Last week saw another 15,600 metric tonnes of copper go into Comex and LME warehouses, bringing the total held to 436,250 metric tonnes, representing the highest level held since Nov. 2013, yet the price continues its sideways move.
So, at the risk of repetition, it seems we are living in a new realm, where the fundamentals of gravity no longer apply. Or are we? This past Friday the Wall Street Journal published an article entitled, “LME Wants Storage Business Back.”
The article said it seems that the problem is the warehouses within the LME system charged their customers a bit too much for storage, and took a little longer than necessary to move metal out, amongst other things, to the extent that business was lost to lower cost competitors. Thus, the article implies that metal stored in non–LME warehouses, which are not required to disclose their holdings, have distorted statistics, thereby making proper market analysis more difficult, if not impossible.
From where we sit though, there is nothing new here in terms of transparency issues going back over many decades, and that is why technical analysis is so important in managing price risk.
If you would like to learn more about how to manage your wire and cable inventory in this volatile market environment, email John at by clicking here or calling him at 631-824-6486.