Where The World's Biggest Worries Are

With US equity markets hovering near record-er highs, we thought a quick summary of the state of the world's growing geopolitical risks would 'help' rationalize the BTFATH mentality. Here is Deutsche Bank's map of the most potentially destabilizing risks around the world..

Chinese primary aluminum imports climbed 10.23% in May

The data released by the General Administration of Customs indicates that the imports of primary aluminum grew significantly during the month of May this year. On the other hand, the imports of waste aluminum by the country dropped during the month.

The country’s imports of primary aluminum totaled 24,049 tons during the month of May ’14. The monthly output rose 10.23% upon comparison with the output during the same month a year ago. The Chinese welded steel pipe imports had totaled 21,817 tons in May 2013.

As per Customs data, the country’s average import price of primary aluminum averaged at $ 2,026.78 per ton during the month of May.

The cumulative primary aluminum import by the country during the initial five months of the year totaled 212,484 tons, 162.11% higher when compared with the output during the corresponding five months during the previous year. The January-May primary aluminum imports had totaled 81,067 tons during 2013.

China imported 169,583 tons of waste aluminum during the month of May this year, falling by nearly 15% year-on-year. The cumulative imports of waste aluminum during the first five months of the year totaled 929,516 tons, marginally lower by 1.85% when compared with the imports during the corresponding five months in 2013.

China imported 282,969 tons of refined copper in May '14, says Customs data

The latest statistics released by the country’s General Administration of Customs indicates that the Chinese refined copper imports surged higher during the month of May this year. The country imported 282,969 tons of refined copper during the month. The imports during May ’14 were 21.89% higher when compared with the imports during the same month a year ago.

The average import price for refined copper during May ’14 was $ 6,925.74 per ton.

The refined copper imports by the country during the initial five-month period of the year totaled 1.63 million tons, rising significantly over the previous year. The imports jumped 48.84% higher when compared with the imports during the corresponding five-month period during 2013. The Chinese refined copper imports during January to May in 2013 had totaled 1.10 million tons.

Meanwhile, the country’s refined copper exports soared higher during May this year. According to Customs data, the exports of refined copper during the month totaled 28,149 tons, nearly 95% higher when compared with the exports during May last year.

The cumulative refined copper exports during the five-month period of the year totaled 105,204 tons, down 37.58% over the previous year.

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Stocks Slump As Fed's Bullard Warns The Market Is Wrong

 "Markets don't appreciate how close the Fed is to its goals," and thus tightening is the warning from the usually quite dovish Jim Bullard.

• BULLARD SAYS MARKETS DON'T APPRECIATE HOW CLOSE FED IS TO GOALS
• BULLARD SAYS HE'S TRYING TO PUT EMPHASIS ON CLOSENESS TO GOALS
• BULLARD: MARKETS SHOULD BE PRICING IN RATE INCREASES BASED ON WHAT THE FED SAYS
•  BULLARD: ECONOMY SHOULD BE ABLE TO HANDLE IT IF WE BEGIN TO PULL BACK FROM WHERE MONETARY POLICY IS NOW

Remember, don't fight the fed - unless they say sell?

And it seems the market that is 'wrong' is stocks; as bond yields continue to tumble to 4-week lows. Consider for a moment the many reasons why bonds would be here and now thanks to Bullard, they are front-running the equity sell-off (knowing that once stocks dump, it will all go into duration).

Industrial metals to benefit from China's positive outlook

Restocking and improved demand for industrial base metals is likely, said TD Securities.

“With China growing at 7.5%, the U.S. showing more and more positive data points and Europe benefitting from more ECB (European Central Bank) monetary accommodation, industrial metals demand should tighten their supply/fundamentals across the base metals complex into 2014,” said TDS says.

Chinese inventories of products containing metals have been declining, and they may need to be replenished should industrial uptake speed up. “It is quite likely that manufacturers are light on inventories owing to recent uncertainty related to Chinese growth,” TDS added.

