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Chinese Copper Inventories Revealed To Be Double Estimated

Tyler Durden's picture




 

In a piece of news that can not be taken well by students of Dr. Copper, the FT reveals for the first time that China's estimated copper inventories, based on numbers from the China Non-Ferrous Metals Industry Association, were 1.9 million tonnes at the end of 2010 which is almost double the lower end of the consensus estimate of 1.0-1.5 MM tonnes (and, as the FT points out, "more than the US consumes in a year). So while copper is doing its high beta thing on the nth short squeeze day in stocks, the smart money is starting to bail for very obvious reasons. And if the reasons are not obvious, this means that "The estimates, which were announced at a recent meeting of the International Copper Study Group but have not been made public, imply that real Chinese copper demand may have been lower than thought in recent years." In other words, and to all who are still confused by why Zero Hedge jokes at each and every iteration of economic growth driven by "inventory stockpiling", this is nothing other than trying to do at the national level, what Goldman and JPM do at the LME level each and every day: hoard and sell, only in China's case it is more hoard and forget. Alas, when China itself is the only real marginal buyer (not to mention that millions of domestic businesses operate using Letters of Credit backed by copper), things get very, very ugly, and explains why China has been so secretive about this number.

From FT:

The CNIA estimated that Chinese copper stocks, not including those kept at Shanghai Futures Exchange warehouses, stood at 1.768m tonnes at the end of 2010, up from 1.218m in 2009 and 282,000 in 2008. SHFE inventories were 132,000 tonnes in 2010, putting China’s total stocks at 1.9m tonnes.

 

Other than exchange stocks, copper is held as working inventory by China’s manufacturing sector as well as by merchants, investors and the State Reserve Bureau, Beijing’s stockpiling agency. However, analysts, investors and traders are sceptical, noting that the world’s largest copper importer and consumer has an interest in inflating the size of its stockpiles, which could push prices down. The CNIA declined to comment.

That loud whooshing sound is long copper PMs sucking in air as they scramble to find the proper spin for this shock. Such as this one:

“Whatever the Chinese say that stocks are, in the end they still need copper,” said George Cheveley, metals and mining portfolio manager at Investec Asset Management.

Yes they will. And they will use the millions of tonnes they have in storage, not buy in the open market. Of course, this means that China will continue to buy US Treasurys and not diversify entirely to commodities. The opportunity costs of continued copper demand, however, is the difference between the 10 Year at 2% and 12%...

 

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Wed, 10/12/2011 - 15:08 | 1766762 darteaus
darteaus's picture

You can tell what the inventories are based on the price action.

Wed, 10/12/2011 - 15:16 | 1766798 Pladizow
Pladizow's picture

Copper or

Fiat?

Whats the right choice for a nation that plans centuries ahead?

Wed, 10/12/2011 - 15:25 | 1766842 CharlieSDT
CharlieSDT's picture

This should be bullish for silver- as copper mining goes down that's less silver getting mined as a byproduct.  Also maybe those assholes will stop breaking into people's houses to steal their copper plumbing.

 

http://www.singledudetravel.com/2011/08/silver-and-the-single-dude/

Wed, 10/12/2011 - 15:36 | 1766882 nope-1004
nope-1004's picture

Not sure what to believe anymore.  I know one thing:  To continue to print into oblivion and finance insolvent banks, the gov'ts around the world will do, say, and publish almost anything to get the required result - ie, deflation.

Of course there is a slowdown, we can all feel it.  But if QE had worked, would this copper article have ever surfaced?

I'm suspicious because in the end we need more QE, but not while commod's are high.

 

 

Wed, 10/12/2011 - 15:38 | 1766888 Smithovsky
Smithovsky's picture

China getting ready for Bancor.

Wed, 10/12/2011 - 18:32 | 1767555 DormRoom
DormRoom's picture

yup.  That is why China is in Africa.  It wants to lock in the huge mineral resource of this continent.  And her navy can protect supply lines.

Wed, 10/12/2011 - 16:04 | 1766973 macholatte
macholatte's picture

Not sure what to believe anymore.

The article is about what they estimated a year ago.  And they admit that it doesn't include all the warehouses.

How is that germaine today? Is this just the residue of another set of worthless numbers that someone pulled out of his ass because he had to write a report?  What am I missing here?

 

Not only do I not know what's going on, I wouldn't know what to do about it if I did.
George Carlin

Wed, 10/12/2011 - 15:46 | 1766915 NotApplicable
NotApplicable's picture

Interesting how the LME rule allows GS to squeeze the aluminum market.

