Much as He’s rise was a microcosm of China’s economic boom, his current woes may mark a turning point for commodity markets: the end of an era in which Chinese demand could only go up.

“In some ways Maike’s story is the story of modern China,” said David Lilley, who started dealing with Maike in the 1990s, first as a trader at MG Plc and later as co-founder of trading house and hedge fund Red Kite. “He has skillfully ridden the dynamics of the Chinese economy, but no one was prepared for the Covid lockdowns.”

This account of He’s rise to the pinnacle of China’s commodities industry is based on interviews with business associates, rivals and bankers, many of whom asked not to be named because of the sensitivity of the situation. 

Eoin Treacy's view

“Never mistake a bull market for brains” is one of the most useful adages in the markets. The challenge is that to make truly life changing money in a bull market one has to act as if it will never end. That implies loading up on leverage, making big bullish bets and never giving into doubt. In bull markets that last for a decade or more, the biggest gamblers look like prophets and are treated as such by the market. When liquidity conditions eventually change, that business model experiences significant duress.

Copper is locked in a battle between slowing Chinese growth and less enthusiasm for property development versus the global urge to support electrification of the transportation sector and net zero ambitions in the generating sector. The price continues to range around $3.50 and will need to sustain a move above $4 to confirm a return to demand dominance.

The clearest bullish catalyst would be an end to China’s COVID-zero program and revitalization of the domestic economy. That is not likely ahead of the Party Congress which is not for another month. The market is holding its breadth until after that event.