Nine big questions for LME week Asia 2014

Copper. The arbitrage window into China opened the week before the conference began, and bonded stocks are decreasing. After the sharp decline seen following Black Friday, March 7, when LME copper prices lost around 5% of their value, premiums in Shanghai assessed by Metal Bulletin firmed up last week. Has the bear story in China been overdone?

Copper. The arbitrage window into China opened the week before the conference began, and bonded stocks are decreasing. After the sharp decline seen following Black Friday, March 7, when LME copper prices lost around 5% of their value, premiums in Shanghai assessed by Metal Bulletin firmed up last week. Has the bear story in China been overdone?

What about copper TC/RCs, which moved up again this week on?

What caused and drove on the crash in copper prices last month? Technical selling by algorithmic traders? Covering of out-of-the-money options? Selling that started in iron ore and steel markets? Big bets by bearish funds in China? All of the above?

The market is falling over itself to revise its forecasts for nickel prices upwards: refined nickel prices have risen by about a quarter since the start of the year on the nickel ore export ban in Indonesia and shadowy fears about a curtailment of Russian nickel supply in the west. So how long will those nickel ore stockpiles in China last? As they run down, how likely is it that Chinese companies will actually move NPI production to Indonesia? And how will such factors affect the flight of nickel prices over the rest of the year?

It’s the LME’s week in Asia, in the Hong Kong Exchange’s backyard. But the LME’s largest contract in terms of volume — aluminium — faces competition from the USA-based CME’s new aluminium contracts, which it launches on May 6. How will the North American aluminium market respond to the lawsuits that are going on in its backyard, along with the defeat the LME suffered in the UK courts — an outcome that LME ceo Garry Jones described as being detrimental to the market?

Problems with the aluminium contract aside, trading in and with China is central to HKEx ceo Charles Li’s plans for the LME, as well as the Hong Kong Exchange. The Securities & Futures Commission recently welcomed a pilot programme to enable Hong Kong and mainland investors to trade each other’s markets. How long will it be till a similar deal enables commodity traders in the mainland and Hong Kong to have easier access to the other market?

If you can make the connections, do you have the products that people want to trade? Launching new commodity contracts is partly science and partly art. So what new products will HKEx and LME announce next week? Mini metal futures traded in RMB on HKEx? Iron ore or coking coal even?

Perhaps April 2014 will see the announcement of a new membership category?

Emir moves closer to being implemented. Will it prompt new business plans for brokers — or a complete shake-out? And what will that mean for users of the market?

What is the future for aluminium usage in the auto sector compared with steel?

Alex Harrison
aharrison@metalbulletin.com
Twitter: @alexharrison_mb

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