An article on Bloomberg today - a ML metals analyst Michael Widmer commented that copper price might have overextended itself given its recent rally despite sharp rise in inventory.
I have done some work on metals inventory vs price and found that there isn't much one can infer one way or another. On a daily basis it does not seem to matter at all. On a longer horizon it works OK but then how practical is it to hold a metal position for a whole month based on last month's inventory data (this is analyzing data on monthly frequency and constructing trades that way). No clear relationship among inventory, warrant cancellations and price that I could decipher. As you see in below chart that on monthly basis inventory and price movement seem to be quite negatively correlated, but as you can see in the period 2005-2006 it is hardly a sure thing.
HOWEVER, this just might be enough argument to push me into going short copper - finally.
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