Commodities tipped to collapse

[BREND]

China stock market is in a bubble stage, so crash in share prices is just expected.

Will this affect commodity demand? I think this is 2 different issues.

 

[wayneL]

Any potential market reaction in the post was specific to OZ, perhaps I should have put the 'Chinese 10% +-' on a separate line, wasn't really relevant in any context just the reversal fact.

Although not sure...I don't think Ours or the US markets have any margin rules in place, certainly not on individual stocks and as for indices....I have never seen a '10 percent down day' on an entire indice, since Ive been investing.

You will.

FYI, the price limits on US indicies:

LINK

RULES for S&P 500, E-mini S&P 500, S&P MidCap 400, E-mini S&P MidCap 400, E-mini Russell 1000, Russell 2000, E-mini Russell 2000, S&P 500/Citigroup Growth & Value, S&P SmallCap 600 and SPCTR futures
5% 1 Down only. Once a limit offer has been established, trading can occur at or above this limit for 102 minutes or until 2:30 p.m. CT.3 Trading will halt for two minutes if the primary futures contract is limit offer at the end of the 102 minutes or at 2:30 p.m. CT3. Trading will resume with the 10% limit in effect.
10% 1 Down only. Prior to 1:30 p.m. CT, trading can occur at or above this limit. If the primary futures is limit offer and the NYSE has declared a trading halt (due to a 10% decline in the DJIA), trading will halt (see below for more details). Trading will resume with the 15% limit in effect when 50% (capitalization weights) of the underlying S&P 500 stocks reopen. After 1:30 p.m. CT, trading can occur at or above this limit for 102 minutes. Trading will halt for two minutes if the primary futures is limit offer at the end of 102 minutes. Trading will resume with the 15%-point limit in effect.
15% 1 Down only. Once a limit offer has been established, trading can occur at or above this limit for 102 minutes. Trading will halt for two minutes if the primary futures is limit offer at the end of 102 minutes. Trading will resume with the 20%-point limit in effect.
20% 1 Down only. Once a limit offer has been established, trading can occur at or above this limit. If the primary futures contract is limit offer and the NYSE has declared a trading halt (due to a 20%-point decline in the DJIA), trading will halt (see below for more details). Trading will resume with the 20%-point limit in effect when 50% (capitalization weights) of the underlying S&P 500 stocks reopen. (See below for second day limits.)
5% 1 Up or down. CME Globex price limit. The 5% upside price limit will be removed at 8:28 a.m. CT. This only applies to the upside price limit and does not have an effect on the downside price limit. CME Globex trading will be delayed until 6:00 p.m. CT, if an NYSE trading halt is in effect at 3:00 p.m. CT or the primary big S&P 500 futures is locked at a limit at 3:15 p.m. CT.
1 These limits are set quarterly.

2


This window can be longer or shorter than 10 minutes for the E-mini S&P 500, E-mini S&P MidCap 400 and E-mini Russell 2000 contracts depending on when the primary big futures reach their corresponding limit.

3
Forty-five minutes before the close of an abbreviated trading session.

Please note: E-mini S&P 500, E-mini S&P MidCap 400 and E-mini Russell 2000 contracts will halt whenever a halt is declared in the primary futures contract -- except at the 10%-point limit before 1:30 p.m. CT and the 20% limit.

RULES for NASDAQ-100, E-mini NASDAQ-100, E-mini NASDAQ Composite, and E-mini NASDAQ Biotech futures
5% 1 Down only. Once a limit offer has been established, trading can occur at or above this limit for 10 2 minutes or until 2:30 p.m. CT.3. Trading will halt for two minutes if the primary futures contract is limit offer at the end of the 102 minutes or at 2:30 p.m. CT3. Trading will resume with the 10% limit in effect.
10% 1 Down only. Once a limit offer has been established, trading can occur at or above this limit for 10 2 minutes. Trading will halt for two minutes if the primary futures is limit offer at the end of the 102 minutes. Trading will resume with the 15% limit in effect.
15% 1 Down only. Once a limit offer has been established, trading can occur at or above this limit for 10 2 minutes. Trading will halt for two minutes if the primary futures is limit offer at the end of 102 minutes. Trading will resume with the 20%-point limit in effect.
20% 1 Down only. Trading can occur at or above this limit.

