Commodities Demand, Trading Migrating to Asia

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Oct. 10 (Bloomberg) -- Bloomberg's Alix Steel and Bloomberg Industries’ Kenneth Hoffman put futures in focus with a look at the demand shift in commodities markets in "On The Markets." They speak on Bloomberg Television's "In The Loop."

I'm curious as to the mood at the conference.

It's crazy because last week, i was in china and mongolia talking to senior officials with a lot of optimism there and then i fly from korea to london and the mood is changed.

They are more dour.

Are analysts and the west to pessimistic?

One thing that really happened this week is on monday morning, the ceo of the exchange came out and said we havetwo hubs - one in asia and one in london and when you look at the map of where demand is, it's all asia which tells you that all the trading will go from here in london to asia.

That was a big part of the discussion.

We are also seeing demand in asia but in terms of demand, is it and user demand?

Yes, that will be pretty good.

When i was in china, all the chinese officials i talked to were raising their demand forecast for all sorts of metals . they believe the spring softness is ending and you are seeing a robust increase in demand toward the end of this year and increased growth as we get into 2014. what art of that might be financing like using copper or aluminum to secure a loan and use that money to invest elsewhere?

We have created a new term called iris - it says because you cannot take money out of china in the yuan, they are using the base metals as a currency so they are getting high interest rates and china and using low financing rates in the west and doing a swap.

We noticed that is supporting metal so and he knew inventories that commit the system are being used as this arbitrage between low interest rates in the west and high interest rates in china but that may come to an end soon.

We appreciate it, thank you so much.

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