


ASSET CLASS”    


 


 most innovative companies, whereas commodities are cyclical and  aluminium’s production shift to cheap power locations).


   bubble popped. US rates had already been cut to 3.5% by Sept 2001, and were cut again post 9-11 to reach lows of 1% by 2003.


  really buy into the commodities argument.


Coupled with the emergence of China as a global powerhouse, the price impact on the LME was massive.


Arguably, many in the LME underestimated the extent to which investment buying would push prices higher, as the new wave of buyers showed little respect for previous chart highs and production economics  metals prices inside cyclical boundaries.


Chart 1


THE NUMBER OF LME CATEGORY 1 AND 2 MEMBERS WHO FACILITATE CUSTOMER BUSINESS IS WORRYINGLY LOW.


Chart 1 shows LME Cu and Ni 3m prices during normal price cycles in the 1990s, and the impact of  


• Relatively early in the cycle, some low cost   MTM losses as prices pushed higher, but all hedge obligations were met.


• The LME generally understood that copper’s  speculative short positions were placed with further triggers at $4000. These were  at China’s State Reserve Bureau and LME counterparts.


• Despite some assertion that commodities     of 1996


 and hold commodity investors were questioned at 


Source: LME/Bloombg/ADMISI


22 | ADMISI - The Ghost In The Machine | May/June 2019


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