Copper - Back above $3lb!

[rederob]

Copper inventories continuing to run down, with drawdowns across all continents.
Given that Comex and LME are both in decline, and have been for some weeks despite copper climbing over $8,000/tonne, the likelihood of further price upside remains good.
Oddly enough, copper's rapid trip north is closely paralleled by events a full year ago: So will we see May collapse the market again, and kill off the bull?

 

[YOUNG_TRADER]

Oddly enough, copper's rapid trip north is closely paralleled by events a full year ago: So will we see May collapse the market again, and kill off the bull?

Needs to run alot harder for this to happen IMO, not high enough yet, say $4.50lb then where talking get your shorts on shorty!!!!!!!!!!!

 

[dlineinvestor]

Copper higher on Fri's close

Due to a weaker US dollar copper traded higher for Friday's LME close
Stockpile stands at 159125 M/Tonnes and a change of [-2050]

 

[YOUNG_TRADER]

Strikes all over Peru = Supply Disruptions

Continued drawdown of LME Stock Levels about 2kt a day = 157kt and falling

All = Cu at $3.70lb, should hit $4 soon given current situation

 

[BREND]

Strikes all over Peru = Supply Disruptions

Continued drawdown of LME Stock Levels about 2kt a day = 157kt and falling

All = Cu at $3.70lb, should hit $4 soon given current situation

Great! If Cu break $8150/mt, it will just continue its way up.

http://basemetal-trading.blogspot.com/2007/05/review-on-copper-trade.html

 

[YOUNG_TRADER]

Copper continues to decline on the LME yet continues to rise in the Shanghai Futures Exchange, wierd

Either someones just moving copper from LME warehouses to China or something else is up,

Either way mkt is now taking notice of the rise in Chinese Warehouse inventories but is not overlooking the fact that every day an avg of 2kt's of Copper leaves LME warehouses

Redrob, Brend, Wayne and others a penny for your thoughts gentleman?

 

[wayneL]

YT,

Well I'm a technician, so views from that angle... purposely vague views as there are obviously different schools of T/A.

I haven't run an oscillator over the chart, but I just know there will be a bearish divergence. This could mean:

1/ Nothing, it will continue up
2/ Distribution or re-accumulation
3/ It's gonna correct

In other words it will either go up, down, or sideways (really all divergence means is a tapering off of momentum)

I'm out of my futures position (too bloody early) but am still long some miners (FCX, PCU mainly) so hope it continues up. My best guess is option 2/ for a bit, and then see.

 

[rederob]

Wayne
Copper has increased 50% in 3 months to date - topped out last week.
Due for a bit of a correction before any significant recovery.
Shanghai inventories are interesting - probably more arbitrage opportunities being taken with deliveries from LME and orders sidetracked to Shanghai for now: Not sure!
What is for certain is the distribution of drawdowns globally - healthy in Europe, US and Asia,
Comex is also trending slowly down - interesting given the general weakness of US manufacturing and housing.
Lord forbid; what will happen if the US kicks into gear again!

 

[BREND]

I think the fall of copper has just started, has advised my clients to be cautious about their long positions on base metals, and also to take up short position on copper.

China's preliminary trade data due out by early next week may show that copper imports in April fell, maybe even sharply, as price differential of Shanghai Futures Exchange, London Metal Exchange then were unprofitable for imports, analysts and traders say; some estimate that refined copper imports may only top 100,000 tons, vs 202,955 tons in March. Ample supplies, following 483,485 tons of imports in 1Q have been weighing on domestic physical copper price, hence curbing imports.

 

[michael_selway]

I think the fall of copper has just started, has advised my clients to be cautious about their long positions on base metals, and also to take up short position on copper.

China's preliminary trade data due out by early next week may show that copper imports in April fell, maybe even sharply, as price differential of Shanghai Futures Exchange, London Metal Exchange then were unprofitable for imports, analysts and traders say; some estimate that refined copper imports may only top 100,000 tons, vs 202,955 tons in March. Ample supplies, following 483,485 tons of imports in 1Q have been weighing on domestic physical copper price, hence curbing imports.

zinc is best basemetal to invest in now, what do u think?

thx

MS

 

[BREND]

zinc is best basemetal to invest in now, what do u think?

thx

MS

I had recommended customers to buy zinc futures when it was at $3600/mt level, at $4000 plus level, we had already asked them to take some profit.

If copper price really falls as per my prediction, then it will pull zinc price down as well.

Now we are recommending them to sell Zinc call options $4600 Jun07.

 

[michael_selway]

I had recommended customers to buy zinc futures when it was at $3600/mt level, at $4000 plus level, we had already asked them to take some profit.

If copper price really falls as per my prediction, then it will pull zinc price down as well.

