China Has Been Stockpiling Copper: Iaccino

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May 19 (Bloomberg) -- Tethy’s Partners Chief Market Strategist Bob Iaccino and Bloomberg’s Greg Bender discuss the price of copper on Bloomberg Television’s “In The Loop.” (Source: Bloomberg)


Copper futures rallied more than two percent last week.

That is the most since march.

Joining me with a look at where copper prices are heading and how you can make money off the metal, greg binder.

Greg, let's start with you.

What is likely to move the price of copper.

Correlation with other commodities, part of the risk on, risk off with other asset classes?

The theme seems to be housing.

If you look in the u.s., last week we had better than expected housing starts in april.

Lower yields for more affordable mortgages.

40% of the demand comes from china.

The housing market in china is anything but stable.

The central bank is rushed -- requesting lenders restrict on mortgage lending.

That, combined with the technical picture, which is still bearish, we have had a 10% rally back in march, but until you get over 320 a pound, i do not think there will be any significant momentum buying coming it's -- coming into this market.

How are you trading m copper?

I think some of the weaker numbers we saw in prior months were due to supply concerns.

It was not supply coming to the market.

There was demand with a low interest rate.

There are lower interest rates now.

The numbers will be surprising to the upside.

The weather has broken, but it takes time to get them to break a grounding get contracts in place.

I think demand will rise.

China has been stockpiling copper.

I think they will continue to do that.

I think you will see stimulus measures that will help that.

Production has been increasing and copper.

We want to be low on copper here.

What is your specific trade?

We want to buy copper, look forward to get to three dollars 89 cents, possibly four dollars.

You are only looking at a risk and you are pretty much a 3-1 on reward to risk.

I am comfortable taking that trade.

Look at it from the risk side first.

We will want to buy copper, looking for $3.89. if you buy copper at around $3.18 per pound, it goes up to $3.89, you have made it profit of $.71 per pound.

The profit for the entire tree is really $17,500. when i look at where copper has been trading, it has not hit the 389 price since december 2012. you have a weak momentum picture.

To flip sides on what i said and maybe argue for his position, price in copper is weak and repricing gold is coming off of a relative low compared to gold.

That could be an interesting --. we want to get to our word of the week -- everyone knows what volatility means, but what does that mean in the world of commodities?

Commodities are highly leveraged.

Higher volatility, higher risk.

There's also high reward.

A major theme in the markets is low volatility.

Equities, currencies, buys, everything is trading at a very low volatility level.

Copper could be a canary in the coal mine.

We are seeing an uptick in volatility.

With the n breaking.

Yields look poised as going under -- percent.

Thank you.

We are "on the markets" in 30 minutes.

Thank you, scarlet.

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