Wed, 10/12/2011 - 15:30 | 1766860 youngman
youngman's picture

I agree..if I had all that US and Euro toilet paper...I would buy the hard stuff too...oil also....stockpile, stockpile, stockpile...I do not see it as a bad thing....they do think long term..they just bought a bunch of corn yesterday

Wed, 10/12/2011 - 15:35 | 1766875 Minimum Clearance
Minimum Clearance's picture

Just out of curiousity, when did China begin "planning centuries ahead?"  During the Mao years?  During their most recent civil war (you know, the one that was put on hiatus, sort of, during WW2)?  Maybe before that, while the Japanese were invading in the 1930'?  During the Boxer Rebellion?  The Opium Wars?  Please let us know.  Thanks.

Wed, 10/12/2011 - 15:26 | 1766846 nyse
nyse's picture

Not surprised by this then? Great job!

Wed, 10/12/2011 - 15:37 | 1766886 Piranhanoia
Piranhanoia's picture

Should energy and the costs of mining be factored in,  did they buy cheap in the long run to have a out of ground supply?  It sure seems like unused inventory, but the energy and ROI story from yesterday seems to fit?  Not my area, just curious.

Wed, 10/12/2011 - 15:55 | 1766940 The4thStooge
The4thStooge's picture

maybe they're preparing to go to war soon.

Wed, 10/12/2011 - 22:32 | 1768179 covert
covert's picture

covert market influences at work!

http://expose2.wordpress.com

 

Wed, 10/12/2011 - 15:08 | 1766763 Ancona
Ancona's picture

I think they have lied about nearly every other commodity as well. Why would anyone believe their "official" numbers on anything?

Wed, 10/12/2011 - 15:25 | 1766845 MrBinkeyWhat
MrBinkeyWhat's picture

If there is anyone on this board that believes "official numbers" about anything. Step on out: Fight Club

Bitchez

Wed, 10/12/2011 - 15:09 | 1766767 SheepDog-One
SheepDog-One's picture

'FT'? *cntrl-alt-del* article.

Wed, 10/12/2011 - 15:10 | 1766772 prains
prains's picture

oops, so sarri

Wed, 10/12/2011 - 15:11 | 1766778 Ahmeexnal
Ahmeexnal's picture

This means Chilean spring will accelerate.

Already fascist Pinera has banned protests.  And the MSM is not following the massive riots going on down there.

 

Wed, 10/12/2011 - 15:20 | 1766824 Shitters_Full
Shitters_Full's picture

Preach on, ye of the long beard.

Wed, 10/12/2011 - 15:59 | 1766960 nyse
nyse's picture

It has been said that "no one is expecting the Spanish revolution," but no one is expecting the Chilean Revolution.

Wed, 10/12/2011 - 19:51 | 1767797 DosZap
DosZap's picture

This means Chilean spring will accelerate.

Already fascist Pinera has banned protests.  And the MSM is not following the massive riots going on down there.

 

 

Damn, scratch ONE safe haven off the list of four.

Wed, 10/12/2011 - 15:11 | 1766779 qussl3
qussl3's picture

You can eat copper no?

Wed, 10/12/2011 - 15:15 | 1766801 hedgeless_horseman
hedgeless_horseman's picture

Fast food when wrapped around lead.

Wed, 10/12/2011 - 15:41 | 1766893 wombats
wombats's picture

It's best served 125 grains per serving.

Wed, 10/12/2011 - 21:37 | 1768067 UP Forester
UP Forester's picture

.... also good at removing pesky blue helmets....

Wed, 10/12/2011 - 15:25 | 1766782 traditionalfunds
traditionalfunds's picture

Hate to say it. Suppose this is bad for silver too. 

 

Also Tyler did you notice the Alcoa CEO was bashing Aluminum shorts for the poor results during the conference call?

 

Unlikely he had a problem with them when prices were high or when his raised prices stick.

Wed, 10/12/2011 - 15:36 | 1766884 tekhneek
tekhneek's picture

OH, they're actually not the same metal.

Silver is silver and copper is copper.

More copper above ground supply = less copper ore being mined which means less silver as a byproduct which means less supply of silver for the already raped above ground supply.

Please elaborate how this is bad for silver.

Wed, 10/12/2011 - 15:51 | 1766930 traditionalfunds
traditionalfunds's picture

Long term you are right about that and that is why I have plenty of physical silver.

Short term trades are made based on the relative price of other commodities so I stand by the potential for downside. Would not be surprised to see $22.