Trading
Halts:
If there is a trading halt declared in the primary securities market, trading will halt for the NASDAQ-100, E-mini NASDAQ-100, E-mini NASDAQ Composite, and E-mini NASDAQ Biotech contracts. Once trading in the primary securities market resumes after a trading halt, trading in the NASDAQ-100, E-mini NASDAQ-100, E-mini NASDAQ Composite, and E-mini NASDAQ Biotech will resume.
5% 1 Up or down. CME Globex price limit. The 5% upside price limit will be removed at 8:28 a.m. CT. This only applies to the upside price limit and does not have an effect on the downside price limit. CME Globex trading will be delayed until 6:00 p.m. CT, if an NYSE trading halt is in effect at 3:00 p.m. CT or the primary big S&P 500 futures is locked at a limit at 3:15 p.m. CT.
1 These limits are set quarterly.

2


This window can be longer or shorter than 10 minutes for the E-Mini NASDAQ-100 contracts depending on when the primary big futures reach their corresponding limit.

3
Forty-five minutes before the close of an abbreviated trading session.

Please note: E-Mini NASDAQ-100 contracts will halt whenever a halt is declared in the primary futures contract.

DJIA % Declines *
10% If the DJIA declines 10% prior to 1:00 p.m. CT, the NYSE will declare a one-hour trading halt. If the DJIA declines 10% between 1:00 p.m. and 1:30 p.m. CT, the NYSE will declare a half-hour trading halt. After 1:30 p.m. CT, the 10% limit is not in effect.
20% If the DJIA declines 20% prior to 12:00 p.m. CT, the NYSE will declare a two-hour trading halt. If the DJIA declines 20% after 1:00 p.m. CT, the NYSE will declare a trading halt and will not reopen.
30% If the DJIA declines 30%, the NYSE will declare a trading halt and will not reopen.

2nd Day Limits


If the primary futures contract is limit offered at the 20% limit at the close of Regular Trading Hours (RTH) and the cash equity markets fall more than 20%, the following RTH trading session will have modified price limits. These provisions reduce the restraining impact of the 10% limit. The 10% limit would be in effect for 102 minutes or until 2:30 p.m. CT3. Trading will halt for two minutes if the primary futures is limit offer at the end of the 102 minutes or at 2:30 p.m. CT3. Trading will resume with the 15% limit in effect before 2:30 p.m. CT3 and 20% after 2:30 p.m. CT 3. The 15% limit would be in effect for 102 minutes or until 2:30 p.m. CT3. Trading will halt for two minutes if the primary futures contract is limit offer at the end of the 102 minutes or at 2:30 p.m. CT3. Trading will resume with the 20% limit in effect.

To maintain coordinated trading halts under Second Day procedures, trading will halt whenever the NYSE declares a trading halt, regardless of the futures price level. Futures trading will resume only after 50% (capitalization weights) of the underlying S&P 500 stocks reopen.+

+After a trading halt in the primary securities market, NASDAQ-100, E-mini NASDAQ-100, E-mini NASDAQ Composite, and E-mini NASDAQ Biotech contracts will resume trading once the primary securities market reopens.

etc etc etc

 

[wayneL]

The day-to-day performance of the Chinese A-Class stockmarket has limited relevance to the vibrance of the Chinese economy.

BHP will be fine

Demand for commods will be fine

Chinese GDP and Industrial Production will be fine.

Neither will be effected by this bubble being pricked

Opportunity presents

Depend whether this is the chicken or the egg... whether this is symptom or cause.

Chinese GDP etc may be fine, but then again it may not.

We may be seeing a domino effect

 

[Freeballinginawetsuit]

Is that the same for the OZ market as well Wayne?.


Considering that I only trade X (fixed amount) yet systematically Milk Y into value holds, regularily for quite a significant timespan......I would really like to know what effect any pullback in the market will have on me. Much the same as the property market crashing. Quite honestly I couldn't give a rats!

I mean come on......if you compare both markets and the time in them in recent years, all this Bearish talk is of no relevance to the people that have grasped the opportunities.

I say this in no codescending manner at all....just stating the reality that their would be many in the same boat......and of course, more cash than ever seeded the initial investment, is out to pasture 'safe and sound'.

