Copper - Back above $3lb!

[chops_a_must]

Aluminium would not be a suitable substitute for nickel in coins. Copper has been used before and will be used again. Most 'silver' coins are only worth as much as the last of the copper ones anyway. Don't know how much influence it would have on either the copper or nickel price but it would have some. I'm sure the mint is looking at it by now.

Nickel coins will soon be worth more as scrap metal.

I posted about this somewhere else:
https://www.aussiestockforums.com/forums/showpost.php?p=133822&postcount=248

When I last checked, our 20c coins are worth just over 19c. When you take into account other costs, there is very little difference between the face value, and metal value. Time to stock up on this years coins. Lol!

There are big problems right now with the US nickles. This is a little out of date:
http://en.wikipedia.org/wiki/Nickel_(United_States_coin)#Metal_value

They are now worth 10US cents in metal.

 

[BREND]

\
Halba
What/where is your evidence about lack of nickel substitution?

On copper, it's easy to say it's only worth $2,20.
However, it never got there on the big dipper, and has now rallied strongly on excellent fundamentals.
Yes, there is plenty mine supply. But there is also very strong demand for copper.
The dangerous game to play is guessing the impact of US housing on copper demand. Despite a massive housing slump, Comex copper inventories are presently declining!!!
Industry consensus has copper concentrates in potential deficit for the next 2 years.
How likely is that?
In my view it is a high probability because Eastern demand is increasing beyond supply, while the US situation suggests a generally balanced state.
Behind all this is metal destocking, tight scrap availabilities, and firm buying on price dips.
The commodity bull rides on copper's back, and copper's back.....
with a vengeance.

Copper inventory falls at LME, but rise in Shanghai. Is there really a real demand?

 

[rederob]

Copper inventory falls at LME, but rise in Shanghai. Is there really a real demand?

Brend
Shanghai represents a few warehouse locations in China.
LME drawdowns and cancellations are occurring across the globe, including China.
Are you suggesting the drawdowns in Europe, the USA and Asia in recent weeks are fabrications?

 

[BREND]

Brend
Shanghai represents a few warehouse locations in China.
LME drawdowns and cancellations are occurring across the globe, including China.
Are you suggesting the drawdowns in Europe, the USA and Asia in recent weeks are fabrications?

From what I know and heard, for the past 1 month physical traders are buying copper at LME, and sell to Shanghai, earning an arbitrage profit.

I will only be convinced that there is a real demand for copper when LME copper inventory continues to fall, but Shanghai inventory stops rising.

 

[BradK]

Can someone explain how arbitrage works in practice?

I just looked up a dictionary definition, but I am not sure how it works in practice.

Brad

 

[wayneL]

I have virtually guaranteed that copper will race away to the upside in a parabolic trend by selling my futures on friday LOL

Get long!!!!

(still have a few stock options in the sector though... just in case )

 

[rederob]

Can someone explain how arbitrage works in practice?

I just looked up a dictionary definition, but I am not sure how it works in practice.

Brad

Brad
Prices for the same item (commodity/currency etc) can be markedly different elsewhere for a variety of reasons (tax concessions, currency/exchange rates, etc).
In some cases it is possible to buy the physical at the lesser rate and sell it at a much higher rate, almost simultaneously, elsewhere.
In the metals market, for example, a number of Chinese consumers have been diverting a portion of their forward orders of nickel (that were "purchased" under contract last year in the $30k/tonne range) into the LME system and pocketing the odd $10k/tonne difference (an LME nickel lot is 6 tonnes, so the minimum profit is large. Although this principle uses the "backwardation" mechanism, it is nevertheless "arbitrage" as the transaction could have simply gone ahead as originally intended and no diversion made to LME in order to profit.
Chinese metals markets are presently prone to arbitrage opportunities for a number of reasons, although tax concessions have given rise to most of the action in recent years.
Is can be misleading to think, perhaps as Brend's posts suggest, that arbitrage opportunities for copper are "directly" giving rise to Shanghai's exchange stocks of copper increasing. However, the strong link may be that it is cheaper for a consumer to import physical metal from LME and divert a forward delivery from local production into Shanghai's warehouses - ie indirect arbitrage effect.
Copper is not cheap to insure and ship around the world to take advantage of "raw" price differences, so the nature of arbitrage needs to be sensitive to a range of additional factors.