I won't sell my physical silver soon but am not married to it nor am I opposed to hedging gains. 

 

 

Wed, 10/12/2011 - 15:12 | 1766786 Oh regional Indian
Oh regional Indian's picture

Copper, perhaps being stockpiled for some unknowable reason (liek fooling the world maybe). But I'll tell you this. They bought one heck of a lot of Iron ore from India these past 5-7 years. 

A lot. Millions and millions of tons. Paid crazy prices, bribed the government, created political goon control territories in states that had ore. Crazy, Two of India's states are comping with Enormous environmental destruction as Chinese agents mined thousands of hectares bare.

And one only need look at their build up over the past few years (all those ghost cities for example).

And they've clearly built everything shoddy and for the short term. So lots of steel and not much copper.

Are those ghost city apartments just shells? Curious. But China is a Sham, just like my once great country that never was till the british made it so.

ORI

The Perversion of Language

Wed, 10/12/2011 - 15:32 | 1766868 spartan117
spartan117's picture

Let me see.... would I prefer to have 1.) fully built cities paid for by money printing, or 2.) lots of Federal Reserve Notes.  I think I'll go with the former.

Wed, 10/12/2011 - 16:04 | 1766974 nyse
nyse's picture

Yeah, but they are fully built Chinese cities. 

Checkit! - http://www.hoax-slayer.com/13-story-buliding-collapse-china.shtml

 

Wed, 10/12/2011 - 18:31 | 1767550 carbonmutant
carbonmutant's picture

Cities built with hollow piling and no rebar....WTF??

It makes you wonder if their economy is built the same way...

Wed, 10/12/2011 - 18:07 | 1767438 Hephasteus
Hephasteus's picture

It's ok ORI. They messed up the poor irish even more.

Wed, 10/12/2011 - 15:13 | 1766791 gringo28
gringo28's picture

whatever. if you thought Chinese data is trustworthy, tool you. here's the fact: copper, and othe hard commodities, will be consumed and the Chinese are not afraid of stockpiling. stop thinking so western-like Mr. Chanos.....

Wed, 10/12/2011 - 15:30 | 1766862 gringo28
gringo28's picture

whoever dinged me is a frikin moron. we are in a secular commodities bull market. do you really think this shit isn't released for a reason? what are you waiting for, the Chinese to announce that they are actively substituting paper assets for hard assets in order to (a) build resevres for future growth and (b) provide alternative investments for their internal economy? fucking morons like Chanos who think China is going to impload so he can make a bunch shorting australian miners. FCX is dirt fucking cheap and 50% of its remaining 2011 sales is fucking hedged at over $4/lb. read the filings and weap shorts macromavens......

Wed, 10/12/2011 - 15:15 | 1766799 Raynja
Raynja's picture

Little do we know the copper is stored in the form of bullets.

Wed, 10/12/2011 - 15:15 | 1766802 Mercury
Mercury's picture

Still, better than having a stockpile of....paper

Wed, 10/12/2011 - 15:16 | 1766804 nobusiness
nobusiness's picture

Cheap copper equals cheaper houses???  Bull market continues.  Go back to buying the dip please, nothing the see.

Wed, 10/12/2011 - 15:16 | 1766806 firstdivision
firstdivision's picture

I'm shocked, absolutely shocked, to hear that China tried to hide factual numbers.

Wed, 10/12/2011 - 15:17 | 1766809 A Man without Q...
A Man without Qualities's picture

The fact China has been exporting far more than needed is widely known.  It's interesting how quiet the copper miners have been on the topic of demand for more than a year now, whereas the likes of JPM (who have an ETF to sell after all) have been banging on about supply shortages like they are some sort of boiler room operation.  To my mind, it also explains why equity prices have declined faster than the underlying...

The question is whether inventories have been rising as Chinese financiers need to keep the price high in order to prevent the copper collateral financing game going....

Wed, 10/12/2011 - 15:17 | 1766810 cosmictrainwreck
cosmictrainwreck's picture

well, shit....they gotta spend all that loot on somethin', right? they've been stockpiling the Cu for YEARS. This is news?

Wed, 10/12/2011 - 15:19 | 1766818 DonBadajoz
DonBadajoz's picture

What is copper good for... industry and FUCKN BULLETS!... they are gearing up for war.

Wed, 10/12/2011 - 15:19 | 1766819 zerozulu
zerozulu's picture

If we underestimated China's copper reserves, trust me we are underestimating China's GOLD reserves too.

