Copper and Steel

Filed in archive Commodities on July 27, 2009

Seeking alpha had a couple of interesting pieces earlier this month on how China is impacting two particular commodity markets - copper and steel.

Chna has come close to cornering the market on copper.

Enticed by low prices, China stockpiled copper and other commodities and now controls the fate of copper prices and has the potential to move both futures markets and related exchange traded funds (ETFs).

The article goes on to say that China has close to one month's worth of copper stockpiled - as measured in terms of worldwide consumption. It's probably not too much of an exaggeration to say that China could flood the copper market (and collapse the price) or choke it off (and raise the price) if they wanted too.

At the same time, China has become about the only place on earth where there is any real demand for steel. Its thriving auto industry and its stimulus-driven infastructure projects have created increased demand for steel in China. And so far the Obama Administration's stimulus package has failed to do that in the US.


© elitchou