Now we are recommending them to sell Zinc call options $4600 Jun07.

ok thats for "zinc price" in the ST

what about zinc lme warehouse stocks? do yout think they will halve by year end or before?

thx

MS

 

[BREND]

ok thats for "zinc price" in the ST

what about zinc lme warehouse stocks? do yout think they will halve by year end or before?

thx

MS

China may be cancelling tax rebate for export of zinc, so zinc inventory is expected to go down, but how low I don't know.

I'll look to buy zinc at much lower level, but I'll not short zinc.

 

[michael_selway]

China may be cancelling tax rebate for export of zinc, so zinc inventory is expected to go down, but how low I don't know.

I'll look to buy zinc at much lower level, but I'll not short zinc.

ok thx, imo i have a feeling Zinc might do a Nickel or Lead, double in price from a low/correction. Copper may be similar but i suspect it wont mirror these 3. Below is quoted from another site

This guy has a very positive view on zinc - from an article on the Kitco site - he makes some very worthwhile observations, whether or not you agree with his conclusions.

Zinc Companies Soar

By Jason Hommel
11 May 2007 at 04:12 AM GMT-04:00


GRASS VALLEY, Calif. (Silver Stock Report) -- Zinc stocks started soaring, exploding in price this week, starting last Friday, with Apex Silver, up 20%, and others also up 15-20% in the past 5 days. As each stock soared, the stocks had huge volumes, suggesting a powerfully wealthy buyer. The stocks moved up on different days, suggesting a single large fund buying, as if one man was making the decision to buy. The stocks were up nearly the same amount, again suggesting a single buyer. I do not know who this was, nor have I been able to find out.

Look at the past 5 days' performance of the following zinc stocks:

SIL - Apex Silver (zinc & silver)
CZN.TO - Canadian Zinc (zinc & silver)
MMG - Metalline Mining (zinc & silver)
PAX.V - Pacifica Resources (zinc only)
Why is there a sudden rush to buy zinc stocks? Probably because zinc prices are rising as zinc inventories are falling, which started about last month.

I note that zinc inventories are as low as they were in December, and falling even faster, yet prices are lower. Therefore, zinc prices could head much higher, very quickly, unless something changes.

Similarly, copper prices started rising, and copper inventories started falling, about 3 months ago.

I am expecting that both copper and zinc will soon break out to new highs.
Zinc should rise above the former high of $2.10/lb, and copper should rise above $4.00/lb.

How high each can go, is just about anyone's guess, but I would not be surprised to see gains of at least about 50-100% higher than the former highs, suggesting $3-4 for zinc, and $6-8 for copper, just for starters. Further gains would be from inflation, which I also expect.

Now is probably not the time to be timid, but to buy silver and zinc stocks aggressively, before zinc inventories drop further, and before the base metals rise further, to re-establish the long term trends, which are massively up.

A bullion dealer friend asked me, "How do you know it's not the time to get out, and sell everything?" Good question.

1. Because zinc shortages are expected to last at least another year, and get worse over the next ten years.
2. Because copper is being imported again by China, which stopped buying for 8 months on the world market, which is the most likely cause of the recent dip in the copper prices.
3. Because most of the zinc/copper companies I've been following have still hardly moved up given the rise in the metals prices.
4. Because the average zinc/copper stock with a near term production project has a forward P/E ratio of less than 1. If it was more than ten, that would be the first sign of a mania, and a sign of a top.
5. Because most of the managements of most of the companies are timid about the rising prices, and are using trailing price averages with much lower prices than current prices.
6. Because this is my "job," to pay attention to all of this, full time. I "show up".
7. Because this information is still rather hard to come by, and not covered by enough mainstream journalists.
8. Because most mainstream journalists, if they even acknowledge the commodity boom, warn about how risky it is, and wonder whether the boom is over.
9. Because none of those who warn you to "stay away" were ever there to advise you to "get in" at the bottom.
10. Because the industry advisors who said to "get in" at the bottom, are still here, showing the great values in the industry.
11. Because very few of the 100's of projects that I've been following have yet come to production, and even if the majority of them go to production, it will not be enough to satisfy the demand.
12. Because there are shortages industry-wide, from not enough drillers, or assay labs, or geologists, or engineers, and because miners world wide continue to go on strike to protest their wages not keeping pace with skyrocketing base metals prices.
13. Because with declining LME stockpiles, it is almost as if capital itself has also gone on strike.
14. Because too few dollars are being spent on stockpiling physical inventories of depleting base metals.
15. Because too few dollars are being spent on mining stocks, which need to raise $100's of millions of dollars, and many tens or hundreds of billions collectively, to put their mines into production.
16. Because too many dollars are still short the commodities in futures markets, and because too many dollars are invested in futures contracts on commodity markets, instead of being invested in mining. Because paper contract betting, at best, creates "paper gains" and does not generate new physical, base metal production.
17. Because too many dollars are being spent on acquisitions and mergers, and not on new projects. Because mergers create "paper gains" and do not generate new physical, base metal production.
18. Because commodity booms end when there is too much physical base metal production.