By continuing the bearish arguement you run the risk of the Bullish market continuing on with the same info being offered by yourself in 08


LOL, that doc looks too long and Ive got some pasta to eat at the Cot

 

[BSD]

Yeah - well I am very happy to bet an unwinding of a Chinese sharemarket bubble is NOT going to limit the ongoing domestic GDP expansion of 10% per annum.

This is not the Dow or Nasdaq that created a consumption boom in the US in 1999.

What is the wealth-effect like in China?

Laughably small I would assume.

 

[wayneL]

Is that the same for the OZ market as well Wayne?.

Doesn't look like there is;

http://www.sfe.com.au/content/sfe/trading/con_specs.pdf

 

[wayneL]

Yeah - well I am very happy to bet an unwinding of a Chinese sharemarket bubble is NOT going to limit the ongoing domestic GDP expansion of 10% per annum.

This is not the Dow or Nasdaq that created a consumption boom in the US in 1999.

What is the wealth-effect like in China?

Laughably small I would assume.

Of itself yes, but there are other cracks in the edifice... and in all the wrong places

 

[BREND]

Bank selling Copper, Aluminum and Zinc now.

 

[rederob]

Of itself yes, but there are other cracks in the edifice... and in all the wrong places

Lots of cracks in the Great Wall.
But the economy of the great bastion of western democracy is now riddled with more holes than an Albanian highway, and that inevitable "crash" seems as far away as ever.
BTW, are commodities still tipped to collapse?
Or did they collapse and recover again?
Or, what do we really mean by "collapse" in the context of historically high prices?

 

[wayneL]

Lots of cracks in the Great Wall.
But the economy of the great bastion of western democracy is now riddled with more holes than an Albanian highway, and that inevitable "crash" seems as far away as ever.
BTW, are commodities still tipped to collapse?
Or did they collapse and recover again?
Or, what do we really mean by "collapse" in the context of historically high prices?

Red,

I draw you to the first post:

Don't shoot the messenger! :whip

http://finance.news.com.au/story/0,10166,18993553-462,00.html

Commodity collapse tipped
From:
By Andrew Trounson

May 02, 2006


COMMODITY prices were likely to peak this year and were primed for a fall of up to 50 per cent, analysts warned yesterday as resource stocks again jumped sharply higher.
The gold price hit a 25-year high at $US661.10 an ounce, sparking fresh buying of mining stocks, despite a warning from Canberra-based Access Economics that metal prices are poised to start dropping steeply from the end of the year.

Gold shot up on the back of growing fears over the nuclear standoff between the US and Iran, and expectations that US rates are on hold.

This year will be as good as it gets in metal markets, according to Access's latest quarterly survey of 10 forecasters. Booming copper prices are forecast to fall about 50 per cent over the next two years, with other base metals to fall 30-40 per cent. Gold is forecast to be averaging $US564 an ounce a year from now.

They got copper pretty right, other metals, no. But there is still time for this to play out.

For mine, the route is still to come... but note I am long metals and mining stocks at the moment. Bears may look to a correction, but we ain't dumb

 

[wayneL]

US Durable Goods Orders:

Actual -7.8%
Survey Prediction : -2.5%
Prior : 2.9%

building down
re values down - MEW down
motor vehicles down

all commodity consumers and customers of China.

= MegaDump

 

[rederob]

Red,

I draw you to the first post:


They got copper pretty right, other metals, no. But there is still time for this to play out.

For mine, the route is still to come... but note I am long metals and mining stocks at the moment. Bears may look to a correction, but we ain't dumb

Wayne
Before that post of mine, I actually did go back to the first post of yours.
Copper is up so far this year.
Zinc has also clawed some cents back from an early year bath it took, and fundamentally remains as strong as it was at almost any time last year.
Nickel has gone absolutely ballistic, breaking new records with monotony.
Tin is at cyclical highs.
Lead is at cyclical highs.
And even aluminium, which I consider the weakest metal on fundamental grounds, refuses to buckle and collapse.
So the quoted forecaster got it badly wrong on most counts.

I am personally very wary about 2007's second half, but think that global markets can tough out present jitters for a while longer.
As for the "correction" we had to have, I will keep doing what I have for a long time; buy more of the equities that I have had on my watch list yet at the time were not quite the "value" proposition I preferred.

