) \| Respond to of 110194

Have Not Seen a Recent Oil Post from you Darffot, But a 60 day theme I am turning over in my mind is that the Iraq Drop Dead Date of 30 JUNE 2004 is hanging out there in the Winds of Uncertainty, and it's very, very hard for me to see how the Oil Market can negotiate it other than to push spot, and near-term futures, up, on the approach. Thoughts? I am proposing to lay this dynamic down on top of the post-Fed Drama landscape, the continued news flow about global oil demand, and the possibility the USD is set to soften a touch here.

To: Wyätt Gwyön who wrote (12463)	4/23/2004 8:36:13 AM
From: russwinter	Respond to of 110194

Copper notes: There's been some bobbing and weaving in copper this week. Apparently some copper in China (Shanghai warehouses) has been shifted back to LME. One would have to believe that this must be related to this power increase going through in China on May 1, Message 20055526 which I think will have the effect of quickly taking out some marginal producers who use many of these metals. I would imagine that if China is really cracking down on credit, that there should be a pretty decent collapse under way? How could there not be, if input costs out strip selling costs, and you can't get your crony at the bank to give you more credit. The crony question that China supposedly is cracking down on, will be crucial now. Will they really do it, or instead do they keep Train Wrecked businesses alive with fresh loans? If they keep lending and this turns out to be "who let the dogs out" loud barking (a common theme in the world right now), then I fully expect bleeding Chinese copper users to keep consuming. Meanwhile, Grasberg production is coming back in May-June and in the nick of time. This will eliminate about a fifth of the deficit we've seen in the 1Q. Message 20055537 However, I noticed something very interesting yesterday. While the Chinese sent some Cu back from Shanghai warehouses to LME, look what happened at Comex, a one day drop of 3,257 MT. metalprices.com That has to be western users scrambling to buy bargain $1.20 a lb copper. Conclusion: The Train Wreck in China is getting ready to accelerate with these power increases. However, copper is still in severe deficit and in short supply, you can't brake a 100 mph out of control train that easily. $1.20 is not the equilibrium price, in fact I doubt if it's much incentive to produce, or push out the door much extra. Any price opening, (such as now) only gives a little gasp of air to drowning western and Japanese copper users, and they will grab this opportunity. Therefore, I expect any slowdown in usage (questionable?)in China to be quickly offset by relief purchases from copper strapped users elsewhere. Incidently did you notice the backwardization narrowing: Last Friday it was 2.80 cents even between July and Sept, yesterday it closed at 1.35.