But what about copper ?

Discussion in 'Commodity Futures' started by syswizard, Sep 23, 2012.

  1. LME Stock levels are at 371,975 metric tons.....which are very low and I am sure this is helping to support prices.
    The March '14 CME contract almost hit $3.40 this morning.
     
    #491     Dec 26, 2013
  2. December 26, 2013, 9:57 a.m. ET
    Copper Futures Rise on U.S. Labor Data, Weak Dollar

    --Comex March copper up 0.4% at $3.3880/lb

    --U.S. weekly jobless claims fall more than expected

    --Weak dollar boosts copper's allure to foreign buyers

    NEW YORK--Copper futures rose Thursday, drawing strength from better-than-expected U.S. economic data and a weaker dollar.

    The most actively traded contract, for March delivery, was recently up 1.40 cents, or 0.4%, at $3.3880 a pound on the Comex division of the New York Mercantile Exchange.
    Claims for jobless benefits fell for the first time in three weeks in a sign the U.S. labor market continues to strengthen. Initial claims for unemployment benefits dropped by 42,000 to a seasonally adjusted 338,000 in the week ended Dec. 21, the Labor Department said Thursday. Economists had expected claims to fall to 344,000 for the week.

    "The jobless claims data are a little bit better, and that can benefit copper demand," said Sterling Smith, a futures specialist with Citi Institutional Clients Group.

    Copper is widely used in everyday goods such as smartphones, cars and heaters, and demand for such products increases when a larger proportion of the population is employed.

    A weaker dollar also gave copper prices a boost. The ICE Dollar Index recently traded at 80.519, down from 80.608 earlier. Copper futures are priced in dollars and become less expensive for investors who use other currencies when the dollar eases.
    ----------------------------------------------------------------------------------------------------------------------------------
    Commentary: Copper now a play on the US dollar. No mention of the supply side of the market here......
     
    #492     Dec 26, 2013
  3. Morning Copper Market Report
    Thu 26 Dec 2013 06:33:16 CT


    Sharp gains this week have come after a month long run up in prices and the gains also appear to have taken place in the wake of a possible shift in copper positioning, from a net spec short, to a net spec long!
    ------------------------------------------------------------------------------------------------------------------------------------
    Commentary: Once again this market remains unsettled. On the LME, cash is indicated at $3.46. However, on the CME, the Dec contract is down to $3.43.....and March '14 is off 2 pennies. This could be signs of profit-taking as many specs were likely long since $3.10 or so....seen earlier this month.
     
    #493     Dec 27, 2013
  4. Wallstreet Journal Article: As Shadow Storage Grows, Exchange Inventories Lose Their Usefulness

    http://blogs.wsj.com/moneybeat/2013...-usefulness/?KEYWORDS=metals+copper+inventory

    Only owners of shadow warehouses and large clients who use those storage facilities will be aware of the extent of their metal holdings, Mr. Briggs said.

    Hidden metal stocks have moved prices before. Nickel prices hit a record high of $51,987.80 a metric ton in May 2007 after supplies of the metal in LME warehouses dropped to their lowest level since 1991. But LME warehouse stocks quickly rebounded and prices plunged to $25,200 a ton by August. Analysts say owners of shadow stockpiles likely drove the moves, first taking metal off the exchange to drive prices higher, and then bringing it back into view, because no big shifts in either mine supply or industrial demand occurred during that time period.

    “Was the market really that tight, or was the market assisted by physical players?” Mr. Wilson said. “We know that traders move metal into inventory when they want to signal something, or they’ll move it off when they want to signal something else.”

    In February 2011, copper futures rocketed to a record $4.6230 a pound as investors bet that a surge in Chinese buying signaled robust demand from the country’s manufacturers. When industrial activity failed to pick up, traders realized the metal had been diverted into shadow warehouses in that country. Prices slumped to $3.9020 a pound in May of that year.

    Mr. O’Neill said that having good contacts among physical copper traders is integral to being a successful copper investor, because metal that’s accumulated in shadow stocks can make a sudden reappearance in exchange warehouses during times of high prices.

    “You really have to get a feel for not just what LME, (Shanghai Futures Exchange) and Comex inventories are, but what the off-exchange inventories are,” Mr. O’Neill said.
    ------------------------------------------------------------------------------------------------------------------------------------------
    Commentary: One could almost "feel" this is what is happening right now with copper at least.
     
    #494     Dec 30, 2013
  5. Copper stock levels continue to plummet as shown on the LME. The current level is 367450 tonnes (metric).
    This has caused even a sharper contango in contract pricing on the CME.
     
    #495     Dec 31, 2013
  6. #496     Dec 31, 2013
  7. lx008

    lx008

    http://www.reuters.com/article/2013/12/23/copper-squeeze-idUSL6N0JZ3DP20131223

    "* One investor held over 90 pct of copper contracts

    * Further squeezes seen amid shortage of inventories

    * Exchange says rules robust against manipulation

    By Eric Onstad and Josephine Mason

    LONDON/NEW YORK, Dec 20 (Reuters) - Someone has made a near billion-dollar bet on copper this week, virtually cornering the world's key stocks of the metal.

    That has stoked worries of a supply squeeze, as warehouses run low on a raw material vital to global industry, and has raised questions about commodity exchanges' efforts to curb attempts to manipulate prices by aggressively heavy trading.

    The London Metal Exchange does not identify investors holding positions but data <0#LME-WHT> on Friday showed that a single participant was holding 50-80 percent of available copper stocks on the LME, which handles the bulk of trade in the metal. The position was nominally worth up to $753 million.

    Earlier in the week, one investor - presumably the same - had held over 90 percent of short-term trading instruments <0#LME-WHC> on LME copper - a position worth at least $862 million on paper. Traders have no clear idea who is behind it.