“We are also hearing the same thing from Western world manufacturers. Metals with supply constraints, like zinc, are likely to perform best. While the scandal surrounding copper in China may have some negative impact, it is small relative to the market and should not skew the positive impact of global supply/demand physical fundamentals and cost structures,” TDS added.

Copper price: Emptying warehouses spark red hot streak

In New York trade on Monday September copper extending a rally to reach a high of $3.1765, sparked by a continuing drawdown of inventories around the world.

It's the tenth straight day of gains for the red metal after coming dangerously close to breaching the $3.00 a pound level at the start of June for the second time this year.

The rally is the longest winning streak for the metal since 2005. LME copper also showed some strength climbing to $6,955 a tonne.

Gains for copper come on the back renewed optimism about more robust global economic growth after strong manufacturing numbers out of China and expectations of an acceleration in the US economic recovery.

The copper price is highly correlated with economic growth thanks to the widespread use of the metal in the construction, transport and power industries.

Inventories at warehouses managed by the LME and those in New York and Shanghai, fell to a six-year low on Thursday – 50% in 2014.

The global refined copper market swung to a surprise shortage in March and a 205,000 tonnes deficit for the first three months of the year, compared with a 206,000 tonnes surplus in the same period in 2013, preliminary data from the International Copper Study Group showed on Monday.

The Qingdao issue is raising concern over the status of supplies

Defying market expectations, the copper price has dug itself out of a near four-year low struck mid-March of $2.92 a pound.

The metal remains 5.7% down in 2014 as the market adjusts to slower growth in China which consumes more than 40% of the world's copper demand of some 21 million tonnes.

A complicating factor in predicting the copper market this year is Beijing's crackdown on the use of commodities as collateral for letters of credit.

On Thursday it was revealed authorities uncovered massive fraud in the China's gold-backed loan industry, which comes on the heels of a probe into allegations that several companies pledged the same copper, iron ore and other industrial metals held at the port of Qingdao as collateral for loans to different banks.

Fears that these stocks will be dumped onto the market as these deals unwind forcing prices down and creating a vicious circle have spooked the industry, especially iron ore.In sharp contrast to copper Chinese iron ore inventories remain close to record highs of 115 million tonnes and the price of the commodity is already down some 30% this year.

Another theory doing the rounds is that, at least for copper, the shadow banking crackdown could actually turn out to be a boost:

"The Qingdao issue is raising concern over the status of supplies, with physical copper in Shanghai now commanding a premium over front-month futures, having been trading at a discount earlier this month.

"Another potential impact from Qingdao is that Chinese imports of metals will decline in coming months, as traders find themselves shut off from letters of credit."

Chinese copper imports tumbled 16% in May compared to the previous month, but year to date China is still importing refined copper at a record setting pace – up a whopping 34% over 2013 to 2.1 million tonnes.

Other base metals have also enjoyed a good run.

Zinc is trading near a 16-month high

Zinc was trading near a 16-month high at $2,190 a tonne, as LME stock of the metal sink to lows last seen in 2010. The base metal is up more than 6% during the current quarter.

Lead has advanced 5% this year and is now back to highs last seen in February this year above $2,150 a tonne.

The imminent closure of several lead-zinc mines including the Century mine in Australia have raised fears of a supply shortage.

Nickel continues to be the strongest performer gaining 13% just over the last three months in response to Indonesia’s export ban on unrefined mineral ores. Nickel prices scaled $21,000 a tonne in May, but has since settled back to the mid-$1,800s.

The Ukrainian crisis also underpinned the price of the steelmaking raw material over fears of increased sanctions against Russia – Norilsk accounts for approximately 17% of global nickel output.

Tin is the laggard of the sector trading close to its opening levels of 2014 at $22,425 per tonne.

Tin has followed the opposite path to copper. Expectations was for a rise in the price on predictions of a market deficit, but warehoused stock has been on a rising trend reaching 11,185 tonnes on Thursday, up nearly 40% over the past four months.