Safe Pair: Short Cu, Long Al

Discussion in 'Metal Futures' started by qll, Nov 4, 2006.

  1. qll

    qll

    Bet Cu will come down and Al will be strong. Looks like a safe pair to use the extra cash, because Corn, Soyoil need me to add more positions.
     
  2. I hear Amaranth is now betting on the same exact pair with their remaining assets. Good luck.
     
  3. uh, from what i heard amaranth exists no more.
     
  4. rosy2

    rosy2

    were you going to do this on a 1 to 1 basis? also how liquid are aluminum futures? here's a spread for the past 200 days.
     
  5. qll

    qll

    i don't really care about technical. i know many friends who use Al and Cu in their business, so I know what price they are willing to pay.

    China is Cu's big buyer. Cu is used a lot in big buildings. I know chinese developers, they are not building more but less in 2007, so you know why I short Cu.

    Air bus is a major Al buyer, I know a trader who buys Al for airbus products. They are willing to pay 200% of current Al price. They don't use the basic Al, but a refined Al used on air plane bodies. Only a few % of airbus's air plane can be manufactured, because all departments are waiting for the Al to come. My friend buys Al and add 15% to the price, then resell Al to her boss and her boss add 15% then resell to airbus subcontractor. The airbus subcontractor said if they can double the supply, they are willing to pay 100% more. This talk took place in July. I asked the trader if they would trade futures to hedge the risks of a rising Al price, my friend said "no need to worry, no matter how high Al becomes, we can sell it at a higher price. Shortage of supply is the only concern."