It is very true that “corrections usually happen faster than...

It is very true that “corrections usually happen faster than expected”.

Column: Collapsing metal inventories clash with plunging prices (Reuters | July 13, 2022 | 6:30 am)

“The scale of the disconnect between price and stocks is striking. The resulting mismatch of current scarcity and expected future surplus is likely to be resolved by sporadic flare-ups in LME time-spreads.”

LME approves BOCI, G.H. Financials as cat 2 members in 2012. Since July 2015, LME Clear members have been able to use Offshore Renminbi (CNH) as eligible cash collateral to cover their margin requirements. China has a great influence on the LME. It is not surprising that China would strategically stock up after metal prices fell.

There are some interesting commentaries in this article by Bloomberg:

“Yet copper and several other metal markets are still facing some of the tightest supply conditions ever. With inventories dwindling globally and little sign of significant new supply, even staunch copper bulls like Goldman Sachs Group had warned that demand destruction may be necessary to help ease the strain."

“For now, the recessionary risks around copper are driving away generalist investors, said BOCI’s Fu. ‘Some of the so-called tourists have decided they want to get out for the time being, and from a trading perspective that makes sense — but fundamentally these markets are still very tight’.”

All the above suggests to me that metal prices will not stay low for long. I topped up AIS this morning.