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Archive through July 05, 2005

Chart Forum » Commodities & Futures » Commodities - base metals/oil » Archive through July 05, 2005

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perler59
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Thursday, June 09, 2005 - 09:28 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



The RSI did not lie :-)

Oil_1.PNG


Lack of discipline ends trading careers far more efficiently than lack of knowledge.

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rederob
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Thursday, June 09, 2005 - 07:59 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



perler
thanks again
are you able to do an oil "weekly"
it could be that we are looking at higher lows, in increasing number (a line in the sand at $45 for now)
but need to see what has to happen at the "top" - $60 resistance could be a tough ask for a while (can you also toss in some TA for we poor FA types if that's ok?)

base metals continue to disappoint, with longer term view entrenching that 2nd half will see in a turnaround and stock levels improve markedly: but it seems harder to turnaround stock levels than a super tanker in the Suez!
this month will be a great "look, see"







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rederob
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Friday, June 10, 2005 - 06:34 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



copper will have an interesting time tonight
LME & Comex drawdowns over the week were countered by an 8300 stock build at Shanghai
given copper backwardation rates we really should be seeing warehouses getting a boost to their levels
that said, there is presently industry "conspiracy theory" talk about, suggesting that a number of traders have stock but are "playing" the market
it should be noted that high backwardations don't lead to immediate resupply to take advantage of spot prices: copper could literally be shipping around the world to make the most of it - and the sellers could be taking a bit of a gamble as local suppliers could get the jump - that's probably why copper backwardations have been a bit more longlived than i had expected

on the oil front, possible adverse weather conditions will keep the market poised to jump in long - the hurricane season in USA runs from now till November (remember what Ivan did to prices last year!!!)
hot off the press:
Tropical Storm Arlene, the hurricane season's first named storm, developed Thursday in the northwest Caribbean Sea and was expected to enter the Gulf of Mexico by Friday.
Total SA, ChevronTexaco Corp. and BP PLC said they have begun evacuating nonessential staff from off-shore facilities in the Gulf, according to Dow Jones Newswires, and Total said it will shut production at three of its rigs Friday morning.



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perler59
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Tuesday, June 14, 2005 - 09:54 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



The Crude Oil chart looks to me like the recent consolidation is going to break to the upside... maybe with a big boost on Wednesday night.

Oil


Lack of discipline ends trading careers far more efficiently than lack of knowledge.

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rederob
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Tuesday, June 14, 2005 - 11:44 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



perler
as usual, great charts - but is a "weekly POO" possible for the constipated commodity cohort (a byplay for patch and dogalog as it's the IC challenged version of the "kkk")

meanwhile
in the debased mosh pits we see zinc galvanising itself for further declines on the back of massive restocking - another 60,000tonnes added to warehouses today
copper continues to do a runner as the short sellers vaingloriously buy back positions in the wake of further destocking
nickel seems to have reached a near term balance, but with cancelled warrants still around the 20% mark, don't expect any protracted selldowns
what needs reiterating is that base metals are holding up strongly in price given this is the "quiet" time of the year AND given the greenback powering into strentgh
chart followers know full well that the longer you sustain a high position, the stronger the level of support and the greater the propensity to bounce
so it leaves us with the prospect that any base metal weakness going forward may be met with a weaker greenback and a technically solid foundation should the key economies keep ticking over
i might wait till Shanghai inventories are next available for the next post
unless the dawg piddles on it!!


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rederob
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Wednesday, June 15, 2005 - 10:19 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Just so that some perspective is added to the thread, Kitco Metals brief tonight as follows:

The weaker than expected retail sales data in the US is a negative indicator for metal demand as is the run up in oil prices again. The large increase in zinc stocks, which has seen a gross 106,000mt come out of the woodwork in three working days, has also raised concerns that there may be other off warrant stocks in the other metals. Although you hear comments to this effect, the fact that most of the other metals are supporting significant backwardations, suggests that there is real tightness. Common sense would suggest that with supply of copper on the increase and with steel production seemingly slowing down fast in China, any holders of excess metal would be keen to capitalise on the current high market prices especially when backwardations and premiums are also taken into account. The fact that backwardations remain in force suggests that buyers are prepared to pay the premium, if there was a surplus of metal around then the backwardations would soon disappear, as has been more recently seen in aluminium and zinc.

