OREANDA-NEWS. September 28, 2011. There appears to be a mounting disconnect between the sharp sell-off of paper commodity futures and the still robust demand for actual physical cargoes, especially from China.

New York crude oil has slumped 10 percent and London copper by 18 percent in the past two weeks, joining the rout on global equity markets sparked by increasing concern that Greece will default on its sovereign debt and trigger another global financial crisis and recession.

Signs of slowing manufacturing output in both China and Germany have added to fears that recession is inevitable and it's time to rush for the exit of any asset leveraged to growth, such as oil and copper.

But this sentiment isn't shared by physical commodity traders, who continue to report strong buying interest from China and India for oil, and ongoing Chinese demand for commodities including copper and coal.