Opinion pieces are the views of the author: they do not represent the views of FastMarkets
Winter Park, Florida 05/05/2016 - If it's past 4 pm, I've essentially given up on trying reach traders on their direct office line.
We're in the heart of the second quarter. It should be the busiest time of the year but an alarming number of normally hard-working traders are simply not around in the afternoon. Perhaps some are on the road trying to stir up new business but I fear that just as many are going home because they don't have much to do.
In July and August, it's standard operating procedure to have a multi-hour boozy lunch or to sneak out for a twilight round of golf with friends or clients. But it's only the beginning of May - people really should be chained to their desks closing big deals.
But the spring season has been a real dud across all regions and for most metals. Premiums are depressed and spot demand is nearly non-existent. Hopes for one last demand surge before the summer starts fades with each passing sunset, with no evidence that things could turn around any time soon.
In China, Shanghai bonded copper stocks rose 10 percent to 580,000-610,000 tonnes by the end of April from 530,000-550,000 tonnes a month previously, according to a FastMarkets survey of multiple warehouse companies.
"The trading of copper is not active - buying interest is quite thin so lots of copper entered warehouses," a warehouse source in Shanghai said.
Spot Shanghai copper cathode premiums, meanwhile, are at $40-50 per tonne CIF, the lowest in more than three years, according to FastMarkets' price assessment.
"When we talk to the end-users, they say their stock of final products is piling up so there's no fresh demand at the moment," an Asian trader said.
China's Caixin manufacturing purchasing managers' index (PMI) slipped to 49.4 in April from 49.7 in the prior month and missed the 49.8 forecast. Any reading below 50 represents contraction.
"The fluctuations indicate the economy lacks a solid foundation for recovery and is still in the process of bottoming out. The government needs to keep a close watch on the risk of a further economic downturn," He Fan, chief economist at the Caixin Insight Group, said.
Here in the US, the Institute for Supply Management (ISM) reported that its US manufacturing index fell to 50.8 percent in April from 51.8 percent in the prior month. Meanwhile, Markit Economics' final PMI came in at 50.8, which was the lowest reading since 2009.
"Destocking is very much in evidence as companies reported weaker-than-expected demand and exports are slumping at the fastest rate for one-and-a-half years," Chris Williamson, Markit chief economist, said.
At the American Copper Council (ACC) spring meeting in Arizona, one delegate told FastMarkets that copper market hasn't seen a "big rebalancing" yet, which means that most traders will be forced to wait on the sidelines until 2017.
And the problems now extend beyond the physical markets. The last several sessions have seen aggressive profit-taking on both the London Metal Exchange and on Comex by funds and CTAs. Copper, for example, has fallen by about six percent since the start of the month on both exchanges.
Commodity funds netted more cash in the first quarter of this year than any other type of hedge fund, with the $4 billion of inflows into the group being the largest for any quarter in more than six years, according to a Wall Street Journal report.
But May is traditionally seen as a good time to square up and head away for an extended holiday while markets get a burst of volatility out of their system, ANZ Research noted.
"Some dark clouds are gathering," ANZ said. "There are question marks over the quality and sustainability of China's growth and its implications for global commodity prices, the unresolved question of what to do about peripheral Europe and its banks, and political fragmentation, including the Brexit question."
So that, unfortunately, is where things stand. Business is slower that it should be and many traders and metals sellers are twiddling their thumbs. But on the upside, parent attendance at Little League Baseball games this spring might just break records.
(Editing by Mark Shaw)