Although further weakness in the metals is expected as the year progresses and aluminium and zinc seem to be heading that way already, it may be too early for copper, nickel and lead to follow suit. It is easier to be bearish for zinc and aluminium with both markets in contango and both with relatively high stocks, but it is much more risky to be bearish on copper, nickel and lead, where stocks are low and backwardations are firm. Tin is the odd one out, prices have fallen back significantly since their highs a year ago at $9650/mt, at the same time as stocks have been falling. Also of interest is the fact that broad based mining equities have recently been moving higher again.



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rederob
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Thursday, June 16, 2005 - 09:00 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



further copper drawdowns at LME and Comex warehouses should tonight spur prices to near/record highs
over 30% of LME copper (ie almost 13000 tonnes out of available 38000 tonnes) is cancelled warrants
news from China is presently suggesting that copper imports may be lower than anticipated this week, spiking Shanghai prices higher
US economic data generally supportive and USD a neutral factor near term, while higher oil prices provide a catalyst for analysts to ignore fundamentals for a different angle, but continuing theme
add to the pool of data, news from various South American nations tripping copper to probably greater highs, such as earthquake damage at BHP's Cerro Colorado mine in Chile, and civil unrest closing Tintaya Copper mine in Peru for 3 weeks thus far
unlike nickel, that typically oscillates several hundred tonnes of ore per week at exchange warehouses, copper moves several thousand tonnes
so we see that LME warehouses could potentially be emptied within next few months
not surprisingly, in the futures ring we have more metal sold than is physically available, exacerbating backwardation and worrying the pants off the shorts: will we see a running of the naked puts?


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rederob
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Friday, June 17, 2005 - 08:02 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



today, expect our mining majors to get a fillip from copper and rising base metal prices overnight

from Reuters this morning:
By Declan Conway

LONDON, June 16 (Reuters) - Copper prices touched record highs above $3,340 a tonne on Thursday as fund managers shifted back into metals markets dominated by tight supply.

Analysts said supply worries and shortages of material on the London Metal Exchange (LME), the world's largest non-ferrous metals market, cemented gains.

"Having set up new highs a period of consolidation would not be surprising," Basemetals.com's William Adams said.

"There's a chance to go higher above $3,350 after a brief period of consolidation, profit-taking and producer selling.

"However, from mid-July onwards there will be seasonal shutdowns for maintenance and with production increases due later this year we should see prices then ease."

Numis Securities analyst John Meyer said in a report: "Cash copper prices are perilously close to a staggering $3,550 a tonne as (economic) data out of China supports our view of continuing strong manufacturing growth in the region.

"The market is awaiting the release of Shanghai (metals) inventory data on Friday to measure the impact of recent strong industrial activity."

A trader said: "Copper is onwards and upwards -- the market has been running short and they (shorts) have been caught on the wrong foot."



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rederob
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Friday, June 17, 2005 - 11:14 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Commodities drove up the allords today and have also given the AUD a value added boost.
The week is shaping up to end with oil within a whisker of its all time high, and copper looking to set yet another cyclical record price.
In the case of copper, Shanghai's exchange added about 2000 tonnes over the week, more than counteracted by the 2600 tonne drawdown in LME/Comex warehouses today.
Copper at LME and Comex warehouses is at long term lows - over 30 years in the case of LME - and creating a massive headache for futures traders who are reluctant to hold short positions in a contracting market. From a dollar perspective, less than $200m will empty every ounce of copper from every exchange warehouse in the world, so manipulation possibilities abound.

On the oil front, lack of refinery capacity, and the availability only of sour oils to meet excess demand, has pressed the starting button on the $64 race - a winner likely by the end of the US driving season - ie heading into autumn in the USA.

Of the other base metals, nickel looks strongest in terms of holding up against the indefatigable greenback. That said, most of the other metals are rising firmly tonight on the back of a slightly weaker greenback but, more likely, on copper's coattails.


