COPPER 0.00% $2.71 copper futures

so wheres chinas massive demend now, page-29

  1. 29,310 Posts.
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    Its not just the Chinese -its the Banks, hedge Funds and futures traders.
    This WAS predicted last year (13/5/2006) in articles (there were several) that showed the "hollow", shall we call it, between the rising prices the crust) and the REAL fundamental support underneath. Something eventually had to give.
    I saved this article at the time:

    "I bet you didn't make this much last yearBanks face vast losses in copper
    mayhem
    By Ambrose Evans-Pritchard (Filed: 13/05/2006)

    The spike in copper prices over recent weeks has left a group of banks and
    operators on the London Metal Exchange (LME) nursing vast losses, raising
    concerns about the stability of the commodities market.


    Simon Heale unexpectedly said that he would be stepping down by the end of
    the year
    The banks have been caught out by a sudden widening in the gap between the
    price of three-month futures and that of long-term futures, for December
    2010 or April 2011.

    "The dramatic differential we have seen over the past six weeks has cost
    them a huge amount of money," said a market source. "The bigger players can
    absorb the losses but smaller operators have nowhere to hide."

    Copper surged this week to an all-time high of $8,875 a tonne, rising almost
    10pc on Thursday. Yet futures prices for April 2011 are just $3,778 a tonne.

    Barclays Capital denied reports that it faced losses of £500m on copper
    trades, saying that it would have issued a statement if such claims were
    true.

    Banks help to finance the LME's $3,000bn trades each year, often taking on
    long-term hedges from metal producers, which they cover by selling
    short-term futures. If the two suddenly diverge, it plays havoc with their
    books.

    Adding to the intrigue, the LME's chief executive, Simon Heale, unexpectedly
    said on Thursday that he would be stepping down by the end of the year. His
    spokesman denied that there was any link to the metals mayhem this week,
    insisting that

    Mr Heale wished to spend more time with his family.

    Copper has doubled in price this year even though industrial demand is flat.

    "This is fairyland," said Richard Elman, head of the Noble Group. "We have

    never seen such a disconnect between reality and pricing

    of raw materials. The long-term story is sound but the short-term froth is
    patently frightening."

    William Adams, an analyst at BaseMetals.com, said demand for copper tubes
    was collapsing as producers switched to PVC plastics. The market in Germany
    has halved from 90,000 to 45,000 tonnes. "There's a very rapid switch from
    copper. When it turns, copper could easily drop $1,000 a tonne in one day,"
    he said.

    David Threlkeld, a veteran copper trader, said the market had been "out of
    control" for months, allowing speculators to run roughshod over industrial
    producers and users. "The LME has been seduced by hedge funds, [which have]
    pushed prices to levels unsupported by fundamentals. There's a vacuum below
    and the crash could set off a chain of margin calls running through the
    whole commodities sector. We've got a crisis on our hands and it is a lot
    bigger than copper," he said.

    http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/05/13/cncopp13.xml&menuId=242&sSheet=/money/2006/05/13/ixcitytop.html


    GZ
 
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