Wed, 10/12/2011 - 15:20 | 1766825 Roy Bush
Roy Bush's picture

Jim Rickards tweeted about this yesterday with this article....

http://www.stratfor.com/memberships/203019/analysis/20111009-chinas-threat-falling-copper-prices

The Chinese are using copper stocks for collateral.

Wed, 10/12/2011 - 15:23 | 1766840 Roy Bush
Roy Bush's picture

Here's the article:


October 10, 2011 | 1208 GMT LAURENT FIEVET/AFP/Getty Images Cargo ship anchored in Hong Kong Summary

The price of copper has dropped 30 percent since early August, reaching a 14-month low. Because businesses in China have been using copper as a financing tool to bypass the tightening of credit markets, the repercussions on the Chinese economy of a sustained drop in the copper price could be widespread. Beijing may not be able to do anything to significantly counter this threat, as copper is already being widely used for financing and Beijing does not want to enforce any new regulations that could sacrifice economic growth and employment.

Analysis

Copper prices have been experiencing increased volatility in recent weeks, dropping 30 percent since early August and reaching a 14-month low as a result of Europe’s deepening debt crisis and the overall slowing of the global economy. China has been using copper as a financing tool, thereby linking it to financial and real estate markets. This means that a sustained drop in the price of the metal — certainly a possibility amid the recent volatility — could deliver an unexpected hit to the Chinese economy.

The Use of Copper in Financial Markets

Even though China is the world’s largest consumer of copper, the drop in prices has not come as a welcome development. This is because of the different ways China uses copper. Though China’s demand for the metal has surged over the last 10 years due to domestic construction, industrial production and the needs of the manufacturing industry, copper has also taken on an important role in financing. An increasing number of Chinese firms have been using copper as a financing tool — stockpiling the metal and using it as collateral — because the government’s measures to curb inflation have limited the firms’ access to credit. Such financing links the price of copper to other key elements of the Chinese economy, including the growing speculative real estate bubble.

China’s tightening monetary policy has made it more difficult to access credit through official channels. As a result, Chinese small- and medium-size enterprises (SMEs) have increasingly turned to copper for use as collateral in loans, which are then funneled into other sectors of the economy. The falling price of copper means that the collateral initially put up for the loans in yuan is no longer worth what it once was, decreasing the likelihood that the borrower will be able to pay back the loan. If firms default on debts, then others connected in the chain will default — and determining where loans have been invested is nearly impossible.

Banks and state-owned enterprises (SOEs) are also potentially vulnerable. A high number of SOEs have also used copper as collateral. These firms are often involved in the real estate sector — even if their primary function is not always directly linked to it — and are therefore exposed to the country’s growing real estate bubble. The government would bail out the more politically favored SOEs if necessary, but that would leave fewer resources to be allocated to the private sector that is crucially important to China’s growth.

How Financing with Copper Works

As China considers raising interest rates further and implementing other measures to tighten credit, businesses continue to use more complicated methods to obtain loans. The procedure for using copper as a financing instrument has typically gone as follows: SMEs and SOEs apply for a low-interest loan to buy copper on the international market using U.S. dollars, deferring payment on the loan for three to nine months. The copper is imported and stockpiled in warehouses in China, and the warehouses issue the borrower a letter of credit confirming the amount of copper stored at their facility. Borrowers bring this letter of credit to Chinese banks and can exchange the rights to the copper for around 80 to 85 percent of its value in yuan, which they can immediately turn around and invest in other sectors.

Due to the yuan’s general appreciation against the dollar, the borrower is in theory virtually guaranteed to make a profit during the initial three- to nine-month period, in addition to whatever they earn by their investment of yuan. Because of the apparent upside involved in trading assets purchased with dollars for yuan and the overall tightening credit environment in China, which makes it more difficult to secure loans through other channels, this approach has become quite popular. In fact, according to STRATFOR sources, virtually all copper imported into China over the past three months has been used for financing.


(click here to enlarge image)


Potential Fallout and Beijing’s Response

Beijing issued new regulations in late August requiring banks to place part of the original loan in a low-yielding reserve account instead of allowing it to be used to invest yuan elsewhere in the economy. But because the use of copper as collateral developed as a way to bypass lending regulations, there is no mechanism in place to track how much of the inventory is tied up in these financing deals, meaning the extent of the risk also cannot be measured. But China’s copper demand was up by nearly 100 percent between 2005 and 2009, during which time Chinese gross domestic product rose by only about a third, according to the International Copper Study Group.

