Posted on 10/21/2011 4:28:26 AM PDT by blam
A Quick Look At Copper, Lumber And Rubber Prices
Global Macro Monitor
Oct. 21, 2011, 5:21 AM
Take a look at copper, lumber, and rubber. Down big.
What does it mean?
No doubt a reflection of a slowing global economy and confirms the contracting manufacturing PMIs in many of the emerging economies.
Hard landing in China?
Don’t know but makes us more vigilant.
Stay tuned.
(Excerpt) Read more at businessinsider.com ...
Copper Tumbles 6% (4% Yesterday)
ALBERT EDWARDS: The Coming China Crash Will Separate The Sheep From The Goats
It looks like demand is expected to drop.
China stopped buying and warehousing commodities for future use. China has slowed down and does not need to continue buying commodities.
Let me preface by saying I know nothing about copper or rubber.
However, I know a little more than the average person about lumber futures. The trend is lumber is up. Lumber bottomed out at 180 last year. The trendline has supported 210-212 four times on the November contract. The last low was 212.40. Yesterday’s low was 214.50. I have orders in to buy at 212.20.
China has supported lumber for the last two years with increasing demand. They buy lumber primarily for concrete forming, furniture and pallets/crating. Lately their demand has gone flat not down. China, Tiawan and South Korea have also bid up the price of timber on the west coast(OR & Wa primarilly) so much that mills in those states can not compete and have had to cut production. This has primarily happened because of the drop in the US dollar over the last two years.
There has also been an increase in demand for lumber from India, Pakistan , Vietnam and various middle eastern countries.
What has changed for lumber brokers like myself is our dependence on selling lumber to contrator lumber yards that sell to people that build single family HOUSES. However, I can tell you from personal experience that demand with even these domestic yards is IMPROVING, not getting worse. This does not mean that certain markets, like Rochester, NY , for example seem to have gotten worse over the last year. Generally, throughout the country things are getting better.
This is why lumber futures are generally staring to trend up. The worst is over. It is not going to get substantiaaly better for YEARS. Also, poorly managed companies within my business will continue to go away. Blue Linx(formerly a division of Georgia Pacific)is in big trouble. However, this companies competitors will benefit from their demise.
Lumber will remain rangebound for the next couple years.
The low is in.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.