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After Arresting Hundreds Of Stock Traders, China Cracks Down On "Malicious" Metals Sellers Next

Tyler Durden's picture




 

Five months ago, in the aftermath of its biggest market crash since 2008, China unleashed an unprecedented series of measures to stem the selling tide, none more mindblowing than its threat (which was promptly executed) to arrest "malicious short sellers" or even worse. It did just that as the following stories recount:

The result of all these ridiculous interventions was two-fold: China effectively killed the market, as can be seen by the following chart of volume on China's futures market, until recently the world's biggest which overnight evaporated after China made it practically impossible to trade anything...

... and as a result of the PBOC being the last standing player, the Chinese "stock market" would now trade precisely as its central planners demanded it to. Too bad nobody else will participate.

But now that China has gotten its stock "market" under control, it was time to focus on a market that is far more important to China's economy - that of commodities. After all, while several dozen million may have gotten very rich and then very poor over the summer, the implications of the Chinese stock bubble and subsequent burst were mostly contained. However, when it comes to plunging commodity prices, these have a far greater impact on both China, where fixed investment is about 50% of GDP, and as a result impact everyone, as well as the world.

And as we reported yesterday, China will soon commence "fixing" the commodity market (which has seen its worst collapse since 2008 in the past year) by engaging in what will be the first bailout of its domestic metals producers since 2009:

The state-controlled metals industry body, China Nonferrous Metals Industry Association, proposed on Monday that the government scoop up aluminum, nickel and minor metals including cobalt and indium, an official at the association and two industry sources with direct knowledge of the matter said. The request was made to the state planner, the National Development and Reform Commission (NDRC).

 

... while the proposal does not include copper, it is likely to revive memories of 2009, when the State Reserve Bureau (SRB) in Beijing swooped in to buy more than 700,000 tonnes of copper on the domestic and international markets. Prices were languishing at around $3,000 per tonne at the time, and the buying spree reversed the falls and ultimately helped to propel prices to record highs above $10,000 per tonne in February, 2011.

The news spread like wildfire overnight, and sent copper, aluminum, zine, and the rest of the metals complex surging. However, the price spike will hardly last long: "any policy support from the government and smelters subsidies to smelters or joint production cuts, will be short-lived forces and won’t change the bigger picture of a market glut. Prices may be impacted temporarily," said Qi Ding, Beijing-based analyst at Essence Securities.

So as a plan B, the same metals industry group that is reeling and understands it is one foot in the grave unless commodity prices pick up and which earlier this week demanded a government bailout, or "QEmmodity" soaking up all excess production, has doubled down and according to Bloomberg the China Nonferrous Metals Industry Association has submitted a request to Chinese regulators to probe "malicious" short-selling in domestic metal contracts amid recent price declines.

What is even more insane, is that China will do just that, in the process breaking what little is left of a domestic commodity market next.

Regulators have begun to collect some records of trading activity following a request from the China Nonferrous Metals Industry Association, according to the people, who asked not to be identified because they aren’t authorized to speak publicly on the matter. Nobody answered calls to the industry association’s general office.

Remember: it is always the "malicious" sellers who are the cause of all the world's problems, never the "malicious" buyers, especially when said buyers are the central banks themselves.

Irony aside, if indeed China does buckle under the demands of its commodity producers and unleashes what is effectively a "commodity QE" while at the same time arresting anyone who sells or shorts commodities, there is no telling what will happen to the prices of commodities which may - if only over the near term - soar to unprecedented levels, unleashing even greater excess production and capacity, which would entail that instead of merely arresting "malicious" sellers one year from now, China's politburo will have to summarily execute, on prime time TV, each and every one of them.

One thing is certain: since a market in which the government is about to set prices at whim, and where sellers will be "put away" no longer has any price discovery and is anything but a "market", China's commodity prices are about to see an unprecedented disconnect from the supply/demand constraints of reality, and even more pent up humor when this latest forced attempt to reflate a bubble finally blows up.

 

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Thu, 11/26/2015 - 13:28 | 6842956 nnnnnn
nnnnnn's picture

s&p nextkowski

Thu, 11/26/2015 - 13:28 | 6842962 Looney
Looney's picture

I am torn between China’s arresting traders and Saudi Arabia’s decapitations. ;-)

Looney

Thu, 11/26/2015 - 13:33 | 6842979 Truther
Truther's picture

No worries Looney, DC isn't far from the guillotines. Ready for the Fed Heads.

Thu, 11/26/2015 - 13:42 | 6843015 arbwhore
arbwhore's picture

Will they be on the block or operating the blade?

Thu, 11/26/2015 - 13:50 | 6843047 Lore
Lore's picture

Snide down-your-nose-at-the-Chinese tone notwitstanding, I fail to see how this differs in any essential way from the unbelievably corrupt, manipulated, broken-market situation in the United States.

