Funds have slashed their long positions on the copper market as high and rising inventories cause a collective re-think of the market’s short-term prospects.
The LME three-month price has retreated from its record high of $1,104.50 per metric ton in May to the current $9,000. Money managers have since scrambled to get out just as fast they rushed to get in. Long positions have shrunk by 80% to 78,790 contracts. The London market has seen a similar fund exodus, with the collective net long position contracting from a May peak of 71,899 contracts to 29,694 as of the July 22 close.Shanghai Futures Exchange stocks this year broke with a seasonal pattern of rapid declines after the lunar new year holidays. They have edged lower in recent weeks but remain above 300,000 tons, a level last seen in 2020 when China was reeling from the first round of its COVID-19 lockdown.
Copper has also started arriving at CME warehouses, where stocks shrank to just 8,117 tons in July, fuelling the squeeze across the front part of the forward curve. The lack of any detailed announcements from China’s third plenum has added to the sense of disappointment.forecastsThe median forecast of the latest Reuters quarterly poll of analysts was for the cash LME price to recover from $9,737.50 in the third quarter to $10,000 in the fourth quarter.