Sunday, March 6, 2016

The Reason For Copper's Dramatic Surge: Chinese Copper Inventories Hit Record

Two weeks ago we reported that one month after China created a record $520 billion in total credit (TSF), through February 18 Chinese banks had followed through with another CNY2 trillion according to MarketNews, meaning that in the first two months of the year China will have created a gargantuan $1 trillion in new credit between loans and unregulated shadow banking issues.
The Reason For Copper's Dramatic Surge: Chinese Copper Inventories Hit Record

A question that emerged is what China is spending all this newly created money on. One answer emerged overnight when Bloomberg reported that after tumbling in the first half of 2015, copper inventories at the Shanghai Futures Exchange had been steadily rising, and in the most recent week soared by 11% to an all time high of 305,106 tons.
At the same time reserves at the London Metals Exchange declined for 11 days to the lowest level in more than a year, in other words China is shifting idle inventory from Point A to Point B.
The Reason For Copper's Dramatic Surge: Chinese Copper Inventories Hit Record
Bloomberg adds that as a result of this massive spending spree, inventories tracked by the Shanghai Futures Exchange are higher than stockpiles monitored by the London Metal Exchange for the first time in a more than a decade.
This explains two things:
  • for all talk of reform, China is once again building a bubble in excess capacity and stockpiling surplus commodities, which will likely last as long as China floods the economy with newly created bank loans;
  • The recent surge in the price of copper, which has been a direct function of China's recent massive restocking
The Reason For Copper's Dramatic Surge: Chinese Copper Inventories Hit Record

Most importantly, this means that the world is now back to the "old regime" China, where it was stockpiling massive amounts of inventory as only possible the "use of capital" of trillions in new money created, which of course is precisely the "regime" that created the hard landing scenario that China finds itself in at this very moment.
And so, can kicked. The only question is for how long.

11 comments:

  1. Its risky to trade in share market without any knowledge or information so its better if you take guidance from the advisory like Epic Research.

    ReplyDelete
  2. Asian shares off 1 1/2-yr high, Trump's yuan comment in focus .capitalstars

    ReplyDelete
  3. Your post is very useful for us. thanks for sharing this post
    http://www.wealthitglobal.com/

    ReplyDelete
  4. well written.
    Think big, believe big,act big and the results will be big.financial advisory company

    ReplyDelete
  5. All of your blogs are up to date, i appreciate your work. Keep going and update us with your latest and fresh blogs.
    Share market calls
    SEBI Registered Investment advisor
    Commodity tips

    ReplyDelete
  6. Deep knowledge about investment by experts, Keep it Up nice work.
    Trade India Research

    ReplyDelete
  7. It is really good information about the commodity market. It can help of fresher as well as experienced trader who are trade in commodity market. Very nice article.
    online mcx trading tips

    ReplyDelete
  8. Thanks for this great and useful information. Thanks for sharing it. If anyone wants free trading tips and stock market tips and MCX tips

    ReplyDelete
  9. It is really good information about the commodity market. It can help of fresher as well as experienced trader who are trade in commodity market. Very nice article.
    MRSSteel

    ReplyDelete
  10. Theequicom is a trusted advisory firm which provides you Indian stock market tips, best stock future tips, future and option tips for intraday trading.

    Theequicom
    Theequicom reviews
    Theequicom Financial Research

    ReplyDelete