What is JPM up to? A detailed look at the movements in an out of their eligible stock indicates they, or a client, is stockpiling/parking kilobars in a Comex warehouse for later withdrawal, possibly to do with Chinese new year.
Back in October, TF Metals Report noticed some "round number" Comex movements in multiple of exactly one tonne. At the time I noted that 3 kilo bars are acceptable for delivery against a Comex contract and speculated that:
"if we see 99.5 bars going into COMEX then it may be an indicator that Asian demand has eased. Maybe JPM had commitments with refiners to buy their output for a period of time, and if Asian demand had eased then they may have just asked their refineries to make 99.5 (for all we know maybe those deliveries were 99.99 kilo bars) and they are just parking them in their COMEX warehouse, waiting for Asian demand to return ... if there are movements of round ounce tonne lots, indicative of kilo bars, out of the warehouses then it may be an advance bullish signal of Asian demand returning."
Given these two large recent withdrawals, I decided to have a look at all tonne type movements in and out of JPMs eligible stock over the past two years. The first list shows the recent movements, which started in October with eight receipts totalling 20 tonnes. Coincidence that exactly 20 tonnes is then withdrawn a few days before Chinese new year on the 31st? I don't think so.
18 Oct 13 Received 6 tonnes
21 Oct 13 Received 3 tonnes
23 Oct 13 Received 1 tonne
11 Dec 13 Received 2 tonnes
12 Dec 13 Received 2 tonnes
13 Dec 13 Received 2 tonnes
16 Dec 13 Received 2 tonnes
17 Dec 13 Received 2 tonnes
24 Jan 14 Withdrawn 10 tonnes
28 Jan 14 Withdrawn 10 tonnes
The other explanation to my initial one is that JPM contracted to sell 20 tonnes to an Asian client way back in October, hedged that on Comex and then accumulated kilobars over the next 4 months from refineries. That is, the 20 tonnes that was being accumulated was already spoken for. Either way, the two 10 tonnes withdrawals do not look like they were unplanned or unexpected by JPM.
This isn't the first time JPM has done this. Consider this sequence of movements towards the end of 2012 - accumulating 18 tonnes, then 17 tonnes withdrawn:
27 Aug 12 Received 6 tonnes
19 Sep 12 Received 6 tonnes
09 Oct 12 Received 6 tonnes
13 Dec 12 Withdrawn 10 tonnes
18 Dec 12 Withdrawn 2 tonnes
26 Feb 13 Withdrawn 5 tonnes
Chinese new year in 2013 was 10 February, so the pattern is not as strong as 2013, but I would note that the 12 tonnes accumulated in September and October exactly equal the 12 tonnes taken out in December.
Here are some other tonne lot movements back to the beginning of 2012, which is as far back as I went in this quick analysis and that don't seem to be related, just for completeness.
06 Feb 12 Withdrawn 5 tonnes
09 Apr 12 Withdrawn 5 tonnes
12 Apr 12 Withdrawn 5 tonnes
20 Apr 12 Withdrawn 3 tonnes
29 Jun 12 Received 1 tonnes
02 Jul 12 Received 2 tonnes
07 Aug 12 Received 5 tonnes
It is clear from the above that tonne lot movements in Comex warehouses are certainly not unique - a quarter of all JPM eligible movements are in tonne lots over the past couple of years. Seems they use Comex for holding kilobar inventory on a semi-regular basis.