January 2012 | Base Metals
Lack of post-holiday demand from China may kill the rally: Copper - Market Analysis
The fall in LME stocks continues to provide some support for copper prices, but the fact that China did not take up the baton on its return from holiday on Monday is potentially a rally-stopping development. We wait to see if China emerges as a buyer in the coming days and weeks, but our view is that for China, and for investors, the current price level does not represent a good entry point given how far it has run in January and the risks still clouding the macro outlook. We reiterate that prices are due for a retreat back below $8,000/tonne.
Cancelled warrants rocket...
LME cancelled warrants now stand at just short of 100,000 tonnes, compared with just 41,000 tonnes at the start of the year, and virtually all of this increment has already been drawn out of warehouses. The majority of the cancellations are located in the US, with at least some of this material destined to feed surprisingly firm demand from domestic semis fabricators. But the lion’s share of these cancellations...
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