LONDON, April 19 Copper’s bull momentum from the start of the year is fading as the disruption premium from supply hits at the world’s two largest mines unwinds and broader risk-off turbulence also joins the mix.
Three-month copper on the London Metal Exchange (LME) slid through $5,600 on Tuesday to hit $5,568.50 a tonne, its lowest level since January. And though it staged a small bounce on Wednesday morning, at $5,630 copper’s year-to-date gain stands at a little more than 2 percent, having been up almost 11 percent in February.
On the supply side, a strike at Escondida in Chile has ended, albeit after a longer than expected 43 days, while a temporary compromise on export shipments should allow the Grasberg mine in Indonesia to ramp up towards more normal operating rates.
There is no shortage of potential further flashpoints in the supply chain, but for now copper is drifting. Unsurprisingly, the weaker tone in pricing has seen a significant tempering of fund long positioning in the market. What’s curious, though, is that funds remain as committed as they are, particularly on the CME’s copper contract.
Has CME tapped a whole new source of managed money? Or is it part of a bigger rotation of funds into the commodity sector? Or maybe a bit of both? The latest Commitments of Traders Report (COTR), covering trading to April 11, showed funds holding a net long position of 55,512 lots on the CME’s copper contract.
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