    The firm doing the buying would not have had to put up all the cash up front and may well have had hedging positions and real requirements for physical copper. But it appears nonetheless to be a substantial gamble on prices rising.

    And since the very fact of building up such a dominant position fuels fears of scarcity, it was little surprise that prices did in fact increase - LME cash copper gained 5 percent through December as the long position grew, hitting a four-month high on Monday before shedding about 1 percent.

    That link between an aggressive, large buyer and fears of supply shortages driving prices higher is one that exchanges, including the LME, have historically tried to contain.

    But the LME, under scrutiny from government regulators, said it has no plans to cap the size of investors' positions - though it does have other mechanisms to thwart manipulation.

    "The LME has a robust position management system in place to deal with dominant positions," said spokeswoman Miriam Heywood, adding there was no plan to change those rules.

    The world's oldest metals marketplace has already been overhauling practices on warehousing - its system of ensuring physical stocks exist to back trades concluded on the exchange.

    It has done so in response to allegations of manipulation in its larger aluminium market, which industrialists say has distorted global supply and inflated prices.

    MARKET TIGHT

    With its copper stocks shrinking, the impact of any future squeeze could be more severe than what happened this week, said analysts, who noted a 19-month high in the key price spread between copper for immediate delivery and that for future delivery - a measure of fears that ready supply may run short.

    "The tightness is there. It's bubbling underneath," said Wiktor Bielski, head of commodities research at VTB Capital.

    "There are just a lot of things that could all of sudden turn quite nasty for anybody who needs spot copper and doesn't have any cover."

    The low stocks combined with an outage at a smelter in the Philippines, Chinese demand that has been running more strongly than expected and concern about Indonesia's plans to boost its own industry by banning the export of unprocessed ore could all contribute to a volatile mix.

    Among those potentially hardest hit by a spike in prices are the numerous speculators who have taken short positions on the LME - selling copper for future delivery in the hope of buying it more cheaply later, before the contracts fall due.

    They were betting that the copper market would move into surplus as new mines churn out more supply. But backlogs in processing the ore have limited the amount of refined metal being produced and prices have failed to fall significantly.

    "I don't see this situation abating," said one trader. "There's really no copper around at the moment."

    The crunch may come in the new year, said analyst Leon Westgate at Standard Bank in London: "It looks like in the early part of next year there's going to be a bit of a battle on the cards in copper," he said.

    Copper stocks in LME-registered warehouses MCUSTX-TOTAL have declined by 44 percent since June to 382,550 tonnes. Moreover, much of that has already been earmarked for delivery or is located at warehouses suffering from delivery backlogs.

    Two thirds of the total copper stock has been "cancelled" in preparation to be shipped out to buyers.

    Most of the rest is in three warehouses - at New Orleans, Antwerp and Johor in Malaysia - where queues for other metals makes in hard to secure their copper for rapid delivery.

    Bielski said that, of the nearly 400,000 tonnes in official LME stocks, only about 16,000 were actually available now.

    The owner of Grasberg in Indonesia, the world's second largest copper mine, warned this month that output could slide 60 percent next year if the government strictly implements a planned ban on unprocessed ore exports.

    That could tempt speculative buying, Bielski said: "Someone, somewhere is going to see this as an opportunity in the next couple of months."

    REGULATIONS

    In the United States, the commodities derivatives regulator has stepped up its efforts to limit speculation, proposing a cap on the number of contracts that a single trader can hold in U.S. energy, metal and agricultural markets.

    The LME's smaller U.S. rival in copper, the CME, has set a limit of 1,200 lots. Each contract is worth over 11 tonnes.

    The LME does not intend to follow. It already has rules to limit the profit a speculator can make by scooping up so much supply on any day that traders with short positions are unable to cover them at the close. Any party holding a position worth over half of LME available stocks must supply metal to short-position holders at very modest price premiums.

    The copper market, trading an annual output of about 20 million tonnes, is smaller than aluminium, theoretically making it easier to squeeze. In a scandal in the 1990s, a Japanese trader was jailed for trying to corner the market in the metal in a gamble that cost his employers over $2 billion.

    American billionaires the Hunt brothers also lost heavily when an attempt to drive up the price of silver collapsed in 1980 after a change in exchange rules to curb manipulation.

    On the LME last week, as short holders scrambled to cover, the benchmark cash to three-month spread CMCU0-3 flipped into backwardation - meaning copper for immediate delivery is more expensive that later-dated contracts. The premium surged to $30 per tonne on Monday, the highest since May 2012.

    That is a $46 turnaround from last month, when the market was in contango, with cash copper $16 a tonne cheaper than metal for delivery in three months.

    While benchmark LME copper prices also surged this week and may see further volatility, the greatest impact of any future squeeze could be a strong backwardation, analysts said.

    Westgate said his research showed that there was strong potential for further spikes in spreads since historically when available copper stocks declined to levels of around 130,000 tonnes, spreads are more volatile and can trade anywhere from a $50 contango to a $250 backwardation. (Writing by Eric Onstad; Editing by Alastair Macdonald)"
     
    #497     Jan 1, 2014
  8. Interesting. The consensus appears to be short term glut (2014-15) with lots of new mines coming on stream, but longer term shortage as the largest mines decline. But the expected supply may not show up this year or next. Nobody really knows. The chart looks good if we can get some momentum here. Wouldn't want to be short.
     
    #498     Jan 1, 2014
  9. lx008

    lx008

    If you are not a big player and without inside information, better stay away from this rigged market, where there're too many whales crowded, for a while.

    Exporter as Indonesia can surprise market also.
     
    #499     Jan 1, 2014
  10. [​IMG]
     
    #500     Jan 2, 2014