Confusion Over Copper
A few days ago I posted some bullish stats on copper. Now, Bloomberg tells us that copper stockpiles are jumping. As the story says ...
Ah, don't worry about BHP, they'll be fine. The point is, if stockpiles are surging even as production is falling, we are looking at bearish times ahead for copper.
But then, there's that big word, "IF."
You know, don't you, that the Chinese are master manipulators of the commodity markets.
We've seen them do it with oil. They tried to do it with iron (and failed). They've tried it with other commodities from time to time.
See, the Chinese government is an intimate partner with many big Chinese companies. It's in their interest to get lower prices for raw materials. I remember when they were manipulating the price of oil, they held up on purchases of oil to make it look like there was a surplus. Then they locked in some tanker contracts and bought a bunch of oil.
So, when copper stockpiles suddenly jump in Singapore -- one of the gateways to China -- I'm not concerned as I would be if they
jumped in London.
And then there's the action in copper mining companies, which are looking very bullish. Red-Hot Canadian Small-Cap and Red-Hot Asian Tiger subscribers know what I'm talking about. The copper stocks in your portfolio are strong and looking stronger.
Meanwhile, looking at a chart of copper, we see it constricting in a triangle pattern. I'd be inclined to call it a symmetrical triangle, which is usually a continuation pattern. That is, it would be a continuation of the tremendous run-up last year. Of course, this is a chart pattern, not a crystal ball. A lot of things could happen that will affect the eventual breakout.
Most of today's LME inventory gain was recorded in Singapore, where supplies rose by 7,025 tons. Singapore, Asia's trading hub, is the leading point of export to China, the world's largest user of copper, and southeast Asia.But meanwhile ...
supplies in LME warehouses were equal to less than three days of global demand.... and ...
BHP Billiton Ltd., the world's largest mining company, said today output dropped 19 percent to 249,900 tons in the quarter ended Sept. 30 after workers at the Escondida mine in Chile stopped work for four weeks in August and September. Scheduled maintenance at Olympic Dam in Australia also cut output.
Ah, don't worry about BHP, they'll be fine. The point is, if stockpiles are surging even as production is falling, we are looking at bearish times ahead for copper.
But then, there's that big word, "IF."
You know, don't you, that the Chinese are master manipulators of the commodity markets.
We've seen them do it with oil. They tried to do it with iron (and failed). They've tried it with other commodities from time to time.
See, the Chinese government is an intimate partner with many big Chinese companies. It's in their interest to get lower prices for raw materials. I remember when they were manipulating the price of oil, they held up on purchases of oil to make it look like there was a surplus. Then they locked in some tanker contracts and bought a bunch of oil.
So, when copper stockpiles suddenly jump in Singapore -- one of the gateways to China -- I'm not concerned as I would be if they
jumped in London.And then there's the action in copper mining companies, which are looking very bullish. Red-Hot Canadian Small-Cap and Red-Hot Asian Tiger subscribers know what I'm talking about. The copper stocks in your portfolio are strong and looking stronger.
Meanwhile, looking at a chart of copper, we see it constricting in a triangle pattern. I'd be inclined to call it a symmetrical triangle, which is usually a continuation pattern. That is, it would be a continuation of the tremendous run-up last year. Of course, this is a chart pattern, not a crystal ball. A lot of things could happen that will affect the eventual breakout.
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posted by Sean Brodrick @ 2:28 PM
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