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rederob
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Saturday, June 18, 2005 - 11:01 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Copper overnight breached previous 16 year high and is still moving strongly on exchange stock tightness. Unless inventories are driven quickly higher near term, copper will continue to rack up new cycle highs.
It is said that there is plenty copper around, just not at exchange warehouses. If that is the case then the question is who is taking metal from the warehouses and where are they hiding it?
Furthermore, it makes no sense to drive prices artificially higher if you know there is plenty copper around as a price collapse could leave one unable to dispose at a profit.
Given the consistent trend of drawdowns the most likely explanation is that world demand for copper (metal) remains robust. There is much more concentrate around, but refining capacity is a constraint.
Look closely at what is driving the oil price higher right now.
Voila!
Lack of refining capacity rather than a lack of oil - what a coincidence.




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rederob
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Sunday, June 19, 2005 - 11:35 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



crude, but in the pink



note that for the past 15 months the support channel and 50week average are almost identical


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rederob
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Thursday, June 23, 2005 - 09:00 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



After 3 days of overbought, copper last night stumbled and is again tonight ducking for early cover.
Lots of scuttlebutt on copper at the moment with suggestions that there is plenty of copper about and the price is not reflective of fundamentals.
What is true is that consumer stock levels are adequate, maybe even healthy. Yet that does not explain the constant drawdowns from exchange warehouses on 3 continents, which are occurring when the markets are supposed to be nodding off.
I don't understand why anyone would be paying an extra few hundred dollars a tonne for metal if it's abundant: Maybe people could be "conned" by market behaviour over a short term, but weeks and months seems to be stretching credulity.
In terms of copper price action, I would be hoping/expecting a retrace to around $1.54 before another bounce: That bounce is predicated on continued supply tightness.
Influencing copper downside for now is a much higher oil price and stronger greenback. I don't expect oil to continue to gush, although the greenback's chameleon nature makes it an each way bet.
Nickel has slipped on copper's spill, tho low inventories will see its price reasonably supported near term. Cancelled warrant percentages are declining for nickel, reducing its backwardation and aiding price declines. But as night follows day, consumers buy on the cheap, and nickel is starting to look cheap again.
Nickel price risk is mostly predicated on Norilsk resuming warehouse deliveries following Dudinka's port resuming normal operations - watch this space, as they say.
Other metals are pretty much business as usual with tin looking fragile despite low inventories.


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rederob
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Friday, June 24, 2005 - 09:52 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Not surprisingly copper prices have rebounded on continued tightness, in part from Shanghai reporting a small inventory decline over the week, while other exchanges have doled out 10% of their stock during the same period.
It is one thing to say that fundamentals for copper are not good, it's another to provide that evidence: So far the evidence weighs in favour of increasing supply tightness.
Whether or not this is from increased demand or decreased supply (South American disruptions) is somewhat irrelevant as the weekly pros and cons vary a good deal; and while drawdowns outpace restocking, the balance is obvious.
Even backwardations - a guide to near term tightness - suggest copper is more likely to run to new record highs than to fall off its perch.
It is important to bear in mind, excuse the ad nauseum, that this is the period when supply fundamentals improve.
In a few months time northern hemisphere industry is back to normal and output will ramp up: The question is what they will have to draw on by way of available stock?

On the oil front, I put out the weekly request to perler for assistance with a chart showing record highs of $60/bbl being penetrated for the first time. Again, US driving season is underway and refineries are struggling on the supply side of the ledger.
Add to this rumblings in Venezuela and Nigeria, and Russia's dilemma with Yukos miscalculating the production equation, and $65/bbl looks a dead cert by end-August.

There is funny ha ha, and funny peculiar, when it comes to the "measured" impacts of oil on CPI's. To you and me the oil hikes are expressed as bowser rate increases and are NOT funny ha ha. But to bureaucrats that beguile politicians with hedonic regressions it IS funny peculiar that high oil prices are simply not an issue just yet - despite a 60% increase in prices over 12 months.

Therefore, a new conundrum enters the market: We know a priori that high oil prices suppress economic growth, but with the empirical evidence not reflected in the economic data, we can justifiably deny any possible impact!

