All the signs continue to indicate dwindling demand for base metals, notwithstanding the 2 month stockpiling of copper by China earlier this year. All metals benefited from Chinese copper stockpiling, but even after it has became clear that demand had disappeared, prices have continued to rise. While copper is/was the exception, the plot below is typical of the other base metals where we see stockpiles rising, at decade highs in the case of aluminum and nickel, while prices also rise, admittedly coming off lows that were below cost for marginal producers.
In the copper plot below we can see the drop in stockpiles after China began accumulating but over the last 2-3 months, stockpiles have drifting higher, joining the trends seen with the other metals.
Interestingly about the time China supposedly stopped stockpiling, marked by the point at which the LME copper stockpile began to rise again, the Baltic Dry index (BDI) began to drop and has continued to fall since. The BDI and various commodity prices tend to be fairly well correlated, which you'd expect: rising commodity prices indicate rising demand (relative to supply, and notwithstanding speculative bubbles) and those commodities demanded by manufacturers have to be shipped.
Unless we see some signs of genuine demand, manifested by a sustained lowering of stockpiles (and rising BDI) a correction to base metal prices seems inevitable.
Disclosure: No positions
