Those LME warehouse copper stocks again

The mini-trend continues, as six of the last seven trading days have now added stocks to the LME warehouses.

That 14,825MT added to the warehouses, folks. Now it's important to keep this still relatively small move in context, so here's the five year chart to keep our heads screwed on and understand the difference between a small move and a game-changer such as the one we saw last year....

...but there's little doubt now that the trend of ever-downwards movement we've seen in 2009 regarding stocks is now broken. And by way of a wrap-up, here's a quick look at LME stocks of the other major traded base metals via their six month charts:

Zinc

Lead

Nickel

Alu

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.

DYODD

Charts of the day are...........

......five year LME copper warehouse stocks and five year copper spot price.


They go very well with this report from Reuters:

 SINGAPORE, Nov 21 (Reuters) - The world refined copper
market saw a surplus of 74,000 tonnes between January and
August this year, versus a surplus of 22,000 tonnes in the
year-ago period, the International Copper Study Group (ICSG)
said in its latest monthly bulletin.

 The Lisbon-based ICSG said world refined copper output in
January to August was 12,221 million tonnes, while consumption
reached 12,147 million tonnes. World refined copper consumption
and supply trends, 2007-2008, in thousands of tonnes:

                              Jan-July 08   Jan-July 07
World mine production             10,061        10,161
World mine capacity               12,187        11,838
Mine capacity utilization (pct)     82.6          85.8
Primary refined production        10,411        10,093
Secondary refined production       1,810         1,784
Refined production                12,221        11,877
(secondary+primary)
World refinery capacity           14,893        14,262
Refinery capacity utilization (pct) 82.1          83.3
World refined consumption (1)     12,147        11,854
Refined stocks (end of period)     1,293         1,223
Period stock change                 -129            96
Refined surplus/deficit (2)           74            22
Refined surplus/deficit              206           149
(seasonally adjusted) (3)

 (1) = Based on EU apparent usage.

 (2) = Surplus or deficit is calculated using total refined
production minus refined consumption.

 (3) = Surplus or deficit is calculated using seasonally
adjusted refined production minus seasonally adjusted refined
usage.
(Reporting by Nick Trevethan; Editing by Ben Tan)