Canaccord: Copper, nickel, zinc and aluminium: Is demand for metals really recovering outside of China?
Copper, nickel, zinc and aluminium: Is demand for metals really recovering outside of China? The debate goes on. FT Alphaville reports that there has been a sudden surge in cancelled warrants at the London Metals Exchange (LME). Cancelled warrants climbed to 16,900 metric tonnes, up more than six-fold from the end of 2009, according to LME data. Metal on warrant represents inventories in store at the LME’s warehouse. But cancelled warrants represent investors wanting to take delivery out of the LME warehouse. A rise in cancelled warrants suggests more demand for the underlying physical commodity. FT Alphaville quoted unattributed analyst(s) in saying, "...arguments used to support bearish views are steadily weakening; nearby time spreads are narrowing while LME inventory cancelled warrants are on a steady uptrend. This may finally convince those traders, analysts and reporters who had attributed price rises to “speculation” that the fundamentals have indeed been improving....The narrowing in spreads tells us that availability is tightening, which together with the improving inventory picture makes for a positive price outlook, in our view, and given the build in short positions during the recent selloff this also raises the potential for short-covering rallies."