"which means they will have to restock soon"Hi Invador,You are...

"which means they will have to restock soon"

Hi Invador,

You are probably correct, stocks will rise, but that definitely doesn't have to happen. If it does it won't put upward pressure on the price. It's important to understand that the Futures Exchange warehouse stocks don't have any connection with what's happening in the Copper Mining and Manufacturing sectors. it's nothing more than a sideshow for people who want to own copper as an investment.

Restocking will only occur when the copper price drops to a level where it is considered to be too cheap.

When you look at the Cu price/ Warehouse stock charts the stocks are driven up when the price falls and down when the price rises. They are price driven. They certainly don't drive the price.

If you are interested in why that is so.

The hedging interview video that @ Fuch posted, drew my attention to the fact that a lot of people want to invest in the physical ownership of copper.
Futures exchanges facilitate this activity by contracting with storage providers to provide warehouse space to people who want to own copper.

Like any investment astute players buy copper, via warrants issued by a futures exchange, when its undervalued and sell it when it becomes overvalued. The stock levels don't drive the price. The price drives the stock levels because people want to own copper when its too cheap and aren't interested when it's over priced.

The lion's share of copper that is mined and processed is bought and sold through commodities traders and doesn't go anywhere near a futures exchange warehouse.

The chart shows a very clear relationship between cu price and stock levels. When the price in the spot market falls people buy Cu as an investment and the stocks rise. When the price rises investors sell their Cu take their profit and stocks fall. Happy punters hopping on and off the merry-go-round at the commodities sideshow sponsored by Futures Exchanges.