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Why China Hit The Panic Button On Metals Traders (In 1 Simple Copper Chart)
Within the last week China appears to have hit the panic button with regards the seemingly unstoppable collapse of commodity prices. First, desperate Chinese producers began to demand a QE-for-commodities bailout; then, following the well-trodden (and failing) path of China's equity market maipulation, authorities began to crackdown on "malicious" commodity short-sellers. So why now? Why focus attention on the commodity markets? Perhaps this chart holds the key...
Having suddenly lost control of the stock market again...
Maybe commodities are a renewed focus as, we showed earlier in the week, there is "No End In Sight For Commodity Carnage As Chinese Fear Fed Hike Blowback", a post which can be summarized with the following chart showing that at least for nickel, copper, zinc, iron ore and aluminum it will be a very unhappy holiday season:
The one-word reason for this condition, as we explained here: China, which as documented extensively in the past, has clammed down on its unprecedented credit creation now that its debt/GDP is well over 300% and as a result conventional industries are dying a fast and violent death. In fact, months ago we, jokingly, suggested that what China should do, now that it has scared sellers and shorters to death, is to launch QE where it matters - the commodity space.
Which led to demands for a bailout...
That joke has become a reality according to Reuters, which reports that China's aluminum and nickel producers have asked Beijing to buy up surplus metal, sources said, the first coordinated effort since 2009 to revive prices suffering their worst rout since the global financial crisis.
And a crackdown on speculators (the selling ones, not the buying ones)...
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.
* * *
So why now? Why all of a sudden pay attention to what until now has been a never-ending collapse across all commodities...
Well perhaps we have the answer... For thre first time since the commodity super-cycle began (read credit-fueled malinvestment mania), copper prices are set to close below the critical 200-month moving average.
The last time copper prices crossed this historical level was in 2008/9 and QE was immediately unleashed to reflate that bubble back to some state of debt-supporting fallacy...
On that occasion, the metal rallied hard at month-end to close above.
As Bloomberg notes, LME copper 3-mo rolling forward, currently trading at 4626, needs to rally 9% by Nov. 30 close to finish above 200-MMA, at ~5055, to avoid bearish technical signal.
However, some analysts say it is the 233-MMA, linked to the Fibonacci number 233 and currently at ~4610, that may be the more important support to watch, and which looks likely to hold.
And as if to runb more salt in the wounds, very recent Chinese data has not been bullish for copper as demand for use in appliances falls 4.6% y/y in October.
* * *
So are the momentum-chasing Chinese hitting the panic button on copper (and other metals) because the last level of price support is about to break exposing an entire nation's growth fallacy to the world? Who knows... but it will certainly indicate yet again just how omnipotent central planners are (or are not).
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Nickel Iron batteries, "Edison Cells" are manufactured in China.
Now's the time, off-gridders!
I've bought Edison Cells from these folks for an off-grid system I put together for Hawaii, Big Island, North Kohala area.
http://beutilityfree.com/
Thanks for the link. I have commented before that it is great the wholesale prices of commodities are falling, but I have yet to see that work its way through to the retail commodities yet. Am I going to be able to buy a car battery for $60 soon?
A. The price of copper in China.
B. Russia bombing the hell out of ISIL in Syria.
C. Obama being gay.
I'm just not seeing it. Sorry.
I'm doing my part to prop up the price of metals. 500 oz this a.m. @14.75 delivered, and another 500 just now at $14.92.
I'm going to need a bigger boat!
Great batteries, but extremely expensive, don't have a lot of storage per lb, and aren't very efficient. They waste 40% energy between charging and discharging. Typical efficincy is 65% charging and 85% discharge efficiency, regardless of exagerated claim of 80%, so it means much larger energy gathering required, wind/solar. And they charge slower than equivalent lead-acid.
But their advantage is almost limitless deep discharge cycles. Best use of these batteries is as a small bank that is deep discharged/cycled daily, and relying on lead acid for higher capacity storage that isn't cycled as much.
Only 2 manufacturers, one in China and one in Russia. The company in the US refurbishes 50 to 100 year old batteries.
Devalue time.
Great Correction in progress.
.
Now that's some funny shit right there!
lol
Dr. Copper, please pick up the phone. Larry is on line 1 and wants to know what's happening.
Just like every commodity chart, I see an absurd rally based on the CFMA sending everything to the stratosphere because compulsive gamblers were allowed to fuck with the most important stuff on earth.
Copper has no business trading above $3000. Everything was correcting to normalcy in 2009 but then the Fed had to fuck everything up with QE1 and off the the lunatic fringe we went.
Erase the ill-gotten gains in everything made over the past 16 years and we might be close to a level that could be called normal.
I want to see $1.40 gas, $2.99lb ground beef, $.50 cans of Campbell's soup, and starter homes back at $140k in decent neighborhoods. This is very possible if you close down the gambling houses.
My uncle lives in an upper middle class US suburb, the copper from the flood lights in his neighborhood park got stolen so many times the city gave up. Now the park is only open during daylight hours.
Dime bags ain't free...
They should have changed the wire to aluminum. Not worth the effort.
You guys blame the fed and central bankers for everything.
It's such an old tale, find a new one - one based in reality.
You blame them when it goes up, when it goes down.
If I understand it right by the rationale your entire standard of living is at the behest of the central bankers and Feds - which I find interesting seeing as prior to the existence of central bankers and the fed, life was pretty crappy for 99.995 % of the population.
I guess it's all coincidence right?
Take your head from your rectum and tell me how many trillions of dollars the greedy basturds printed for themselves under Obama alone.
I'm sure you are too ignorant to have any clue what I am talking about.
It's really because of the exotic re-hypothecation schemes that turn metals into credit.They learned this from the corrupt Bankers in New York and London.The Chinese figured that if you guys can do it endlessly with Gold then we can do it even bigger with everything else in the biggest ponzi scheme ever.Of course Mark Caney,Janet and the rest of the band of crooks won't do anything because it's all done with the blessing of the Treasury in order to "Keep up the confidence in the Dollar."You can't blame the Chinese for doing what they learned from basturds.
I guess that explains those 70 trips in that Hank "The Hammer" Paulson made to China. How to effectively lie and steal in today's modern world. http://useconomy.about.com/od/governmentagencies/p/Henry_Paulson.htm
Because without also pumping commodities, the general public might figure out that it's all a sham?
Cyber Monday = CNY deval =Black Monday
Commodities down, paper shit up. Someone light a match.
No matter what short-term gain they may achieve with repressive tactics, the ulitmate casualty in all this is the "Chinese Dream", since it was artificially fueled with FDI and technology transfers that are now going to shrivel up completely. Domestic Chinese may fear going to jail if they are on the wrong side of the trade, but they have no place else to put their money. Foreign businessmen, on the oither hand, don't like jail any more than the locals do, but they have alternatives to playing that game in that particular whore house.