There is little doubt that a significant proportion of this copper has been used for financing, given that industrial use alone does not account for the increase. Warehouses bonded to the London Metal Exchange (LME) also saw Chinese copper inventories increase 17 percent in the first quarter of 2011, compared to a drop in the purchasing managers index manufacturing rate to 52.9 percent during the same period, according to the China Federation of Logistics and Purchasing. That this figure only includes inventories registered on the LME again suggests that a high percentage of imported copper is being used to finance credit.

Any move by Beijing to institute new regulations to limit this activity may prove to arrive too late. Speculative tools like copper and real estate have been used in informal and formal lending, making them harder to regulate, thus increasing China’s vulnerability to price declines and financial risk. Beijing understands it needs to clamp down on copper speculation, but it is wary as this may lead to a big rise in nonperforming loans at banks.

A drop in copper prices appears on one hand to be a good thing, since China’s demand for copper is growing faster than production. On the other hand, if the value of China’s stockpiled copper collapses, the impact on those using copper as collateral has widespread ramifications. Such a collapse would result in a much worse outcome for Beijing and would parallel similar problems China faces in managing bubbles in, for instance, real estate. There are few safe investments, and the system is more stressed than it appears.

Beijing will find it hard, while installing new regulations, to achieve the contradictory goals it is pursuing — keeping the economy growing even as it tightens lending. It cannot sacrifice growth and employment, so it is unlikely to take measures to halt the copper financing practice completely.

Wed, 10/12/2011 - 15:33 | 1766873 CharlieSDT
CharlieSDT's picture

Very interesting article.  Leave it to the Chinese to figure out how to do business in tight credit markets.

Wed, 10/12/2011 - 15:28 | 1766852 Quinvarius
Quinvarius's picture

This data is 9 months old and it is an estimate.  It is very actionable after copper's decline this year.  LOL.  I don't have a copper opinion.  But the one I adopt won't involve some obscure group's 9 month old estimate based opinion.

Wed, 10/12/2011 - 15:29 | 1766855 apberusdisvet
apberusdisvet's picture

Those Chinese warehouses full of copper are really just the collateral being used for real estate loans; bubble anyone?

Nothing to see here.  If an 800 lb gorilla falls from the top floor of a 100 story building, it will be spun as a "soft" landing.

Wed, 10/12/2011 - 15:30 | 1766856 MrBinkeyWhat
MrBinkeyWhat's picture

US nickles...bitchez

Wed, 10/12/2011 - 15:30 | 1766861 The Axe
The Axe's picture

I think those sons of bitches stole my cooper gutters to....bastards.....short FCX  

Wed, 10/12/2011 - 15:32 | 1766866 whisperin
whisperin's picture

I think everyone is missing the obvious. China has decided to support their banks. These banks posess an avalanche of real estate loans of dubious quality and issued letters of credit backed by copper. Question: Has or will China exhausted their entire foreign reserve surplus in putting out the fire?

Wed, 10/12/2011 - 15:35 | 1766877 silverserfer
silverserfer's picture

It just seems that everybody is milking the deflationary hysteria right now trying to drive down prices as low as possible to get in low positions before the massive inflationary event hits. If you can print fiat for free and trade it for something real your going to do it.

Newsflash: governments are stockpiling commodities while talking them down. SSDD.

Wed, 10/12/2011 - 15:52 | 1766934 Belarus
Belarus's picture

governments are stockpiling commodities while talking them down. 


As in JPM Government, I agree. Covering massive short position in silver to buy.....physical silver. I've been saying this for awhile, the take-down gives them massive leverage to actually buy the stuff they need. 

In hyper-inflation, it's all about outrunning the other guy. I hope these cocksuckers didn't scare you out of silver. 

Wed, 10/12/2011 - 16:16 | 1766972 Conax
Conax's picture

+1

Shazzam! Tons of copper suddenly stockpiled in China, and since the September silver drive-by we get the news of the 'big' silver piles lying around on sunken ships. All this news being pumped out tells me they are using every tactic they can to drive prices lower and lower.  Soon a silver mountain will be discovered in Tibet or some damn place noone can get to. Desperation is very bullish.

Hold Fast. We're going to win.

http://en.wikipedia.org/wiki/Information_warfare

Wed, 10/12/2011 - 23:11 | 1768280 Hephasteus
Hephasteus's picture

Some of those air force cyber space information soldiers are pretty much this...

http://www.youtube.com/watch?v=ZqrmR3w-lLU&NR=1

Wed, 10/12/2011 - 15:36 | 1766880 spartan117
spartan117's picture

Yes, this all makes sense.  If I were the Chinese, I would push out a report that copper inventories were nearly depleted, thus sending copper prices skyward so I could pay more for copper. 