 

[YOUNG_TRADER]

Redrob have you heard anything about a 1 Billion Tonne Copper short position?

Last week I had a chat with some investment bankers, who had been told from their London counterparts that there could be a huge surge in the price of copper as this short tries to close out (is stopped out)

I am yet to confirm this directly for myslef though,

From what I understand an unfortunate Chinese trader who had a big Copper short last year was partly responsible for Coppers parabolic rise as he was stopped out.

Thoughts?

 

[BSD]

1 BILLION tonnes?!?!?!?!

That is over 5,000 times the LME Warehouse stocks

Pounds maybe - not tonnes.

 

[rederob]

Redrob have you heard anything about a 1 Billion Tonne Copper short position?

Thoughts?

If such a short position existed I suspect it would have been well revealed by now.
But I am not directly involved in the commodity sector, so that is simply my view.
Copper is destined to rise on concentrate shortages as demand in 2007 seems unlikely to be met.

 

[YOUNG_TRADER]

No sign of "flagging" in copper imports2007-03-23 Source：Shanghai Daily Author： [Font size：Bigger Middle Smaller]
BEIJING, March 23 -- China, the world's biggest consumer of copper, more than doubled imports of the metal in February compared with the same month last year as the nation entered its peak demand period for the construction industry.
Imports of refined copper and alloys rose to 152,651 metric tons, 167 percent more than a year earlier, according to data issued by the Beijing-based Customs office yesterday. That's the highest import level since May 2005, according to data by Bloomberg News.

The price of copper, used in plumbing materials and wires, has gained five percent so far this year amid speculation that Chinese imports would pick up on seasonal demand. The country drew on its stockpiles after prices rose to a record 8,800 U.S. dollars a ton on May 11, and last year's imports slumped by almost a third.

"Chinese demand for imports is showing no sign of flagging," said Li Ling, a trader at Star Futures Co. in Shanghai. "As it's entering a peak consumption period, some processors increased purchases."

Copper prices have rallied every year since 2002 because of falling stockpiles, strong Chinese demand and supply disruptions from major producers such as Chile.

On the London Metal Exchange, copper for delivery in three months rose 136dollars, or 2.1 percent, to 6,745 U.S. dollars a ton, at 6:08pm Shanghai time yesterday. Copper for delivery in June rose 0.7 percent to settle at 61,000 yuan (7,895 dollars) a ton on the Shanghai Futures Exchange.

China's apparent consumption of copper was 356,763 tons in February, according to Bloomberg calculations derived by combining production and imports, minus exports and reported stockpile increases.

China's demand for copper rose to 387,000 tons in January from 288,000 tons a year earlier, the World Bureau of Metal Statistics said on Wednesday.

The country's output of copper fell 4.8 percent to 220,000 tons in February, according to data from the National Bureau of Statistics issued in a statement on March 16.

Refined copper production has been limited by shortages of copper concentrates, the raw material for the refined metal. Imports of copper concentrates rose 35 percent to 392,366 tons in February, the customs data showed.

In February, copper stockpiles monitored by the Shanghai Futures Exchange rose 16,888 tons, or 70 percent, to 40,886 tons. Stockpiles of the rival lightweight metal aluminum rose 63,334 tons, or 217 percent, to 92,927 tons.

　(Source: Shanghai Daily)

 

[YOUNG_TRADER]

Closed at $3.13c doing well so far

 

[BREND]

Copper price has start to fall since yesterday. Reason given by the market is technical selling and weak new home sales in US.

 

[rederob]

Copper price has start to fall since yesterday. Reason given by the market is technical selling and weak new home sales in US.

It's just a short term reaction.
The medium term will see copper rise further.
It is now also clearer than ever that the US is not the dominant force it was in years previous: China's demand is more than compensating for significant weakness in the US market.

 

[BREND]

It's just a short term reaction.
The medium term will see copper rise further.
It is now also clearer than ever that the US is not the dominant force it was in years previous: China's demand is more than compensating for significant weakness in the US market.

