Skip to comments.Why Chinese Copper Demand Could Come Booming Back (Dr Copper)
Posted on 03/24/2014 6:22:15 AM PDT by blam
Why Chinese Copper Demand Could Come Booming Back
Mar. 23, 2014, 11:21 PM
Copper prices have been tumbling on concerns about China's economic slowdown and an unwinding of copper-backed loans.
But Sijin Cheng at Barclays writes that grid spending could "help dispel" concerns about Chinese copper demand.
China's grid companies invested 40 billion yuan (about $6.4 billion) in the first two months of the year, up 22% year-over-year. This comes "despite a high base; in January-February 2013, [when] investment rose 44% from a soft 2012."
While some cable providers reported "sharp slowdowns" in the Jan-Feb period, Cheng attributes this to "the temporary mismatch in investment and orders. ...As orders are executed, however, copper demand could begin to improve sequentially."
(Excerpt) Read more at businessinsider.com ...
Plenty in the old phone industry as fiber gets more popular.
A strong warning to any potential investors in copper.
It is a closed market, and has been since the early 20th Century. Speculating in it is asking to be ripped off, and lots of people have tried and failed. The industry secret is that they maintain vast reserves of refined copper to foil any efforts to manipulate the market, just like DeBeers hoards diamonds.
Where do they hoard this stash?
That, like everything else the industry does, they do not share. I knew a highly respected mining historian, and even he was impressed at how secretive they are. He was used to talking with miners, who are usually very gregarious; but once inside the mining company office the level of secrecy was stifling.
But as a hint of this, when the telecom companies upgraded their national network from copper wire to fiber optic, there was enough surplus copper to, as the historian put it, build several aircraft carriers of pure copper. But the market price didn’t vary one cent, because none of it went on to the market.
A lot of it went back to Anaconda Copper, one of the largest trusts of the Rockefeller family along with Standard Oil. Then, when WWII came around, copper was a key strategic metal, so the industry got into bed with the US government, and there it has remained.
Bottom line: while gold is kept under very close control, and silver is free enough so players like the Hunt brothers could manipulate it, copper is a no-go, and those who control it are utterly ruthless.
The lack of proof is proof of how good the cover-up is.
You want a tour of a warehouses full of copper ingots? I mean plural, warehouses, because you’ll find them near any big industrial user of copper. But only if you can find dozens of warehouses will you have any clue as to how much is kept in reserve.
The important thing is how few businesses control all that copper.
Who needs a copper warehouse. It will not rust. I read the Chinese leave copper stocks out in the open if they cannot house it.
That’s London Metal Exchange warehouse stocks only. They deal in futures, so just need enough to cover calls.