Wed, 10/12/2011 - 18:09 | 1767445 Hephasteus
Hephasteus's picture

Ya and that would make sense if anyone was in control. As it is the consumers are entrenched and they say when the depression is over. Not one minute sooner. So store it all up.  Nobody cares.

Wed, 10/12/2011 - 15:37 | 1766885 Quinvarius
Quinvarius's picture

Coin stock.

Wed, 10/12/2011 - 16:22 | 1767019 Dapper Dan
Dapper Dan's picture

You are on to something with that, why not coin it.

Wed, 10/12/2011 - 15:38 | 1766889 falga
falga's picture

Chinese companies were not only using copper but many other commodities like soybeans.... Worst scenario for such scheme is a continuing decline in price of the commodity as it essentially stops the ponzi scheme!

Wed, 10/12/2011 - 15:38 | 1766891 Deadpool
Deadpool's picture

maybe they'll back the renimbi with copper instead of gold. Just kidding, they top ticked it.

Wed, 10/12/2011 - 15:40 | 1766897 buzzsaw99
buzzsaw99's picture

There is no way the earth can produce copper as fast as the bernank can give away free money to his maggot friends.

Wed, 10/12/2011 - 15:42 | 1766907 ziggy59
ziggy59's picture

Maybe they will switch cu for ag. So they are on a copper standard.. could be worse, no?..like being on a paper standard

Wed, 10/12/2011 - 15:43 | 1766908 NotApplicable
NotApplicable's picture

Well, once the wars get rolling, what mines aren't put out of production directly due to hostilities will be selling product to the defense contractors. Did I say selling? I meant "nationalized."

The mining industry, along with all other productive enterprises, are being plundered to death by the bankster class, as it is the easiest way to enslave the most. People will be too busy fighting each other in the streets to notice.

Divide & Conquer, FTW!

Wed, 10/12/2011 - 15:43 | 1766910 totem
totem's picture

And for today's copper-bullish story, Steve Liesman is now reporting that he is starting a penny collection.

Wed, 10/12/2011 - 15:45 | 1766914 eurusdog
eurusdog's picture

I remembered reading this article several years ago:

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/5160120/A-Copper-Standard-for-the-worlds-currency-system.html

Maybe they will start the hard money trend by moving out of Yuan print and into Yuan copper coins.

Wed, 10/12/2011 - 15:48 | 1766921 nobusiness
nobusiness's picture

Where did all the stock buyers just go at 3:45???

Wed, 10/12/2011 - 15:50 | 1766926 nobusiness
nobusiness's picture

Maybe that guy from the movie AirPlane pulled out the electric cord on the Atari 5000 runing this market

Wed, 10/12/2011 - 15:59 | 1766958 Archimedes
Archimedes's picture

Because the new ZH trolls SparkySC , No Mas and mn1 cashed out all of their 12% gains. Because of course they follow in the footsteps of other great trolls Robo Methman and Harry Wanger and always buy low and sell high! god those guys are good!  </sarc>

Wed, 10/12/2011 - 15:54 | 1766936 Archimedes
Archimedes's picture

This news means nothing. They need to get rid of 1 Trillion worth of worthless US bonds. Since the Chinese can't buy US companies and assets they should be stockpiling every hard asset the world needs.

In other news, shorts have been covered, low volume ramp is now in progress and if earnings don't dissapoint the market is going higher.

In the past two weeks Faz, Fas and Drv have seen more than ten days of 10% price swings! Now I am not going to lie and say I caught it every day since most of the ramps occur overnight.

But if you have some gambling money placing 10K bets on these ETF's every day can quickly make you a few grand a day. After a while it starts adding up!

Wed, 10/12/2011 - 15:58 | 1766957 nobusiness
nobusiness's picture

Which way will you bet for tomorrow?

Wed, 10/12/2011 - 16:03 | 1766968 Archimedes
Archimedes's picture

I am out for right now. Low news days are scary. Jobless claims are a crap shoot. If they come in under 400K no matter how close the stock market will cheer. Looking to get back into DRV in the low 11's but 1220 on S&P is resistance. If we don't break though that I am jumping back in.

Wed, 10/12/2011 - 16:21 | 1767016 misnomer
misnomer's picture

"Chinese copper stocks... stood at 1.768m tonne"

I'm still a learner here....how many pennies is that?

 

Wed, 10/12/2011 - 16:31 | 1767041 eddiebe
eddiebe's picture

Watch copper prices rise. Because the new white is black and the new up is down, until further notice.

