In what has been an interesting week with China back from their holidays, we have seen buyers back into the market, however their demeanor has been far from bullish. With reduced trade volumes and the lack of demand that we expectantly experienced throughout the Chinese Holidays, traders are stepping carefully back into the market.

London Metal Exchange (LME) markets have seen some upside on most metals, however this is being eroded in Australian dollar terms with our currency gaining ground against the USD by almost 3c in the past 10 days.

**** Chinese imports herald renewed copper market tension ****
(The opinions expressed here are those of the author, a columnist for Reuters.)
By Andy Home

LONDON, Feb 17 (Reuters) – China is once again exerting a powerful gravitational pull on the global copper market. Imports of unwrought copper hit a fresh record high last month, while those of copper concentrate maintained their recent surge. The strength of the preliminary figures out last week surprised analysts.

It’s entirely possible that imports were inflated by the timing of the Lunar New Year holidays at the start of February. It’s also a highly moot point as to whether China’s renewed hunger for copper is being driven by manufacturing demand or financing demand. What’s not in doubt, though, is that this accelerated flow of metal into the country is sucking the rest of the world dry.

Exchange stocks everywhere else are low and, in the case of the London Metal Exchange (LME), still falling on a daily basis. The resulting tension is manifest in the tightening of the nearby spreads in the LME copper contract. And as long as China gorges itself at the expense of the rest of the world, that tension is only likely to get worse. Some sort of adjustment is looming. And it won’t be for the first time.

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