According to the Financial Times, copper inventories are at “record levels,” and China’s largest producer of copper has announced a plan for “large” exports in the next few weeks.
China is the world’s largest consumer of copper, so if it has too much, the surplus is sure to depress prices.
The invisible hand of the market has already smacked down the share prices of BHP Billiton and the copper-dominated iShares MSCI Chile Investable Market Index ETF. ECH is down 3.61% over the last month, and BHP Billiton has also fallen in recent trading.
Over the last year, BHP Billiton is down 21.57%.
China has never been shy about manipulating the copper market, and it may not actually follow through with the announced exports.
But judging from the share price declines for BHP Billiton and the ECH in recent action, the market expects the supply of copper to increase.