Huge Market Busts/Bubbles Coming from Speculators in China

bloomberg.com

5 pointsjboydyhacker2 comments

The epicenter of the commodities boom, however, has been steel reinforcement bars, which have surged 38 percent.

Rebar? I had absolutely no idea that rebar was traded in the futures market. That said, I always found it funny that OJ was traded on a market. Oil too - it's weird to me that the price of oil or OJ (or rebar??) can be disconnected from any reality regarding the cost of production - especially considering that it gives speculation the ability to grind world economies to a stop.

Edit: rebar??

Well for anything that is fundamental, and getting more of it if demand is different than supply is difficult or impossible, will be traded on a futures market.

If you believe that China is going start a bunch of building projects as a way of pumping up their GDP, you know that the supply of rebar, used in all concrete projects, is rate limited. And you know it takes months for a foundry to start producing rebar from the time the owner says "We should make more rebar, go" until the salable product hits the streets "Here you are boss!". So in those months between "go" and "deliver" there will be a shortage, which, if you own a contract for delivery at a reasonable price, you can "flip" for a nice profit.

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