column-what are surging industrial metal prices telling us? andy home
(
The opinion expressed here is the opinion of the columnist of Reuters. )
* LME Index: tmsnrt.
Relative price performance: tmsnrt.
Rs/2wDoRQ5 for Andy Home LONDON, Sept 5 (Reuters)-
Copper three-
The London Metal Exchange has an annual high of $6,970 per ton (LME)
Tuesday morning
Aluminum has performed even better, surpassing $2,100 a tonne for the first time since 2013.
Zinc overshadows both.
Currently $3,200 per ton, it is crossing the chart level during the big bull market in 2007 --2008.
The whole base metal complex seems to be charging up.
The LME metal index has risen 20% in the past three months.
The previous pattern of price differences between individual metals is disappearing.
Of the main base metals traded on the London Metal Exchange, only small tin refused to join the bull market.
The simple market mechanism, mandatory coverage of short positions in futures and options, explains the cruelty of some recent moves.
The weaker dollar is a fuel booster for the bull market, although its impact should not be overstated.
Analysts at Goldman Sachs, who are particularly concerned about copper, believe that the dollar effect is only a \"small part\" of the recent rise \"(
\"Copper: fundamental and technical aspects point in different directions \". 5, 2017).
Speculative funds must be mixed, and the positioning of the fund is rising throughout the scope.
However, this unexpected rise in metal, to a large extent, also shows that the market narrative has shifted from specific to general in terms of demand and supply.
Graphics on the LME Index: tmsnrt.
The rs/2 vHFBbW rally like this has gained its own momentum
Override more purchase signals that trigger the automatic trading system host.
This is a virtuous or vicious cycle depending on which side you are on.
The net long position of funds on CME copper contracts has actually fallen below an unprecedented level.
According to LME broker Marex Spectron, the collective speculative long position of LME copper contracts in London exceeded 50% at the end of last month.
It added that the length of this bull market has not been seen since 2004.
China\'s commodity exchanges are resisting the growing \"rapid\" capital surge among retail people who collectively act like a huge momentum --
The black box transaction plan.
From iron ore to steel to iron and other esoteric metals
To curb runaway prices, the Silicon exchanges in mainland China have been raising fees and margins.
Even so, the public interest rate on aluminum contracts on the Shanghai Futures Exchange is now more than 1 million for the first time.
This collective boom has led analysts to almost agree that things are a bit out of control and that some sort of corrective response is approaching quickly.
Figure of relative price performance of LME metal: tmsnrt.
Rs/2wDoRQ5 although sometimes tends to be irrational, this boom is based on a rational rewrite of the market narrative.
In the first half of this year, there were wide differences between the various LME --
According to the supply dynamics, the market price of metal transactions.
Zinc is challenging these historical peaks due to tight supply chains of raw materials and a decline in metal inventories in Exchange warehouses.
After two gears in the iron ore supply chain fell in Indonesia and the Philippines, nickel has not performed well for a long time.
But now the nickel has caught up.
$12,180 per ton, LME three-
At the beginning of the month, metal rose nearly 23%, followed by copper, up 26%.
There has been no change in nickel supply.
Stocks remain high, and there is no evidence that China is restricted by raw materials.
What changed was a collective reassessment of the state of industrial metal demand.
Judging from a series of positive purchasing managers\' indices in early September, global manufacturing seems to be enjoying one of the rare coordinated growth moments.
Factory activity is expanding in China, Europe and the United States, and funds seem to be moving into industrial metals to take advantage of this. Nickel’s ever-
The ever-changing supply chain of raw materials is now overshadowed by stronger prospectsthan-
Demand in the stainless steel industry is expected to grow.
It was boosted by the rising macroeconomic wave. SUPPLY-
Not that individual supply differences have disappeared, but the shock and awe on the side.
They are still there, but they are also included in the larger supply --side shock.
An inspection team from Beijing is spreading in waves in the form of an inspection team that checks the illegal and environmental insecurity capabilities of the entire industry.
This started with the steel industry.
Campaign to crack down on small illegal operators, \"zombie\" factories and even large producers operating in target environmental cleaning
Surrounding areas of Beijing.
Since then, it has expanded to almost every industrial supply chain, and metals have received particularly close attention.
A week ago, tin smelters in Yunnan province were closed for inspection.
Next week is the wire and cable manufacturer in Hebei.
The forced closure of a large amount of aluminum capacity has changed the market\'s continued description of structural oversupply, even if no one is very sure how much the actual production will be affected.
This is the problem.
China is often overlooked as an important producer and consumer of metals, although it operates in black holes with reliable statistics.
Its internal supply chain is undergoing reforms in an unprecedented manner, and its impact is almost unpredictable.
Take steel as an example.
China has been working to solve the excess capacity of its huge steel industry.
It closed 42 million tons in the first half of this year, equivalent to 84% of this year\'s target.
However, actual steel production is not only on the rise, but a record in July.
There are some statistical means in these figures, because most of the illegal capacity that is being shut down has not been counted since the beginning.
But with less competition and strong demand for core building and infrastructure drivers, the profitability of Chinese steel companies is soaring.
The shutdown of capacity seems to be a counter-intuitive result.
But Beijing is building its own virtuous circle of eliminating \"illegal\" operators, which will raise prices and, in turn, raise the financing status of state-owned enterprises such as aluminum producer Chinalco. This all-
Including supply shocks are still developing.
A new set of capacity restrictions in the surrounding provinces of Beijing will start at the beginning of the winter heating season in November.
The new narrative of base metals is still developing, and the combination of optimistic macro demand and uncertain macro supply masks micro wealth.
The opinion expressed here is the opinion of the columnist of Reuters. )
* LME Index: tmsnrt.
Relative price performance: tmsnrt.
Rs/2wDoRQ5 for Andy Home LONDON, Sept 5 (Reuters)-
Copper three-
The London Metal Exchange has an annual high of $6,970 per ton (LME)
Tuesday morning
Aluminum has performed even better, surpassing $2,100 a tonne for the first time since 2013.
Zinc overshadows both.
Currently $3,200 per ton, it is crossing the chart level during the big bull market in 2007 --2008.
The whole base metal complex seems to be charging up.
The LME metal index has risen 20% in the past three months.
The previous pattern of price differences between individual metals is disappearing.
Of the main base metals traded on the London Metal Exchange, only small tin refused to join the bull market.
The simple market mechanism, mandatory coverage of short positions in futures and options, explains the cruelty of some recent moves.
The weaker dollar is a fuel booster for the bull market, although its impact should not be overstated.
Analysts at Goldman Sachs, who are particularly concerned about copper, believe that the dollar effect is only a \"small part\" of the recent rise \"(
\"Copper: fundamental and technical aspects point in different directions \". 5, 2017).
Speculative funds must be mixed, and the positioning of the fund is rising throughout the scope.
However, this unexpected rise in metal, to a large extent, also shows that the market narrative has shifted from specific to general in terms of demand and supply.
Graphics on the LME Index: tmsnrt.
The rs/2 vHFBbW rally like this has gained its own momentum
Override more purchase signals that trigger the automatic trading system host.
This is a virtuous or vicious cycle depending on which side you are on.
The net long position of funds on CME copper contracts has actually fallen below an unprecedented level.
According to LME broker Marex Spectron, the collective speculative long position of LME copper contracts in London exceeded 50% at the end of last month.
It added that the length of this bull market has not been seen since 2004.
China\'s commodity exchanges are resisting the growing \"rapid\" capital surge among retail people who collectively act like a huge momentum --
The black box transaction plan.
From iron ore to steel to iron and other esoteric metals
To curb runaway prices, the Silicon exchanges in mainland China have been raising fees and margins.
Even so, the public interest rate on aluminum contracts on the Shanghai Futures Exchange is now more than 1 million for the first time.
This collective boom has led analysts to almost agree that things are a bit out of control and that some sort of corrective response is approaching quickly.
Figure of relative price performance of LME metal: tmsnrt.
Rs/2wDoRQ5 although sometimes tends to be irrational, this boom is based on a rational rewrite of the market narrative.
In the first half of this year, there were wide differences between the various LME --
According to the supply dynamics, the market price of metal transactions.
Zinc is challenging these historical peaks due to tight supply chains of raw materials and a decline in metal inventories in Exchange warehouses.
After two gears in the iron ore supply chain fell in Indonesia and the Philippines, nickel has not performed well for a long time.
But now the nickel has caught up.
$12,180 per ton, LME three-
At the beginning of the month, metal rose nearly 23%, followed by copper, up 26%.
There has been no change in nickel supply.
Stocks remain high, and there is no evidence that China is restricted by raw materials.
What changed was a collective reassessment of the state of industrial metal demand.
Judging from a series of positive purchasing managers\' indices in early September, global manufacturing seems to be enjoying one of the rare coordinated growth moments.
Factory activity is expanding in China, Europe and the United States, and funds seem to be moving into industrial metals to take advantage of this. Nickel’s ever-
The ever-changing supply chain of raw materials is now overshadowed by stronger prospectsthan-
Demand in the stainless steel industry is expected to grow.
It was boosted by the rising macroeconomic wave. SUPPLY-
Not that individual supply differences have disappeared, but the shock and awe on the side.
They are still there, but they are also included in the larger supply --side shock.
An inspection team from Beijing is spreading in waves in the form of an inspection team that checks the illegal and environmental insecurity capabilities of the entire industry.
This started with the steel industry.
Campaign to crack down on small illegal operators, \"zombie\" factories and even large producers operating in target environmental cleaning
Surrounding areas of Beijing.
Since then, it has expanded to almost every industrial supply chain, and metals have received particularly close attention.
A week ago, tin smelters in Yunnan province were closed for inspection.
Next week is the wire and cable manufacturer in Hebei.
The forced closure of a large amount of aluminum capacity has changed the market\'s continued description of structural oversupply, even if no one is very sure how much the actual production will be affected.
This is the problem.
China is often overlooked as an important producer and consumer of metals, although it operates in black holes with reliable statistics.
Its internal supply chain is undergoing reforms in an unprecedented manner, and its impact is almost unpredictable.
Take steel as an example.
China has been working to solve the excess capacity of its huge steel industry.
It closed 42 million tons in the first half of this year, equivalent to 84% of this year\'s target.
However, actual steel production is not only on the rise, but a record in July.
There are some statistical means in these figures, because most of the illegal capacity that is being shut down has not been counted since the beginning.
But with less competition and strong demand for core building and infrastructure drivers, the profitability of Chinese steel companies is soaring.
The shutdown of capacity seems to be a counter-intuitive result.
But Beijing is building its own virtuous circle of eliminating \"illegal\" operators, which will raise prices and, in turn, raise the financing status of state-owned enterprises such as aluminum producer Chinalco. This all-
Including supply shocks are still developing.
A new set of capacity restrictions in the surrounding provinces of Beijing will start at the beginning of the winter heating season in November.
The new narrative of base metals is still developing, and the combination of optimistic macro demand and uncertain macro supply masks micro wealth.
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