Much of the rally we’re all enjoyed, in one form on another, was predicated upon a resurgence in the cheap Chinese plastic economy that had stalled out in early January. Ever since the low point of 2016, copper prices had risen due to a renewed Chinese demand.
However, as we now see, that rally was only bulking up inventorie, not really indicative of a rally born through economic expansion. The rally has ended. Go in peace.
Comments »There’s “no need for imports given so much inventory as we enter the low season,” Ji Xianfei, an analyst at Guotai Junan Futures, said from Shanghai before the data were released. There’s also been no profit from arbitrage for a while, said Ji, referring to a lack of opportunity to benefit from differences between prices in China and overseas.
Ore Imports
Imports of copper ore and concentrate fell 8 percent to 1.26 million tons in April from a month earlier. In the first four months, purchases gained about 31 percent to 5.27 million tons year on year, the data showed.
Inventories in warehouses tracked by the Shanghai Futures Exchange swelled to a record in March, then fell 15 percent last month, according to bourse data. Holdings in bonded warehouses — which aren’t publicly disclosed — rose in April to the most since August, according to Bloomberg Intelligence.