The poo will hit the fan one day and poor American consumers will wonder how their magnificent democracy could be run by nincompoops. If they look closely right now they might see that only 30% of the voting population put Bush into office - 40% of eligible voters chose not to exercise their rights. Watch that change when Americans learn that their currency is being debased and China's communistic machinery dominates the world scene.


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tony_m
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Saturday, June 25, 2005 - 09:00 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



I did my usual weekly scan today looking at potential candidates. These are stocks established weekly based uptrends meeting a set of fairly stringent criteria. I added a couple of extra criteria including close > open and close > previous close (i.e. > last week's close). I wanted to find what went up through this week's crunch.

Last week there were 31 stocks and this weeek 14. AQP AUO BGF COH GCL IVC KCN MTS OSH RMD STO TAP TYC WPL. Half of the stocks are oil, platinum and gold.

Looks like precious metals and oil are the places to be right now if one is thinking long.

Tony_M


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rederob
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Saturday, June 25, 2005 - 02:19 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



tony
i noted from a much earlier post that you saw a lot of red in france - but not in the charts; rather that being the green of chartreuse, perhaps
are you back in Oz now?
yes, the oilers are triumphant and could be nice channel trades with oils running into overbought for now

i came back to add just one more chart today - on copper:




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rederob
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Monday, June 27, 2005 - 11:18 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



more woes for nickel's price tonight - dropping several thou$$ from its highs of a few weeks ago
nickel has added only slightly to inventory over the month, but with Norilsk ready to swing into delivery mode again, pundits are opting to knock down its near term price: that's fine as Chinese buying usually cuts in under $15,000/tonne so drawdowns could resume again to put some pecker back into nickel
all eyes yet again focussing on copper, with another large LME drawdown tonight
seems copper could be trying to mirror WTIC and break successive record highs on a tight market
i expect copper will ultimately follow nickel's present trend, with a sharp downside correction, albeit in a continuing "firm" market
given we are in the traditional weak season for metals, what is now happening is pretty much to be expected
the difference is likely to be that when markets pick up again in few months time, we may see an exacerbation of what happened at the beginning of the year based on the thinner that usual inventories


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rederob
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Tuesday, June 28, 2005 - 09:03 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



why have nickel miners not tumbled as dramaticaly as the price of ore?
are they waiting for some news?






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rederob
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Tuesday, June 28, 2005 - 11:36 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



NY pre-open marked copper down 120 points, however the data are not supportive of a selldown and and we presently see it, and nickel, shaded green.
The greenback continues onwards and upwards and is making a mess of metals generally (worse still with silver and gold each dropping 1% in early trade).

Keeping an eye on exchange warehouses and it's easy to see why copper and nickel are a touch stronger - nickel and copper with 5% and 3% inventory drawdowns respectively.

London Metal Exchange Warehouse Stocks
Metal Tonnes in Storage Change from
previous day
Aluminum 528,650 -1275
Copper 30,250 -1025
Nickel 7,368 -426
Lead 38,400 -100
Zinc 609,825 -2325

New York Futures Market Warehouse Stocks
Metal Tons in Storage Change from
previous day
Aluminum 97,895 0
Copper 15,366 -14

As the northern summer winds out, it will be vital to the bears that restocking shows in the data - so far the bears are conspicuous in the woods.


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vermante
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Wednesday, June 29, 2005 - 08:11 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



rederob,

From my observations(in contrast to an in-depth study) , there appears to be no correlation between LME warehouse levels and metal prices.Nickel being a current example.Where ware house levels and price have both dropped. There have been other examples in the past .

If reliance cannot be placed on the nexus between metal prices and ware house levels , what purpose does monitoring metal ware house levels serve?

