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’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.
On the scale of hidden copper stocks
An interesting report comes our way from Frank Veneroso of RCM, who has been looking more closely at the scale of the global copper inventory overhang.
He cites the work of Simon Hunt, an independent copper market expert,
Goldman reiterates bearish call on commods (again)
Yikes.
This is the third bearish commodity note from Goldman Sachs in one week.
They must really be keen on the view, eh?
And, dare we say it, the latest note sounds rather panicky — entitled as it is “Growing conviction in NT downside,
Goldman says there’s been a copper collateral crackdown
You never can tell with Goldman Sachs, can you?
On the one hand they revise their copper market outlook and advise to take profits; on the other hand they claim not to believe in the surplus inventory story.
If the market ignores your research…
… bang on about it.
That’s the lesson from Monday’s ‘take profits on your commodity positions’ call from Goldman Sachs.
As Olivier Jakob at Petromatrix observes on Wednesday:
Just in case someone missed on Monday the Goldman Sachs recommendation to exit long positions in crude oil,
Goldman jolts commodities market
A nasty (and in all likelihood temporary) fall for the FTSE 100 on Tuesday morning.
And it’s mining stocks that have done most of the damage.
Apart from profit taking, there are two reasons for this sell-off,
Some circumstantial copper evidence
Sean Corrigan, chief investment strategist at Diapason Commodities, was the first to detect a correlation between China’s loose monetary policies and copper prices. His basic finding; the greater the amount of loans extended in China,
Why the Chinese copper financing scheme is a big deal
FT Alphaville has recently focused on the rise in commodity-backed financing schemes in China as a response to the People’s Bank of China’s tightening measures, which shut credit off to many small- and medium-sized companies in the country,
Chinese ‘copper financing’ got even more popular this month
So says Standard Chartered bank in their latest Metals Weekly research.
The bank was among the first to bring attention to the fad of commodity-backed financing in China, and now has this update:
Three weeks ago in our report ‘Copper – A reality check from China’ (7 March 2011),
Standard Bank says Chinese copper market cause for concern
We’re calling it the “The Great Chinese Commodity-as-Collateral Financing” fiddle.
That is, the purchase of commodities like copper on deferred payment terms for the sole purpose of raising cheap financing for reinvestment in higher yielding assets.
Simply amazing commodity collateral shenanigans in China
Last week FT Alphaville drew attention to a seemingly ingenious financing strategy being implemented by some Chinese commodity firms — the use of copper inventories as collateral for loans.
We only had a few sketchy details at the time,
China’s copper as collateral addiction
On Wednesday, we drew attention to a Standard Chartered report which claimed that as much as 550kt of copper was stockpiled in bonded warehouses in Shanghai by late February — the majority of it being used as collateral for securing financing deals.
More proof the Chinese have been using copper as collateral
The disconnect between oil prices and copper prices is gaining increasing attention.
Naturally, the curiosity boils down to the fact that while oil prices are rising, copper prices are doing anything but:
The FTSE 100 global growth index
Thursday’s price action in London:
Confirmation (if any were needed) that the FTSE 100, with its very heavy weighting of resources stocks, is now just an option on global growth.
So if investors
Chinese consumers, going platinum
One for super-cycle fans and/or commodity bulls. A chart from a Citi note on metals and mining, arguing that slower industrial growth in China’s new five-year plan (and the one after that) will be replaced by lots and lots of commodity-munching Chinese consumers:
Sucden Financial turns its attention to Delta One
An interesting press release via Mondo Visione on Wednesday (our emphasis):
Sucden Financial has announced that it will be launching a new service geared towards institutions to capture brokerage opportunities in the Delta One and Equity derivatives and finance arena with effect from January 2011.
China’s bonded-warehouse copper mystery
Copper prices in London soared to record highs on Tuesday as data from China showed the country’s imports had picked up for the first time in three months — just as fears over supply disruptions in the world’s biggest producer,
Why JP Morgan’s new copper ETF may have a scouse exposure
JP Morgan threw its name into the physically backed commodity ETF race on Monday with the filing of a preliminary prospectus for a copper-backed product.
The SEC document, the first from a major new player preparing anticipating an entry into the market,
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.
Dollar debasement in commodities, charted
Amazing to think that it’s taken some analysts nearly two years (if not more) to discover that commodity prices might be a little more influenced by fluctuations in the dollar than real hard fundamentals.
Block trade watch – frothy markets edition
One big share placing in a week might be considered unfortunate. But two?
Passed to us by a broker on Thursday morning:
(The company in question in Kazakhmys, the Kazakh copper producer)
OFFER STRUCTURE:
Directors’ dealings Kazakh style
That’s Vladimir Kim.
He’s the chairman of Kazakhmys, the London-listed Kazakhstani copper producer.
And he’s just sold an enormous chunk of stock.
From the RNS on Tuesday morning: