By Daily Crux Editor Sean Goldsmith:

In the midst of the recession, China took advantage of low commodity prices to stockpile metal for brighter days... thereby setting a floor in the vulnerable commodities market. In particular, China was buying copper - it imported a record amount of the metal this May.

Metal prices soared 48% this year due to Chinese demand - copper was up 58% - but the party may be over...

"China has been accumulating inventories of commodities for the last six months or so," said Francisco Blanch, head of global commodity research at Merrill Lynch. "This accumulation of inventories now needs to be cleared off. End-user demand in China has not really picked up."

Pan Pacific Copper, Japan's biggest smelter of the metal, estimates China's copper imports may fall to 300,000 tons in the three months to September 30 - less than half China's demand in the first quarter. And stockpiles of copper monitored by the Shanghai Futures Exchange recently hit the highest in 21 months, 68,536 tons... almost quadruple the level at the start of the year.

Might be time to go short copper...

Read full article...

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