By reliance I mean -A professional relying on a certain set of data to earn a living. If that data cannot be consistently relied on , then we have to conclude that that data is irrelevant and be discarded

Cheers

Vermante


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archer
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Wednesday, June 29, 2005 - 02:28 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



http://www.kitcocasey.com/displayArticle.php?id=171


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rederob
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Wednesday, June 29, 2005 - 06:30 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



vermante
Copper's 16 year high was hit when its inventory reached a record low.
Nickel prices peaked when the rate of drawdown was comparatively high AND when inventories were at cyclical lows.
Archer's link to the "manipulation" argument is good reading - manipulation will never go away, but the question is the extent that actual prices are affected by manipulation of inventory: I have no idea as I am just an interested office chair observer of these markets.
More importantly, what would have led the "funds" commit to manipulation?
My hunch is that demand outpaced supply well before the funds decided they could make a killing from manipulation.
It is certainly the case that China's actual use of base metals (from official data) has increased at double digit pace year on year for a number of years.
It is definitely the case that copper concentrates are plentiful, but that refining capacity cannot match concentrates delivered - therefore impacting output.

But let's put all the above aside for a moment.
Whether we like it or not there is a base metals spot and futures market.
Whether it is manipulated or not, these markets set global benchmarks for "pricing".
If we ignored these goings on we effectively would be without an important basis for determining the profitability of producers - and therefore the probable direction of company share prices exposed to these price movements.
While I can choose to ignore measured CPI levels because I might believe them to be wrong, I would be foolish to ignore the "official" interpretation of the CPI that feeds into market trading activities.

If you trade for a living, what other data will you rely on if you believe the industry benchmarks to be unreliable?
The fact is that a lot of "players" are in the same field and act on the umpires decisions (data feeds) so as to run into position for the next play.
I have no idea how smart or otherwise they are for wanting to play the game if the umpires are unwittingly being nobbled.
I just call the plays as I see them: As useless as that may be.
I might one day learn something important, or not.


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vermante
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Thursday, June 30, 2005 - 09:07 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Arthur

Re link - Interesting reading

Rederob,

Your view point is understood and appreciated .

Good Trading

Cheers

Vermante


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rederob
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Thursday, June 30, 2005 - 08:53 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



If the relationship between inventory and price holds true, as in the chart below, then we are unlikely to see low copper prices ((ie around $1.00-1.20/lb) for at least 6 months, but more probably another year - assuming inventories start to significantly ratchet up.



At this stage (conspiracy and manipulation aside) copper inventories continue weekly drawdowns and "balance" is nowhere in sight.
This predicament is exacerbated by potential strike action, site closures due to earthquake and flooding and plant closures due to relocation - across 3 continents.
So while there remains rumours by the score to sway prices for a day or so, the market will continue to correct on "reported" levels of available stock. These corrections continue to the upside for now.


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rederob
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Saturday, July 02, 2005 - 11:40 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



shorts dominated base metals this week, with copper being again plundered, especially at week's end and running into Independence day holiday in USA
spot copper at $1.57 has a few cents before hitting next support at $1.55 and below that at $1.50
metal price declines are not as worrisome as being made out as greenback strength overnight meant that in ozdollar and euro terms there was little change
high oil prices are weighing on the metals market, but i doubt they are yet having a meaningful impact as the immediate imperative is to satisfy the demand imbalance
nickel spent the week consolidating, and its lower price encouraged cancellations once again, which is a positive factor given the surplus of steel and the impending summer factory closures
data from the US overnight suggesting increased manufacturing output and greater consumer confidence will also be supportive of metals going into the second half of this year

i should add that traders were posturing on copper based on rumours of warehouse deliveries into LME Asia sites - these never eventuated, tho the rumours persist
China's State Reserve desperately wants to add inventory, and seems reluctant to take it from Shanghai at this stage as their requirements would leave nil copper for consumers
i therefore can't see tightness disappearing for a good while
unless, of course, the ships come in







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rederob
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with strike action in Chile and Arizona (http://quote.bloomberg.com/apps/news?pid=10000086&sid=atUNvWoRhDAM&refer=news_in dex) copper is in the quandary of a simultaneous increase to inventory and a cut in supply
strike disruption to date already wipes out the inventory increase, and further strike action is being voted on tonight at other company locations
i think the upside may resume in earnest unless Shanghai reports a massive turnaround at week's end
on the nickel front there have been further offtakes coinciding with tonnage cancellations, so demand has picked up with the 15% price drop in recent weeks
other base metals will suffer or consolidate during the summer lull, unless prices reach bargain basement and stock draws resume in greater volume
near term action will see a stronger greenback and higher oil prices put the dampener on any base metal price rallies

 
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