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Isn't that because most of USA's doodads are made in china? Woundn't it be better to compare it to chinas rate of consumption?
"Chinese copper inventories stood at 1.9 million tons at the end of 2010, more than the US consumes in a year, .
Isn't that because most of USA's doodads are made in china? Woundn't it be better to compare it to chinas rate of consumption?
He [the trader] said that on March, clothes makers, food manufacturers, and others who have never bought copper before were massively buying copper from the tariff-protected warehouses, in Guangdong for example. The warehouses are in China, but tariffs on the goods there haven’t been paid yet, and any purchase from one of these warehouses is regarded as an import.
These enterprises purchased copper just to get L/C financing, in which banks finance the purchase of the imports for 90 days. This costs the buyer 30 bps. If they defer repayment to 180 days, they pay an additional 40 bps. The import is settled in dollars, which means that the buyer has a dollar liability due in 180 days, but can sell copper today for RMB. The interest cost for the L/C is around 1.4% annualized, so that even when LME copper trades at a premium to Shanghai copper, the all-in borrowing cost is greatly mitigated by the low cost of L/C and any RMB appreciation.
The reason that banks love to do this business – and markets have become so competitive and rates so low – is that 1)the transaction is off the balance sheet, and 2)bank clerks get paid a direct commission on the L/C. The more they do, the more they earn personally.
This process stopped a month ago because the PBoC intervened to prevent more copper-based financing.
EDIT: The point is (sorry, I forgot to write the point) the vaunted Chinese "copper demand" isn't what it seems at all, certainly not being imported for productive purposes.
So how many months supply do the have inventory.
Who knows. Point is, most of the inventory is held by companies who don't use copper to produce things.
"Clothes makers, food manufacturers, and others who have never bought copper before were massively buying copper from the tariff-protected warehouses, in Guangdong for example"
It would just interesting to know how long it would take the people who are using copper to burn of the inventory if all those speccy players sold off their holdings,
In regards to people holding the metal that don't actually do anything with it or consume it, to me that sounds a bit like gold.
Looks as if the market has fully priced a Europe fix for the coming sunday, anything less i think market will react negatively.
Till we get confirmation of trend change i wait and watch.
Looks as if the market has fully priced a Europe fix for the coming sunday, anything less i think market will react negatively.
Till we get confirmation of trend change i wait and watch.
Any specific reason for 3500?I'm unsure exactly what people are expecting to come out of europe. There is literally nothing that they can say or do that fixes their problems. They may 'print' some more money, which simply "kicks the can" and worsens the problem. IMO if the market had correctly priced in europe we'd be sitting at 3500 or less
I'm unsure exactly what people are expecting to come out of europe. There is literally nothing that they can say or do that fixes their problems. They may 'print' some more money, which simply "kicks the can" and worsens the problem. IMO if the market had correctly priced in europe we'd be sitting at 3500 or less
I don't think that we have seen the end (or the actual reality) of this European situation just yet and the only white knights are those that are already in deep due to lending.
My
And now Moody's are about to downgrade France's credit rating !
Not to worry, the rest of the world is about to downgrade Moody's, Standard & Poor and Fitch's.
The public service run social welfare basket case known as Greece is also threatening to withdraw, if that happens then it could take down the economy of Germany and any other lenders so they have no choice other than throwing more money at it, a bit like lending to a drunken gambler really.
LOL classic expect they would rate FFF-
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