Why am I so enamored with base metals stocks? Because a funny thing happened in 2003. In the spring/summer of 2003, gold prices took off, and silver prices were sure to follow. Gold stocks had already run up, but silver stocks were still depressed, or unknown. As silver prices rose, the silver stocks soared, right on cue. So, I made gains of 300% in 6 months in silver stocks, buying silver stocks when silver was still at rock bottom.

Today, base metals prices have taken off. But base metals stocks are still mostly depressed. If you pay attention to "cause and effect" it seems basic to me that these stocks will, and must, soar in price to match, or exceed the gains in base metals that have already been reached, and the gains to come.

For those of you already positioned, hang tight, or keep researching for more and better stocks in the sector. Don't sell too soon. Get ready for 100% gains, or more, in the next 6-12 months.

thx

MS

 

[BREND]

I had recommended customers to buy zinc futures when it was at $3600/mt level, at $4000 plus level, we had already asked them to take some profit.

If copper price really falls as per my prediction, then it will pull zinc price down as well.

Now we are recommending them to sell Zinc call options $4600 Jun07.

Copper is falling, pulling zinc price down now.
I'll be interested to buy zinc at $3600 level, but not now.

 

[CanOz]

Isn't interesting how the news is always anything but new.

This was only yesterday:

Copper Futures Rise Most in a Week After Chinese Imports Surge

By Millie Munshi

May 15 (Bloomberg) -- Copper rose the most in a week in New York after imports into China, the world's biggest consumer of the metal, surged 61 percent in the year's first four months.

China imported 1.08 million metric tons of copper and copper products from January through April, according to preliminary data issued today by the country's Beijing-based customs office. Imports in April jumped 68 percent to 304,672 tons from a year earlier. Copper futures have climbed 23 percent this year on speculation that China's economic growth will boost demand.

``Chinese imports have been leading the copper price,'' said Patrick Chidley, an analyst at Barnard Jacobs Mellet LLC in Stamford, Connecticut. ``The real question is whether this demand will continue and where it's going to go from here.''

Copper futures for July delivery rose 4.05 cents, or 1.2 percent, to $3.5375 a pound on the Comex division of the New York Mercantile Exchange. That's the biggest one-day percentage gain since May 3.

The price dropped 4.1 percent last week amid speculation that China might have an adequate supply of the metal, used in pipes and wires.

April imports were down from a record 307,740 tons in March, an indication that China's demand may be starting to wane, Sahil Kapoor, an analyst at Kotak Commodity Service Ltd. in Mumbai, wrote in a report today.

On the London Metal Exchange, copper for delivery in three months gained $109, or 1.4 percent, to $7,760 a ton. The metal reached a record $8,800 a ton last May.

A futures contract is an obligation to buy or sell a commodity at a fixed price for delivery by a specific date.

To contact the reporter on the story: Millie Munshi in New York at

You think this came out on the top of the recent rally?

 

[BREND]

I think the fall of copper has just started, has advised my clients to be cautious about their long positions on base metals, and also to take up short position on copper.

China's preliminary trade data due out by early next week may show that copper imports in April fell, maybe even sharply, as price differential of Shanghai Futures Exchange, London Metal Exchange then were unprofitable for imports, analysts and traders say; some estimate that refined copper imports may only top 100,000 tons, vs 202,955 tons in March. Ample supplies, following 483,485 tons of imports in 1Q have been weighing on domestic physical copper price, hence curbing imports.

Copper price has fallen as per my prediction, copper price has fallen $173/mt since then . Double-top formed, looks like copper will continue to fall for the next few days.

See attached for the copper chart:
http://basemetal-trading.blogspot.com/2007/05/review-on-copper-trade_16.html

Had advised clients to buy zinc when it goes to $3600mt, which is still $165 away.

 

[BREND]

Copper futures tumbled in Shanghai to a six-week low on concern that China, the world's biggest consumer of the metal, may be oversupplied following a surge in imports this year and rising domestic output.

China's copper imports reached a record 307,740 metric tons in March, and almost matched that level in April, according to customs data issued May 15. Production of the metal, used in wires and pipes, rose 17 percent in April to a record 274,000 tons, the National Bureau of Statistics said today. The big increase in production will definitely put more pressure on the market.

 

[YOUNG_TRADER]

Getting savaged ATM, almost down 5%

 

[wayneL]

Getting savaged ATM, almost down 5%

I haven't run an oscillator over the chart, but I just know there will be a bearish divergence.

Chalk one up for the divergence signal... wish I had the gonads to have shorted the futures. I would be shouting a festive meal with friends right now.