Thu, 11/26/2015 - 13:58 | 6843085 merchantratereview
merchantratereview's picture

The difference is the political and financial capitols of the United States don't smell like sh1t.

Thu, 11/26/2015 - 14:02 | 6843095 Save_America1st
Save_America1st's picture

Well, don't worry, folks.  Here's some new Thanksgiving Jackass to get us through the holiday.

Turd Ferguson and Jim Willie Podcast from TFMetalsReport:  http://www.tfmetalsreport.com/podcast/7295/some-razzleberries-jackass

Enjoy!  And happy Thanksgiving. 

***be thankful for your stacks of phyzz.  ;-)

Thu, 11/26/2015 - 14:53 | 6843267 Latina Lover
Latina Lover's picture

Dear President Xi

please come to Amerika and arrest the Crimex Gold and Silver traders.  Then, take out GS, JP Morgan, Citibank etc and also do a clean sweep in the City of London.  Send them to Saudi Arabia as infidels, where they will have their human rights respected.

With these actions, you could probably be declared  co emperor of the World. The cheers would be heard everywhere, over the entire globe.

Thu, 11/26/2015 - 18:35 | 6843778 beemasters
beemasters's picture

" it is always the "malicious" sellers who are the cause of all the world's problems, never the "malicious" buyers, especially when said buyers are the central banks themselves."

If you don't buy, how can you sell? The sellers are Central banks themselves too (including via proxies). Punishing these malicious sellers will deter the malicious buyers. I don't see anything wrong with that. If you really think about it, China is indirectly helping to kill Central Bankers's manipulation of price and let the true market dictate in time.

Thu, 11/26/2015 - 21:18 | 6844092 Tall Tom
Tall Tom's picture

The difference is the political and financial capitols of the United States don't smell like sh1t.

 

Of course...The political capitols and financial capitols of America smell of SHIT.

 

That is S...H...I...T....SHIT.

 

Personally I do not know just what S...H...1..T smells like.

 

(Don't worry. We will not tell Mommy that you were using bad words. The Basement door is locked, right?)

 

The sad truth is that you have just gotten used to living in a cesspool of fraud and corruption....filled with SHIT.

 

 

Thu, 11/26/2015 - 13:55 | 6843071 Benjamin123
Benjamin123's picture

Jihadi warriors will operate the guillotines.

Thu, 11/26/2015 - 13:58 | 6843083 Never One Roach
Never One Roach's picture

It's no wonder the goal of every middle class Chinaman is to escape out of China. If nothing else, 80% of their internet is blocked.

Thu, 11/26/2015 - 13:31 | 6842971 Truther
Truther's picture

sum ting wong?

Thu, 11/26/2015 - 13:38 | 6843001 prudent1nvestor
prudent1nvestor's picture

joke tu wold

Thu, 11/26/2015 - 13:31 | 6842970 prudent1nvestor
prudent1nvestor's picture

Pretty sure it's pronounced "Maricious"

Thu, 11/26/2015 - 13:33 | 6842981 silverer
silverer's picture

Reary?

Thu, 11/26/2015 - 13:33 | 6842984 A Lunatic
A Lunatic's picture

No profits for you.......!!

Thu, 11/26/2015 - 13:46 | 6843033 Urban Roman
Urban Roman's picture

The easy solution for "malicious sellers" of metals, is simply to buy the metals and demand delivery.

Thu, 11/26/2015 - 13:52 | 6842987 oddjob
oddjob's picture

So their QE buys Zinc, Aluminum, and Nickel, whereas QE in America pays off Bankster coke debts, margin calls and overpriced Hampton shantys.

Thu, 11/26/2015 - 14:34 | 6843211 darteaus
darteaus's picture

Each country's political class bails out its largest contributors.

Thu, 11/26/2015 - 15:03 | 6843293 Lost in translation
Lost in translation's picture

You left out Long Island call girls.

Thu, 11/26/2015 - 13:51 | 6843050 Deus Irate
Deus Irate's picture

I quite honestly see little wrong with clapping irons on just about anybody working for the rigged casino scheme we have today. Fact is the Chinese seem to be the only ones actually regulating things -- albeit rather clumsily. For all the markets to function correctly there must be regulation. What we have now is a massive criminal enterprise, run by corrupted states and regulated by inmates. I find myself cheering for the Chinese.

Thu, 11/26/2015 - 13:55 | 6843064 Lore
Lore's picture

Note to mid-level financial peons: YOU ARE EXPENDABLE. WHEN THE SHTF, YOU WILL BE HUNG OUT TO DRY.  KEEP A DETAILED PAPER TRAIL. MAKE COPIES AND STORE THEM IN DIFFERENT PLACES. The time will come when you need to cover your ass.