Agreed on the US. But you are not worried about the rise in Shanghai inventory?

 

[YOUNG_TRADER]

Agreed on the US. But you are not worried about the rise in Shanghai inventory?

Partially offset by declining LME and COMEX inventory

As well as the fact that I've read rising Shanghai inventory will be taking out when end users begin re-stocking.

I still think it will get to $3.50 in the next 2 months

 

[YOUNG_TRADER]

Its closed back above its 200DMA


DJ BASE METALS: Comex Copper Closes Above 200-Day Average
By Allen Sykora

Of DOW JONES NEWSWIRES



A combination of technical strength, favorable U.S. economic data and
stronger crude oil futures helped copper post a gain Thursday, analysts said.
Copper closed above its 200-day moving average.

The most-active May copper contract rose 2.40 cents to settle at $3.0865 per
pound on the Comex division of the New York Mercantile Exchange.

Some support came from an upward revision in fourth-quarter U.S.
gross-domestic-product growth to 2.5% from the previously reported 2.2%, said
Jim Quinn, commodity floor analyst with A.G. Edwards. A stronger economy bodes
well for copper demand.

Also, the strength in crude oil spilled over into copper, Quinn said.

"We were able to get back above the 200-day moving average, which was
$3.0685," Quinn said. In particular, this may have brought in some
managed-money buying, he said.

The analyst also cited the market's ability to hold above nearby support
traders have been putting around $3. And, technically, a higher low than
Wednesday also helped sentiment.

Several traders and analysts said during the course of the day the market
still perceives fundamentals to be favorable, leading to buying lately on any
profit-taking price pullbacks.

"Copper is reacting to continued growth in China," said Michael Gross, broker
and analyst with Liberty Group. "The market continues to believe the Chinese
economy continues to be strong."

There is potential for month-end position squaring on Friday, said Quinn.
Otherwise, the market will be watching for the once-a-week inventory data
release from the Shanghai Futures Exchange, as well as a heavy slate of U.S.
economic data, he said.

The U.S. economic calendar is full Friday and includes:

-- personal income and spending at 8:30 a.m. EDT (1230 GMT), with both
expected to be up 0.3% in February;

-- the Chicago Purchasing Managers Index at 9:45 a.m. EDT (1345 GMT),
expected to rise to 50.0 in March from 47.9 last month;

-- University of Michigan consumer-sentiment index at 10 a.m. EDT (1400 GMT),
expected to come in at 88.5, compared to 88.8 in the middle of the month; and

-- January construction spending at 10 a.m. EDT (1400 GMT), expected to fall
0.5%.

Inventories of copper in London Metal Exchange warehouses rose 650 metric
tons Thursday, leaving them at 179,875 metric tons. The most recent Comex
stocks data, released late Wednesday afternoon, were down 118 short tons at
36,438 short tons.


Copper settlements (ranges include electronic and pit trading):
May (HGK07) $3.0865; up 2.40c; Range $3.0260-$3.0950
July (HGN07) $3.0825; up 2.50c; Range $3.0300-$3.0880


-By Allen Sykora, Dow Jones Newswires; 541-318-8765;
allen.sykora@dowjones.com

 

[wayneL]

Its closed back above its 200DMA


DJ BASE METALS: Comex Copper Closes Above 200-Day Average
By Allen Sykora

YT

Just a totally pedantic point: Long term MAs on futures contracts are not accurate like they are on stocks.

Why?

If plotted on a single contract, all the older data is skewed by cantango/backwardation giving a totally inaccurate reading.

If plotted on a continuous contract chart, it will be "more" accurate, but still not ideal because of the change of prices at contract rollover due to cantango/backwardation.

For instance on the continuous chart, copper still has not broken through the 200dma.

If you can find a cash chart, then we can talk long term MAs.

You can still use them as a general "guide" and it makes good copy for new articles, but it is a nonsense in fact.

Cheers

 

[wayneL]

Continuous Copper verses April '07 Copper

 

[Sean K]

Continuous Copper verses April '07 Copper

Looks to be holding above critical 300 level for the minute. Needs to hold or it's still going down perhaps.