Looking simply at LME warehouse stock levels and movements, despite many metals being at cycle high prices, demand remains generally robust: Chinese New Year had no material impact on overall market tightness. Given the indicators you quote, we should have seen a greater impact on the demand side of the equation, especially as most metals (except tin) continue to be responsive on the supply side.

 

[nizar]

http://www.marketwatch.com/news/sto...x?guid={BC9B7A77-BF24-4586-978C-CA7A11757779}

 

[Kimosabi]

What impact would it have on commodities if the US Housing/Subprime Mortgage continues self-destructing, thus impacting US Consumer Spending/Consumption etc?

 

[rederob]

What impact would it have on commodities if the US Housing/Subprime Mortgage continues self-destructing, thus impacting US Consumer Spending/Consumption etc?

The US housing market has been in decline for many months.
The impact has been noticed on metal inflows to Comex and LME warehouses.
There are many US market sectors off the boil - eg vehicle manufacturing - and again the impact has been noticed, but remains subdued.
The stark reality is that for the time being, any slack on the US front is being compensated for elsewhere.
Unfortunately too many " market commentators" and too much "market media" emanates from the US, and they seem not yet to have come to grips with the fact the world is longer dependent on their economy alone.

On the metals front - a stellar recovery overnight, eg lead up 5%, and nickel another record close.

 

[rederob]

Red,

I draw you to the first post:


They got copper pretty right, other metals, no. But there is still time for this to play out.

For mine, the route is still to come... but note I am long metals and mining stocks at the moment. Bears may look to a correction, but we ain't dumb

Wayne
Seems they got copper right for a little while only.
Copper up over 20% from its lows this year.
Most metals tighter now than last year, especially as "destocking" has left them more vulnerable to upside surprises as inventories continue to decline or show weakness.
This "collapse" could be another 20 years away!

 

[wayneL]

Wayne
Seems they got copper right for a little while only.
Copper up over 20% from its lows this year.
Most metals tighter now than last year, especially as "destocking" has left them more vulnerable to upside surprises as inventories continue to decline or show weakness.
This "collapse" could be another 20 years away!

That was enough collapse for me. I am now long... for now

posted 15-01-2007 02:41 PM Profile for enzo Send New Private Message Edit/Delete Post

ZZ,

Been looking at that trade too. Started scaling last week.

--------------------

 

[rederob]

Almost a year since this thread began, and the base metals are running a repeat performance; ie running to new record highs in many cases.
At present, commodity market tightness is the rule and not the exception.
It is clear that supply side responses are inadequate, despite a 5-year ramp-up phase for most metal miners/producers.
Unless metals demand wanes, then prices in 2007 will be higher on average than 2006.
And we might also be setting-up 2008 for an even stronger year again!
That's certainly where I reckon we are heading right now. However, as always I review this longer term trend more deeply in the 3rd quarter.
Between now and then I'm not likely to move too much unless a clear meltdown comes into view.

 

[BREND]

Almost a year since this thread began, and the base metals are running a repeat performance; ie running to new record highs in many cases.
At present, commodity market tightness is the rule and not the exception.
It is clear that supply side responses are inadequate, despite a 5-year ramp-up phase for most metal miners/producers.
Unless metals demand wanes, then prices in 2007 will be higher on average than 2006.
And we might also be setting-up 2008 for an even stronger year again!
That's certainly where I reckon we are heading right now. However, as always I review this longer term trend more deeply in the 3rd quarter.
Between now and then I'm not likely to move too much unless a clear meltdown comes into view.

Ya man! This is why I would always be an investor of mining giants like BHP and Rio whenever their share price are bashed down.

 

[Wysiwyg]

Almost a year since this thread began, and the base metals are running a repeat performance; ie running to new record highs in many cases.
At present, commodity market tightness is the rule and not the exception.
It is clear that supply side responses are inadequate, despite a 5-year ramp-up phase for most metal miners/producers.
Unless metals demand wanes, then prices in 2007 will be higher on average than 2006.
And we might also be setting-up 2008 for an even stronger year again!
That's certainly where I reckon we are heading right now. However, as always I review this longer term trend more deeply in the 3rd quarter.
Between now and then I'm not likely to move too much unless a clear meltdown comes into view.

The costs involved to get the commodities from earth to market are much higher nowadays so that is factored into the present day pricing situation.Bottom lines are higher along with higher demand than we are used to.I think monetary inflation would cover it broadly.