After a super-charged rally from a January 2016 low of 2049.00 the London Metal Exchange (LME) index of major contracts topped out at 2926.10 in the first quarter and has since fallen back to a current 2,732.20.
There is much divergence by individual metal according to supply specifics, but it is the demand side of the fundamental ledger that has dulled the metals' shine.
And, as ever with this part of the commodities universe, this is all about China.
Having been caught out by the strength of policy stimulus last year, industrial metals are now reacting increasingly negatively to Beijing's shift to policy tightening.
For many, it seems, China has gone from metallic buy to metallic sell.
But are they right?
Graphic on money manager net positioning on LME contracts, rebased to the start of 2017: tmsnrt.rs/2rpXjLa
The first commodity to signal a collective change of stance about the Chinese demand outlook was iron ore.
Just as the Dalian contract's sharp rally this time last year heralded a new stimulus-fueled infrastructure and property boom, so its recent slide has been taken as a sign that the Chinese policy cycle has turned again.
It's noticeable that volumes and open interest have picked up as Dalian iron ore has fallen, suggesting it is being used to express a negative view on China's immediate growth prospects.
The LME base metals suite has more recently been infected by the same bear bug.
Speculative money has been steadily leaving the market over the recent weeks with money manager net length sliding pretty much across the board since late February.
Nickel has been the worst hit, aluminum the least affected, reflecting the former's overwhelmingly negative and the latter's more positive supply picture.
The LME's Commitments of Traders Report suggests that money men are still net long all the contracts, but there is a well-known long bias in the weekly publication.
LME broker Marex Spectron's alternative take on speculative positioning is that money men are net short on zinc, nickel and tin, neutral on lead and marginally long on copper.
Only aluminum is still showing a sizeable net long, according to Marex, and even that is much reduced relative to earlier this year.
A TURN OF THE CYCLE
In truth, the metal markets are following a pre-written script.
Rewind to London LME Week last October and everyone was short-term bullish but medium-term wary on China. [nL8N1D850J]
In particular, there was consensus concern that the momentum of Beijing's stimulus package would fade around the second quarter of 2017 causing a slowdown in key metals-intensive parts of the Chinese economy.
Such fears now look well placed.
Stimulus has given way to credit tightening as Beijing looks to damp down speculative excess and force banks to clean up off-balance-sheet exposure.
Industrial production and fixed asset investment growth have accordingly slowed.
Purchasing managers indices, both official and unofficial, are falling, suggesting that manufacturing activity has recently topped out. [nS7N1DC015][nL4N1I200S]
And China's metallic imports are running at subdued levels. Those of refined copper, for example, slumped by almost 28 percent year-on-year in the first quarter.
All of which, it could be argued, was what people were expecting six months or so ago.
Graphic on relative price performance of Shanghai rebar and hot rolled coil steel: tmsnrt.rs/2qQRauk
SHADES OF GRAY
Except that the overall picture within China is much more nuanced than it at first appears.
Consider, for example, the relative price performance so far this year of two Shanghai-traded steel contracts.
Hot rolled coil, which is used across the manufacturing spectrum, has fallen by around eight percent in price since the start of January.
Rebar, which is primarily used in construction, is, by contrast, still up by 15 percent on the year-start.
This seems all the more surprising given the well-flagged measures Beijing has taken to cool resurgent property inflation in some of its top cities.
But, as Goldman Sachs points out in a recent research note, slowdown in some cities is feeding spill-over activity into others. ("Metal Detector: China fears subside", May 16, 2017)
Arguing that "the best lead indicator for (property) activity is property sales", the bank suggests that even if national sales stagnated at April levels for the rest of the year, it would translate into annual 2017 growth of 17 percent, much higher than current consensus.
It also notes that "there appears to be a strong infrastructure pipeline through Q2 and Q3 2017".
That leaves the core manufacturing sector as the prime point of Chinese demand softness.
You may not agree with Goldman's overall bullish view of the current Chinese metals economy but its comments on the continued relative strength of property do tally with the performance gap that has opened up between the two main Shanghai steel contracts so far this year.
Despite all the hoop-la that greeted U.S. President Donald Trump's promised infrastructure spend late last year, it's the turn of the Chinese policy cycle that continues to dictate the rhythm of industrial metal prices.
Ferrous contracts such as Dalian iron ore picked up the change of beat earliest but the same "sell China" theme is now spreading across the base metals complex.
Among the major contracts, only aluminum is holding its own thanks to the potential supply upheaval promised by China's environmental clampdown on its smelter sector.
Everything else is being pressured lower with the LME "Street" keeping a watchful eye on the aggressive selling, widely assumed to be coming from Chinese fund players, that is hitting the complex daily.
The only problem is that this time the policy cycle is turning in a more nuanced way than the metal markets have got used to.
Has Beijing learnt the lessons of its previous "boom and bust" metallic credit cycle?
It's starting to look that way. And if it has, selling metals as a proxy for selling an approaching Chinese "bust" may prove an expensive mistake.
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