Posts tagged 'Bonded warehouses'

The great Chinese collateral trade, illustrated

We’ve seen explanations of how the famous Chinese copper (and other commodity collateral) LC financing trade works in the past.

But here’s a particularly good one from Goldman Sachs’ big report on China’s credit environment, which was out last week. The diagram also explains how SAFE’s new regulations are likely to restrict the trade from now on: Read more

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. Demand, they say, is skewed because of financially motivated collateral schemes in China. Read more

The UK is concerned about banks that warehouse commodities

Yikes. This is hot off the wire on Tuesday:

RTRS-UK GOVT COMMITTEE SAYS IT BRINGS ACTIVITIES OF LARGE DEALERS ON  LONDON METAL EXCHANGE TO ATTENTION OF OFFICE OF FAIR TRADING Read more

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.

A clever inflation hedge, if you will. Read more

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, Chile, increased.

As Bloomberg noted, copper for delivery in three months on the London Metal Exchange climbed 1.4 per cent to $9,327 a metric tonne. Read more