Wed, 10/12/2011 - 16:53 | 1767124 Mr_Wonderful
Mr_Wonderful's picture

Hoard and sell, LOL. Incisive indeed Tylers.

That seems to be the ticket for keeping up prices of way overabundant things. Then you have overissued shares of stock watering scams like GE, MSFT, INTC and CSCO, to name just few. Could a similar scheme be in play there as well?

Wed, 10/12/2011 - 16:56 | 1767147 CapitalistRock
CapitalistRock's picture

We are surprised China is accumulating reserves in more than just foreign currencies? If you think China will suddenly change course and start saving fiat paper while reducing commodity stockpiles then I've got some nice swamp... I mean beach front property at a great price to sell to ya.

China will save its excesses one way or another. Metals of all kinds are an excellent way to do so.

Wed, 10/12/2011 - 18:32 | 1767556 silverserfer
silverserfer's picture

This is a piece of news. Reported by Dr. Shill from the Retard Institute.

Their last report on how much they liked spagetti was much more in depth. 

.

Wed, 10/12/2011 - 18:45 | 1767607 carbonmutant
carbonmutant's picture

Power Lines from the Yangtze...

Wed, 10/12/2011 - 19:21 | 1767720 digalert
digalert's picture

If the analysts on Occupied Wall Street missed Chinas copper holdings, I wonder if China has secretly doubled its gold and silver? Actually, the world runs around propping up failed gambling bets of banksters with borrowed loans from failed sovereigns. China has been running around the world scooping up assets like copper, iron, oil, land...secret (thanks GE) technology.

Bitch about buying Chinese junk all you want. When the SHTF, you'll still be buying from China, learned the grasshopper.

Wed, 10/12/2011 - 19:54 | 1767804 DosZap
DosZap's picture

Well,this splains why the damn expensive ship sunk............they have so much their storing it everywhere.

B4 we jump to any conclusions on this, I thik we need to look at China, and it's LONG term philosophy.

The overage,was not an accident, they bought it right.And, there not going anywhere.

Remember 50yr plans.

Wed, 10/12/2011 - 20:07 | 1767843 Westcoastliberal
Westcoastliberal's picture

In the event they've double-estimated copper it stands to reason they're lying about their rare earth reserves as well.  Could be good for MCP. *Disclaimer: I have a couple of shares of MCP which is why I thought of it.  This is not investment advice.  Duck and cover, void in Wisconsin."

Also, some guy lots of people follow is saying the shit will really start hitting the fan this Saturday, and will result in an edge of your seat market day on Monday (17th).  If you're not ready for TEOTWAWKI maybe you should check this out:

http://www.collapsenet.com/262.html

Wed, 10/12/2011 - 22:18 | 1768137 jjsilver
jjsilver's picture

This is bullish for silver

Wed, 10/12/2011 - 23:31 | 1768315 mcarthur
mcarthur's picture

Wasn't long ago everyone could produce copper for 60 cents a pound.  A buck is now the average cost but mines start shutting at about $1.80 a pound and don't get built for less than $3.  So $3 is the long range floor since some biggies are depleting rapidly (Grasberg pit for example) and the capital will disappear to replenish this in a hurry.  But short term dips to $1.80 are possible as we saw a couple years ago.  The big porphyry copper deposits near surface were found a generation ago and the pits are closing steady.  They are being replaced with underground block cave operations or lower grade pits.  So the copper cost curve is going to do a relentless shift upwards over the next ten years.  A little bit of Chinese inventory build should be looked right through.  Insensitive supply response to price is the real issue. 

http://www.antofagasta.co.uk/pdf/presentations/AplcBMOPresentation201102...

 

The copper cost curve is on page 6.

Thu, 10/13/2011 - 03:32 | 1768645 Cult of Criminality
Cult of Criminality's picture

On other news

I just saw Jamie Dimons face in my toilet bowl.

 

 

Yes I flushed it

Thu, 10/13/2011 - 03:50 | 1768655 Cult of Criminality
Cult of Criminality's picture

Copper for electrical wiring would call for copper obviously but in the U.S.most residential projects and Hotels,Motels use CPVC for water pipe and PVC for waste pipe and have been for more than twenty years on the PVC side. I would like to know if the Chinese are using copper for waterlines and what they are using for waste pipe.

Why would they use expensive copper for waterlines when there is CPVC?

Just a question,i have not had time to research this yet.

Even prisons here in the U.S. are using CPVC for water service,Hospitals still use copper on water and are moving to PVC on the waste instead of cast iron.

