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  • Copper prices hit new high
    Date :2010-4-29


    "Financial Times" on April 7 article, said the London Metal Exchange (LME) 4 月 6 日 8000 U.S. dollars per tonne mark a breakthrough in copper, rose 90 percent, was in August 2008 the highest since.


    Last month copper prices on liquidity crunch and demand is expected to improve the game. March 1 Shanghai copper under the influence of the earthquake in Chile once daily limit, but because of the earthquake in Chile copper mine did not have serious damage, making Shanghai copper finished lower. Subsequent tightening of domestic liquidity is expected to dominate the market, and for a time under pressure Shanghai copper fell to 58,000, but from late February LME stocks continued to decline, and China's copper imports strong, indicating an improvement in the demand, Shanghai copper did not fall further, always maintained at 58000-60000 box shock, and recently granted stock index futures market and other external forces in Peru copper mine strike the boost to complete breakthrough. Although once during the dollar index rebounded sharply but copper does not significantly suppress the formation of copper continued to weaken the financial attributes. 

    Copper prices rose on the large part of the reason we can be attributed to seasonal demand factors, seasonal factors in the support, copper still has to continue to rise, but we look behind the rising price of copper has been we have neglected factors, copper prices continue to rise would falter.


    Whether the physical inventory to reduce demand?


    We expect improvement in the demand for copper, a large part attributable to LME stocks fell and the Chinese copper imports strong appearance. LME stocks in late February up to 555,025 tons, then began its peak. While in February the Chinese New Year falls on holiday, but imports up instead of down, to reach 322,000 tons. Necessary link between the two seems to be that the decline in LME inventories is due to increase in demand due to, but after careful analysis, LME stocks fell early physical needs may not be entirely free of reason.


    Although the Chilean earthquake did not cause serious damage copper, but Chile's electric power, ports and transportation had a serious impact, while the LME inventory is from Chile began to trend down after the quake. The logic we can understand the Chilean earthquake affected the export of copper, which consumes stock exchange. The fact is, after the earthquake in Chile, a sharp rise in LME canceled warrants, canceled warrants / stock than in the March 3 reached the highest point of 6.53%, but then canceled warrants no further rise, now down to Chile earthquake the levels prior.


    On the other hand a fresh look at China's copper imports data. Because China is a net importer of copper, the general sense, means that China increased imports of Chinese copper demand, but the role of speculative funds can not be ignored. Copper cross-market arbitrage window open from the start by the end of December and the February cross-market arbitrage opportunities exist. Comparison of LME stocks and Shanghai copper stocks we can find, LME stocks increased demand for the reduction may not be caused by the possibility is speculative capital arbitrage window opened to move to Shanghai copper stocks. Starting from February, a decrease of 24,700 tons LME stocks, but Shanghai copper inventories increased by almost 70,000 tons. As the years after the cross-market arbitrage window is closed, the lack of the role of speculative capital, whether China can maintain the strong imports in doubt.


    Of course, LME warehouses in Europe while American warehouse and drop, pick up overseas demand is an important factor supporting rising copper prices, which we believe 2010 will be high and volatile copper prices, even if the callback will not be an important reason for the significant downturn.


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