Is China at it again? | FT Alphaville

Is China at it again?

Sean Corrigan at Diapason Commodities has sent us another fascinating chart. It shows the hot money inflows into China which are unaccounted for by the sum of the trade balance, FDI, interest earned and FX revaluations.

That’s to say there’s still a large chunk of inflows left over after all of the above is considered, the volumes of which happen to correlate very nicely with changes in the combined aluminum, copper and zinc (and lead from 2011 onwards) stocks of Shanghai and the LME.

The point being, to what degree are the above metals being bought in the marketplace for the sole purpose of raising money for the Chinese? And to what degree is this skewing the underlying supply and demand picture?

Related links:
Re-securitising commodities financing – FT Alphaville
Some circumstantial copper evidence – FT Alphaville
China’s copper as collateral addiction
– FT Alphaville