 What would be nice to know is if the Chinese are using copper for waterlines or CPVC ? What do they use for waste pipe Iron,PVC?

Has copper use gone up in the U.S or down ?

Has copper use gone up or down in China ?

I have not seen anyone ask these questions.

Good day to all

Thu, 10/13/2011 - 03:56 | 1768663 Cult of Criminality
Cult of Criminality's picture

What it does say is that, OIL will be needed to produce CPVC,PVC or Copper.

CPVC=Chlorinated Polyvinyl chloride

PVC= Polyvinyl chloride

Thu, 10/13/2011 - 04:07 | 1768669 Cult of Criminality
Cult of Criminality's picture

One more note

If building in the U.S. is dying (which it is) where is the copper demand going to come from ?

I hope JP Organ loses their ass.Could not happen to better financial terrorists

FBI....Look up, see the terrorists they are right in front of you...see...right there see....ARE YOU FUCKING BLIND OR BOUGHT?

Its right and wrong not right and left idiots.

Thu, 10/13/2011 - 05:23 | 1768676 Element
Element's picture

But ... but ... efficient marketz! ...

Perhaps the proper question arises from presuming the Chinese are not actually dumb.

This is Beijing policy, this is far too big to be the sum of all errors and all misjudgements.

This surplus is quite deliberate. In a global fiat world the Chinese can buy as much gravel, copper concentrate and ingots from the wider world as it wants to stock.

Give an Aussie a bunch of mouse clicks, and he'll fill a ship with high grade ores of your choice. We get 'rich' off this huge ''trade'' surplus.

Why >wouldn't< Beijing do this when they know it's all a Fiat Ponzi system, and we are all en-snared (both mentally and structurally) to pursuing coloured bits of paper all day long?

How do they possibly loose? They can't! As it's the sweetest deal since the US did this with petro$$$. China does it because we decided to let them have real stuff for their digits ... now they want in on the global reserve currency! And simply to ramp up this swindle ... for that's what it is.

You can pretend it's 'trade', if you still want, I'm just calling it what it is. We GIVE them ANYTHING, and in exchange they give us literally NOTHING, and they gain enormous power in the process, while our so-called 'Ekonomi', is deemed by the xperts, to be dependent on China!

It's  A B S U R D  is what it is! And yet this all the 'Marketz' and Canberra and the sicho-MSM crap-on about all day.

How the feck can they possibly lose here? Even if we cut supply they will have a massive stockpile, ... and we get no more digits.

You know what we would do then?

We would print digits, and keep all the gravel ... for ron ... lateron ... that's what a wise country would do in a Ponzi world ... but we be thickies.

We're constantly fleecing ourselves! ... OURSELVES!!!

If we 'believe' so much in fiat, why do we need someone else's invented digits?

How do these differ from our own invented digits?

Why do we feel 'rich' with someone else's digits ... but 'poor' if we just made our own?

Bizzaro world! ... and China is cleaning up on this rank stupidity ... all created by the Banksterz ... specifically to fleece us of real things.

To make nothing look like something - the art of the bankster.

Why wouldn't the Chinese exploit the Banksterz ruse to the max?

They want strategic stocks and strategic leverage and raw power, as global political leverage - over the west - and doing this, for mere mouse clicks, provides this to them in spades.

You'd do it too, if you could, and if people were silly enough to settle for your mouse-clicks.

The Chinese are logical ... we? ... not so much.

What do we actually get from China?  Absolutely NOTHING that we would not happily do without. Can anyone refute this?

The reverse is not the case though, China needs us to keep going along with the Banksterz swindle, else they are kaput.

Here's the truth: it's us who are rich, already, we have the real stuff, and the Chinese who are quite impoverished in most respects, and just getting by on our aquiecence to the Bankster's Fiat swindle.

They know it ... and it's about time we all did too.

BTW: Those big resources companies filling the ships with ore of every sort in this on-going giant global swindle, these are Rothschilds owned companies... this is the very NWO process itself .. it has been going on for a long time, and via this deepening process of making nothing look like something (FRNs to derivatives ... it's all comes from the FED=TBTFs), via their MSM fantasy machine and thier political scoundrels, so they are well on the way to making us too mentally and intellectually enfeebled, and too co-dependent and distracted with literal nothings, to do much about any of it, nor them.

It's all been working so well ... up to now ... no one was even asking these obvious questions.

Wed, 10/19/2011 - 23:10 | 1791365 thefedisscam
thefedisscam's picture

Frankly, I think China is VERY SMART to horde some copper, rather than CLOWN BUCKS!!

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