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’The curious case of un-cancelled warrants
FT Alphaville noted a couple of weeks ago how backlogs at London Metal Exchange (LME) warehouses in Detroit were seeing some market participants have to wait up to 10 months to receive their aluminium.
Just like a giant secured loan to commodity producers…
Last week was London Metal Exchange week.
And it turns out, the topic of debate, according to Société Générale’s cross-asset research analysts at least, was nothing other than the upcoming splurge of physically-backed commodity ETFs that’s about to hit the market.
A jumpin’ Jack flash in aluminium
First there was the flash crash.
Then there were mini flash crashes.
Now, welcome to the cross-fire hurricane of cross-asset jumpin’ Jack mini flashes.
The development first raised its ugly head last week,
Why is Rusal issuing an aluminium ETF?
Why would a Russian aluminium producer be interested in launching an exchange-traded fund business?
SocGen analysts, for one, have been wondering.
The background here is that Rusal announced last week that it would provide further details of a possible physical ETF to be backed by 1m tonnes of metal in the second half of this year.
A brief UC Rusal primer
Oleg Deripaska’s UC Rusal and its 1,141 page/2.5kg IPO prospectus rolls into town later this week.
According to the Times, at the core of Rusal’s pitch to institutions is this claim on how it wants to invest in its $2.6bn flotation proceeds:
Glencore discovers ETFs
Exchange-traded commodity funds backed by physical assets as opposed to financial derivatives are, as we have noted before, increasingly the rage among both retail and institutional investors.
Gold,
China’s aluminum inventories: larger than you may think
Bloomberg reported an interesting claim by Aluminum Corp of China, or Chalco, the country’s largest producer of the metal, on Wednesday:
Chinese smelters, traders and warehouses hold as much as 600,000 metric tons of inventories because of surplus output
Privately held inventories would be equal to two-and-a-half weeks of forecast Chinese demand this year,
Chinese commodity imports expected to slow
Chinese commodity imports are expected to slow in the second half of the year from record levels as the impact of the country’s stimulus package, arbitraging opportunities and stock-piling fade, according to a Royal Bank of Scotland report being published Monday.
Living in a commodities oxymoron
It appears it’s not just oil that’s defying supply and demand fundamentals, with prices rising in the face of growing inventories.
As Reuters reports on Friday copper and aluminium prices are doing much the same thing (our emphasis):
Livestock and aluminium, laggards in May
Much attention has been focused of late on rampantly rising commodity prices. But as the following from Bank of America Merrill Lynch on Tuesday makes clear, not all commodities were impressive risers in the month of May.
China’s metallic grab
China has released the details of its long-awaited “metal consolidation plan”, which basically amounts to a stimulus/nationalisation package for non-ferrous metal producers in the PRC.
From Steel Guru: