MUST READ: The World Has Less Than 5 Days Worth Of Copper Inventories

According to the financial media, the global economy is supposedly rolling over causing a glut of inventories producing a deflation in the prices of many commodities.  If this is the case… someone should tell that to King of base metals… Copper.

Something doesn’t seem to be making sense in the copper market as the price continues to decline, so are the level of global copper inventories.  You would think the opposite would be the case, but we must remember in the new Financial Paradigm — Paper assets such as Derivatives, Stocks and Bonds are KING, while Gold-Silver and commodities are GARBAGE.  Which is why (according to their mentality), financial assets are what we should EAT, while gold-silver and commodities are what we flush down the toilet once we are done digesting and consuming them (put another way–CRAP).

If we look at the chart below, we can see a very interesting trend taking place in global copper inventories.  Not only are we are near record lows, we are down to less than five days worth of copper inventories:

Global Copper Inventories & Days of Consumption

(Data from the Chilean Copper Commission website Weekly Updates)

In August 2013, the world held 777,697 metric tons (mt) of total global copper inventories–a 13.5 day supply.  During that time, the price of copper was trading in the $3.30-$3.40 range.  If we move over toward the middle of the chart, by March 2014, the global copper stocks declined to 477,014 mt (8.3 day supply), while the price of copper traded in the $3.00 range.

So, after a near 40% decline in world copper inventories, the price of copper fell 10%.  Interestingly, this is the same the price of silver fell from $25 (Aug 2013) to $20 in March 2014.

Now, if we look at the current data, shown on the right side of the chart, total global copper inventories are now at 263,027 mt at an impressive 4.6 day supply (sarcasm).  And of course, the price of copper fell from a high of nearly $3.30 in June, to around 3 bucks today.

Let’s compare copper inventories at the end of September, going back to 2009.

Global Copper Inventories

SEP 2009 = 490,773 mt

SEP 2010 = 553,737 mt

SEP 2011 = 658,851 mt

SEP 2012 = 427,733 mt

SEP 2013 = 717,232 mt

SEP 2014 = 263,027 mt

Here we can see that end of September copper inventories in 2014 are the lowest in six years…. and at a 4.6 day supply.

Just maybe the copper traders know that inventories are going to header higher by the end of the year if the global economy continues to shrink.  However, a 4.6 day supply of copper doesn’t seem like the demand for the king base metal is really falling all that much… or am I missing something here.

Lastly, there is speculation that the Chinese may be buying and hoarding copper that isn’t recorded in the “Official Inventories.”  I say… so what.

If I were Asian or Chinese, I would rather spend $1.8 billion to purchase the rest of the 263,000 mt of global copper inventories than spend another lousy RED CENT on U.S. Treasuries that will become worthless at some point in the future.

NEW UPDATE 10/18/14:

After reading some of the comments below the article, I did additional research that might help answer some of the questions raised.  However, the more I looked into to the global copper market, the more bizarre it became.

While it’s true that China recently had a probe into its Copper Financial Deals (now gone bad), this became public in 2013 and was addressed early this year.  If it is true that China has all this extra copper in inventory… then why did Chinese Copper imports increase 18.7% year-over-year in the first seven months of 2014???  (source of data from this Reuters article).

Again, if we knew that the Copper Financing Deals were coming apart back in May of last year (Zerohedge: The Bronze Swan Arrives:  The End of China’s Copper Financing), wouldn’t this copper market imbalance be worked through by now?  I mean, its been nearly a year and a half.  By the way, thanks reader houstskool for posting that link in the comment section.

I went back and looked at the data from the Chilean Copper Commission and found some interesting trends.  From Jan-May 2014, global copper production increased 5.6% y-o-y, from 7.28 million metric tons in 2013, to 7.7 million metric tons in 2014.  So, we have an INCREASE IN COPPER PRODUCTION.

Now, from Jan-Apr 2014, the world consumed -2.3% less copper, from 5.4 million metric tons in 2013, to 5.3 million metric tons in 2014… a DECREASE IN COPPER CONSUMPTION.  This isn’t much of a decline, but you would think for the first four months of the year, we would have seen a build in global copper inventories… due to an increase in production and a decline in consumption.  However, if we look at the chart above, global copper inventories actually DECLINED IN A BIG WAY in April, 2014.

Global copper inventories fell from 477,014 mt in March, to 355,075 mt in April.  This was a drop of 25% from a 8.3 day supply, down to a 6.2 day supply.

So, here’s the question.  Why would global copper inventories be falling if global production is increasing, demand falling and China with a supposed GLUT of copper inventories to work through?  Does that make any sense whatsoever?

In one of the comments below, a reader put a link to a BNN interview with a copper analyst about the global copper market, which you can watch at the link HERE.  Basically, he goes on to say that they look at all the different Chinese warehouses and state there is a 250,000 mt global surplus of copper.  If that is the case… then WHY IN THE HELL aren’t global copper inventories RISING instead of FALLING over the past year???

You see, something just doesn’t make sense when we look at all the data.  Again, why did Chinese copper imports increase 18.7% Jan-Jul if they had all this surplus copper they could work through???

In conclusion… all I can say is SOMETHING FISHY THIS WAY BLOWS in the Global Copper Market.

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32 Comments on "MUST READ: The World Has Less Than 5 Days Worth Of Copper Inventories"

  1. Don’t quiet understand this: ……the price of silver fell from $25 (Aug 2013) to $20 in March 2013.

    • Gig.

      Thanks for catching that… I corrected it.

      Steve

    • EVERYONE:

      THERE IS A NEW UPDATE IN THE ARTICLE ABOVE. Please check out the additional information and data that I believe you will find quite interesting.

      steve

      • It just means that some chinese stockpiles are not included with your figures and it is possible some may still hoard lots of cooper in china.

        For western analysts and speculators, these above ground stocks are due to come back into the market for use in a nanosecond of required (time and/or price).

        Just my 2 cents here…

  2. The majority of the population nows for sure only Paper is real wealth. / sarc off

  3. Funny timing on this article. I was just watching an interview that claims the opposite.

    Apparently there is a copper surplus, and refiners have lots of raw materials to refine more.

    http://www.bnn.ca/Video/player.aspx?vid=469651

  4. I think the timing oddity is likely an MSM spanner by that site to again deflect any truth
    being put out here. Coincidences,I cant believe in those any more.

    I still think silver is going to fly .Ebola/Colloidal silver multiplied by m/billions of home users.Its just so easy to make your family safe/r.

  5. Steve,

    With respect, the last “Imminent shortage” was going to be silver in Shanghai. Now the Shanghai silver inventory coverage has become as quiet as MH017. Also, with respect, we have been hearing for over a year now that a COMEX default is imminent for whatever commodity. Yet, so far, nothing. And at the same time, there is no hard evidence of shortages anywhere for anything?

    Don’t get me wrong, I am a believer. But, at the same time, I am extremely pleased that I covered my physical holdings with paper shorts over the last few years. It’s clear that the CB’s and the Cartel are in total control and that, in the absence of any Regulator, they will continue to be so for as long as they see fit.

  6. Some believe that the cartel will start to push metals higher when they are correctly positioned to make money to the upside. However, again, there is little hard evidence to support this. When the Cartel has become net long, with Hedge funds net short, each time prices have moved up, instead of squeezing the Hedge Funds, the cartel have just used their longs to cover, so as to contain any price spike higher.

    Metals are relatively small potatoes to the Cartel in comparison to the Trillions in free money they get from the Fed, So, IMHO they are NEVER going to allow upside moves in metals (And make money on their longs) against the wishes of Fed. It’s just not in their own best interests.

    • “Some believe that the cartel will start to push metals higher when they are correctly positioned to make money to the upside. However, again, there is little hard evidence to support this.”

      That some that believe includes Ted Butler [from recent comments he has made], who is so sick of silver manipulation he wants to believe they will finally let it loose.

      Nonsense. Just because the Commercials are net long doesn’t mean they will “cash in all their chips”, effectively saying screw you to the Fed, U.S. Treasury, and CFTC, which has allowed them to break rules and laws so long as they keep suppressing gold & silver prices. Yes they may allow prices a few dollars higher.

      The manipulation will end when it ends [physical shortage? realization of safe haven? fleeing from paper assets? black swan?]. I’m in agreement with Steve, when it does the prices will rise faster than in the past.

