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’Goldman on metal pawning
Remember the negative gold lease rate debacle of the second half of last year?
Negative rates imply that banks are pawning gold in exchange for dollars. A move which happens to depress gold prices.
But it’s always been difficult to establish who was pawning what and when,
Snap news
Breaking pre-market news on Tuesday,
- Total to pay $1.63bn over seven years in US shale gas venture with Chesapeake and EnerVest — statement.
- Codelco says it exercises disputed option to buy 49 per cent of Anglo American’s Chile subsidiary,
A heretical glimpse into the ghost of copper future
Simon Hunt Strategic Services — the eponymous market analysis vehicle of copper market veteran Simon Hunt – has just published its 2012 outlook.
Be warned, though, it carries the following disclaimer:
Counting the copper collateral cost
It’s hard not to wonder what the role of Chinese copper-as-collateral has to do with it?
From Standard Bank’s Leon Westgate, on Monday:
The SHFE copper market traded limit down again this morning,
[Something for the weekend] Alliance… I’m not sure about this
– By Neil Collins –
I’m a shareholder in Alliance Trust. Its subsidiary, Alliance Trust Savings, is home to my (substantial) SIPP. The service from ATS is simple, cheap and exemplary, and I’d recommend it.
Snap news
Breaking pre-market news on Friday,
- Copper down 7 per cent amid commodities sell-off — report.
- G20 communique promises “necessary actions to increase the flexibility of the EFSF” — report.
- EasyJet says easyGroup withdraws request for EGM — statement.
More than 2.8m tonnes of hidden copper stocks
The debate over how much copper is being stored ‘off market’ in private inventories — not part of the LME inventory system — has been going on for a while.
The general position taken by investment bank analysts is that supply is tight.
A new development in China’s copper collateral trade
FT Alphaville has talked volumes about China’s cash-for-copper collateral obsession.
Recently, however, speculation has picked up that these trades have started to be unwound — mainly because the Chinese government caught up on the funding loophole,
Goldman says ‘it’s got riskier’ (but we still ♥ commodities)
For anyone wondering how commodities will do out of the USA(A+) downgrade, Goldman Sachs takes a stab at predicting the course of events in its Monday commodities research note.
In a nutshell, it’s going to get riskier out there,
Goldman Sachs is hot for soybeans
The latest ‘Commodity Watch’ note from Goldman Sachs continues to paint a bullish picture for most of the commodities complex in 2011 and 2012.
The usual Goldman arguments about how global growth, fueled by Asia,
About that Chinese inflation rate
With China hiking interest rates by 25 basis points on Wednesday, reportedly to counter faster inflation, now is probably a very good time to bring up the issue of the country’s GDP deflator calculation.
China and the magic financing (soy)beanstalk
Whoah…
Did you think commodity collateral shenanigans had been rumbled and stopped by China’s authorities?
Well, seems you’d be wrong.
Bloomberg is out with a cracker of a story on Thursday,
Copper’s inventory inconsistency, charted
There’s a bitter divide amongst the copper market commentariat at the moment.
In one camp are the “inventory realists”, mostly independent analysts, who claim prices are too high based on where global inventories stand.
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.
Glencore’s EIB problem
What a curious statement from the European Investment Bank (a placid institution usually) on Wednesday.
It starts off reading like a defence of a $50m loan to Mopani Copper Mines (a Glencore subsidiary based in Zambia) which dates back to 2005,
The butcher, the baker, the candlestick maker — all love copper
Though, only in China, of course.
The title refers to the latest anecdote from China markets guru Michael Pettis regarding China’s growing copper debt pile.
A student of Pettis, Michael Liang, recounts a conversation he recently had with a Chinese commodity trader.
And now Goldman says the commodities correction is over [updated]
Having been proven right about their prediction of a rather substantial correction in commodities earlier this month, Goldman Sachs is now out with a new view.
A bullish view.
As Jeffrey Currie and team wrote on Tuesday:
China’s copper collateral – and covert credit
Whatever happened to China’s amazing copper collateral shenanigans?
Goldman Sachs said last month that China’s central bank may have cracked-down on the scheme, which saw Chinese corporates use copper as collateral for new loans.
If we build it, they will come
FT Alphaville has explored the financing and bespoke servicing role of ETFs before.
The FT’s Gillian Tett has now openly likened the products to CDOs.
Given that, we thought we would provide some further context to the nature of such things in the commodity world.
Chinese commodity imports are falling
It’s probably fair to say that in the commodity world, all eyes are now very firmly set on the state of Chinese imports.
Some interesting signals are now emerging. Namely — and perhaps not surprisingly to some — that Chinese imports are struggling with high global commodity prices.
Commodities on Monday, just a bad dream?
Was it all just a bad dream? Signs on Monday that commodities prices are at least stabilising amid positive economic news from the US, China and Europe might come as a relief markets after last week’s rout wiped a whopping $99bn off the overall market value of commodities prices,
Some more standard deviations in commodities
Sean Corrigan at Diapason Commodities sends us this chart on Friday:
It shows the value of London Metal Exchange Lead inventories over two decades.
As Corrigan notes, the more visible inventory there is,
There’s still room for more oil slides, Goldman says
Just what everyone has been waiting for!
The latest thoughts from Goldman Sachs’ energy gurus on the most recent commodity mega-slide.
And don’t forget: they did predict it.
First… what they think caused it:
Copper, the re-export factor
We’ve already referred to the latest Reuters Metals Insider report on Thursday, but somehow we feel that the following is worth a special mention of its own.
That is, what happens when the government attempts to rein in innovative Chinese financing schemes like those using copper as collateral?
In one (hyphenated) word:
Chinese bonded warehouses’ copper inventories still rising
Having flagged the problem in the first place, it was natural for Standard Chartered to follow up on the state of China’s bonded warehouse copper inventories this month.
And what they found — surprise,
And now for Chinese zinc shenanigans
FT Alphaville has already alluded to the fact that it isn’t just copper that has been subject to Chinese inventory financing shenanigans.
Other commodities, especially base metals, are supposedly also being used for such purposes.