Thu, 11/26/2015 - 14:06 | 6843119 Deus Irate
Deus Irate's picture

I got out of the whole crazy mess 8 years ago just before the SHTF and now I only deal in direct exchanges of real tangible goods and services with actual buyers -- myself with no middle-man and even make a few bucks holding the paper on most deals. Granted the fiat is a week link but I have little of that too, because my "savings" are also hard and tangible, not paper and promises. You can keep yer casino, I'm out for good. No need to cover my trail or even look over my shoulder. I look ahead with happiness and confidence, not dread and/or fear.

Thu, 11/26/2015 - 13:55 | 6843073 merchantratereview
merchantratereview's picture

It's the guillible sympathizers of a race of people who still extract organs from live prisoners that got Red China this far. And no further. It's the end of the line China. No more foreign investment. You blew it buddy!

Thu, 11/26/2015 - 13:50 | 6843055 merchantratereview
merchantratereview's picture

China is an absolute clusterf&ck and deserves 100% dis-investment.

Thu, 11/26/2015 - 13:54 | 6843070 Spiritof42
Spiritof42's picture

I'm trying to be an optimist about this. I think we've come to a time when the world economy has become so complicated and integrated, that politicians serve no useful purpose. Not that they ever did, but that they fuck up everything they touch on a scale never seen before. It's only a matter of time before they won't be able to contain the rebellions. 

Thu, 11/26/2015 - 14:09 | 6843134 Seasmoke
Seasmoke's picture

If you can't hold it. You can't sell it.

Thu, 11/26/2015 - 14:32 | 6843204 darteaus
darteaus's picture

This is very short sided by the Chinese...so to speak.

Thu, 11/26/2015 - 18:41 | 6843806 beemasters
beemasters's picture

It's actually long-sided. :)

Thu, 11/26/2015 - 14:43 | 6843244 Anopheles
Anopheles's picture

Somebody got nervous.   Silver just went from $14.30 to $13.97 almost instantly. 

Thu, 11/26/2015 - 15:11 | 6843313 sudzee
sudzee's picture

Yes, silver turkeyed at the bell. 

http://silverprice.org/

someone must have asked for delivery of Comex last physical oz. 

Thu, 11/26/2015 - 15:58 | 6843407 FlyinHigh
FlyinHigh's picture

Looks as thou someone forgot to turn off the switch before going home to turkey dinner. That chart is floppin back n forth .30 cents every minute. Whats up with that? VERY STRANGE endeed ! ! !

Thu, 11/26/2015 - 15:00 | 6843284 Lost in translation
Lost in translation's picture

Need to ask and to know, and may ask again if traffic in this thread is too slow.

Doug Casey, International Man.

Recommends Hong Kong as an alternative banking site. As it happens, I will be there after the start of the New Year.

If I open a bank account in HK, and/or set aside some Au in a private vault there, what are the chances the PRC will simply order all foreign assets seized and confiscated if it ends up at war with US?

If the chances are high, then why the F is Casey recommending this course of action?

Please, please advise.

Thu, 11/26/2015 - 19:59 | 6843946 Wild Theories
Wild Theories's picture

I highly doubt that

I am a foreginer and have an acct in HK, plenty of people do, it's one of easiest places to bank in the world

unless you are James Bond or connected to the western political elites, or you got involved with a Chinese corruption case, in other words you touched some "national security" level shit, I don't see any reason for China to touch private foreign individuals banking in HK.

 

even if you are an annoying journalist or a free-tibeter they'd only bar you from the mainland, they won't go after your bank account or kick you out of HK.

HK still has legions of China hating journalists living there full time(it always has), and you can still find freerange falun gongers on the streets of HK, so really, if China haven't even touched those people, a normal bob is plenty safe.

Mon, 11/30/2015 - 14:48 | 6857507 Lost in translation
Lost in translation's picture

Ok, many thanks, Gentlemen!

Thu, 11/26/2015 - 20:24 | 6844004 mijev
mijev's picture

LIT I think singapore may be a better option and you can pick up non-stop flights for $50 each way from HK. OTOH I don't think it's in china's interest to seize foreigners' assets but it's obviously not an impossible outcome. The perth mint might also be a good option to consider and you can do all the paperwork remotely.

Thu, 11/26/2015 - 15:19 | 6843329 SSRI Junkie
SSRI Junkie's picture

send some of those cops here china...we have 536 in dc and a bunch of fed cocksuckers for you to extradite...hell with extradite, just judge dredd them

Thu, 11/26/2015 - 16:03 | 6843440 iaminwallstreet
iaminwallstreet's picture

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Thu, 11/26/2015 - 16:06 | 6843446 iaminwallstreet
iaminwallstreet's picture

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