      • lastmanstanding | October 18, 2014 at 8:50 am | Reply

        Silver is far to important to their death and debt bullshit for them to have to pay what it is really worth…and stress to you that it is worthless.

        IMO, when they really need it, they will let it blow enough to get a bunch of weak hands to dump for paper…There will be no getting it back at a lower price.

        They don’t want you having something so important to their control.

        If you need to sell some, make sure you are buying something that may save your life.

        You either have faith in things that are earthly and real, or you don’t.

        Choose wisely.

  7. Do you have a longer trend for this? I remember China important copper furiously which piled up in warehouses to serve for asset backed loans. So perhaps 2013 was the anomaly and we are returning to the mean.

    • Motley,

      I put the data for global copper inventories for each year at end of SEPT going back until 2009. You will see that SEPT 2014 is the lowest. I did an update in the article that I believe will provide some additional data and information. However, I didn’t find answers, just more questions as the whole copper markets seems more bizarre than ever.

      steve

      • As I’ve dissembled the banknote scheme, it’s a certainty to implode once Terminal Debt Saturation becomes a global phenomenon and sufficient new currency no longer covers interest service on its gross float. Governments can create this shortfall (‘QE’) as a bridge-funding measure, but it can only worsen the overall interest imbalance, because it’s no longer spread over whole populations, but tightly concentrated in the governments, which can’t raise taxes sufficiently to facilitate economic growth simultaneously.

        My take on the covert stockpiling of copper, is that governments understand the banknote scheme to be completely irreparable (it’s concievable it was started as a general good) and they’re making provision to ‘face the music’ of its abandonment. Physical, financial and economic constraints combine to make copper the ideal conversion to preserve present Purchase Power of currencies in line with their numerical accounting.

        If Chinese yuan-renminbi is to be the new ‘reserve currency’, it may well be in the form of those old copper coins with square holes in their centers.

  8. China’s copper financing blew up in 2013, too many claims on non excisting copper inventories. I think the numbers were not accurate and are now catching up on reality. ZH had a few nice articles about this. SGE silver is going down also, maybe people are waking up. If that’s the case, we should see some fireworks in the near future.

  9. I don’t know quiet what to make of this info…..
    Does this mean copper production is decreasing because of low copper price so therefore by-product silver will decrease?
    Or does this mean one should expect an increase in the price of copper because of tight supply which would spur an increase in production thus in turn would increase the supply of by-product silver?

    • Gig,

      If you read the UPDATE I just included a few minutes ago, you would have seen that GLOBAL COPPER PRODUCTION INCREASED 5.6% JAN-MAY 2014 over the same period last year. So.. no production of copper is not declining.

      Actually, here is the SILVER PRODUCTION data for Chile:

      JAN-JUN 2013 = 577 metric tons
      JAN-JUN 2014 = 629 metric tons

      Chilean silver production was up 9% year-over-year in the first half of 2014.

      steve

      • Think I will buy some copper rds. Not so much an investment, but might need some “change” to buy a pack of chewing gum or a candy bar.

    • I rather think the reverse is indicated. Silver has become too cheap to mine profitably, and so has gold. Copper is almost a purely economic indicator–it’s not called “Dr. Copper” for no reason. What the composite is arguing is a massive deflation in the offing, due to lack of economic activity. That there is a low number of supply days of copper without a concomitant rise in price is absolutely chilling. It is the number one commercial metal.

  10. I suggest the fishy thing is that copper has begun being horded. First Gold was horded, then silver was horded and now also copper. These are the three monetary metals. The end game is near!

  11. The big drop in global copper inventories since March 2014 mirrors the drop in silver inventories on the SGE. Metals falling into the black hole of China?

  12. There is a shortage in copper in China, real physical copper. To prevent CCFD’s blowing up, entities are trying to get the real thing. Without rumours, because when too many CCFD’s fail, what about gold / silver? Or iron ore?

    When those deals are 100:1 paper/phyz, like comex gold, it could blow things up. China doesn’t want that.

    So what’s fishy here is the inventories. Just a thought. The hunt for real hard assets is ON.

  13. Hi Steve,

    My idea of the end game for quite a while has been that there will be arbitrage between paper and the real deal. As we know a lot of physical mostly / only bourses have been set up around the globe. Especially in the (middle) East). In the PM area we already seen some small and medium arbitrage oppertunities. Making the 100:1 + leveraged system way less worth paper vs the 2:1(?) leveraged paper. That oppertunity so far has been solved by providing the real metal by the West.

    Amazing piece this is thus, shows that the game has expanded to the base metals. The Western players cannot as easy provide the real stuff from stocks as with gold for example. As houtskool says well, the hunt for real hard assets is on. I like to add, the hunt for a new financial paradigma as well. Reality and financial reality will meet soon again. It wont be pretty for the ones holding paper real things. They will proven worthless. I will not be suprised at all that paper metal in the West will be dumped and thus get cheaper and cheaper and the real deal more and more expensive. Oh the irony.

    Regards Hugo

  14. I can’t believe there’s been no mention of GS warehouses full of copper…… One way or another they will profit immensely from this…….. They are probably buying at these “manipulated” prices. Of course they are the one’s manipulating so nothing to see here………

  15. Hi!, Patrons Of SRSEROCO ET AL:

    Of all the lies in this world “statistics” tops the list. When it comes to silver and Ted Butler for example, he as been establishing how imminent the price due to shortage is for how long? The name of those benefiting from this misallocation of expectations is known as the Silver Users Association whose use of silver daily profits nicely from lower silver prices as the base of their many productions worldwide. Like gold miners who benefit from lower fuel costs, silver users benefit from low prices for silver and let us believe that they would love it if they owned silver mines to produce their raw basic material at cost when silver prices are higher and do even better today with silver prices below the actual costs of production without their ownership of the silver mines. Let us not forget either that silver is usually produced as a byproduct from lead, zinc, aluminum and copper mining etc. Should the prices of these other base metals decline below their costs of production, that too will unavoidably effect the availability and price of silver as a byproduct. We should also try to keep in mind that, once either a pure play silver or gold mine is shut, it can take 10 – 20 years for them to reopen operations which also leads to men loosing their jobs etc. That in my opinion would be a double whammy against the stated purposes of the FED. who tells US they want to fight the two headed monsters we call unemployment and deflation would it not? Therefore, both employment coupled with inflation is the advertised purpose of the FED., in order to stop all the complex economic dislocations attributed to another 1929 style deflationary depression. Right now we are learning we are having a temporary bought with deflation and are wondering if the FED. will drop its’ ending QE in favor of additional QE 4, in another added attempt to keep OUR economy stimulated through renewed inflation to avoid a deflationary depression? In the meantime it looks to me we must exercise OUR due diligence worked out through extreme patience allowing events to unfold the truth and OUR economic direction day by day and event by event. Right now for example the overall American public has dropped their interest in owning the precious metals regardless of the underlying supportive statistics but Katy bar the door when the slumbering giant awakens past any consideration of all statistics!!! At that time we will see a true blue flight from the US $ hard to imagine or explain today. Doug Casey of Casey Research has characterized it as trying to empty Hoover Dam through a garden hose etc. Too bad we don’t have an exact time to expect these events bcause it’s hard to live with the uncertainties in the meantime isn’t it? Do not get discouraged as the eventualities of a real world flight from fiat paper money is only a matter of time but becoming a closer reality every day. Hang in there everyone!!

    RUSS SMITH, CA. (One Of Our Broke, Fiat Money States)
    resmith1942@gmail.com

  16. Here’s one article referencing there existence and supposedly there desire to sell. Who knows what’s really going on there now. [ http://www.valuewalk.com/2014/05/goldman-sachs-selling-metals-warehouse-business/ ]

    • Jeff,

      Thanks for the link. Yeah, I searched Goldman Sachs Copper warehousing and I have to say, all we can do is speculate. However, nothing makes sense. Why would global copper inventories decline if DEMAND is DOWN & SUPPLY is UP??

      steve

  17. My bet is that selling out was just another rouse by the great manipulator Goldman Sachs. We all know Bart and the CFTC are a joke when in comes to looking the other way……..Anyway, there’s been no news that this talk of selling ever materialized.

  18. All metal must be smashed down to maintain the illusion that the dollar has some value.

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