Take physic, pomp

LME warehouse copper

There’s a lot of talk about this chart crossing my desk today:

For sure the 100,000MT lopped in copper stored at LME warehouses in just the last couple weeks is ostensibly bullish. No denying that, but boring old fundy-headed Otto is yet to be convinced there’s any demand driver here, sorry.

One clear thing is that China is the driver of this copper take-up. There’s little debate on that score. However we saw China restock iron ore over the new year period, now we see iron ore piled up on the docks of that nation and end user demand clearly wasn’t the driving force. So why should copper be any different here? This copper move has all the hallmarks of Chinese restocking, as the move is fast and against the grain of world macroeconomics. Another rebuttal worth mentioning to the auto-copper bulls is that warehouse stocks that leave one warehouse (eg in Europe) and are transported to another (eg Shanghai) are subtracted from the warehouse lists while in transit. That might also be a factor in play here.

If the stocks are still dropping hard in, let’s say, four weeks time I’ll review my bearish outlook on copper, but there’s no way I’m chasing a speculative sentiment fuelled by Hope™ in the middle of this bear market. Because that’s where we are, like it or not. You won’t get any fairydust sprinkled in your eyes at this blog, so if you want the Kool-Aid go watch CNBC.


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