Network Metals LLC

Many analysts are coming around to the same sentiment we have been harping on for the last few weeks. Earlier, people in the metals world began to agree with what we have been saying about Chinese buying, high copper prices and the chances that such gains would be sustained, but now most of the equity markets/technical analysts are referencing Chinese SRB selling and the effect it should have on copper prices.

We often say that in our experience, the Chinese SRB is one of the best entities at picking a bottom for metals prices, and it looks like the did a good job of it again. After buying huge amounts of copper over the past few months for its reserves (some say as much as 400,000 tons), SRB selling should help to bring prices back to a reasonable level. The huge gains in copper were not particularly reasonable to begin with, given the current
state of the world, and the relative weakness in copper this week should help drive prices down into next week (although copper saw gains today). We advised last week that this could be a typical case of ‘sell in May and go away’, and we are seeing more people saying that now; if this is any indication at all, copper prices and the base metals in general should see some significant correction.