-- Copper futures in New York rallied to a record high after a short squeeze that’s prompted a scramble to divert metal in other regions to US shores.The sudden surge — which has seen Comex futures jump by more than 7% this week — has left metal for July delivery to the New York exchange trading at a record premium over later months, and at unprecedentedly high levels compared with copper on other global commodities exchanges.
“The short squeeze is set to continue as traders might not be able to ship enough metal from either Chinese bonded warehouses or from Europe ahead of the delivery date,” Jia Zheng, head of trading at Shanghai Dongwu Jiuying Investment Management Co., said by phone. Metal could also be sourced in the Americas.
The spike also pushed the Comex market into its biggest-ever backwardation — indicating tight nearby supply — with July trading nearly 30 cents a pound above the September contract on Wednesday.Short-squeeze rallies typically occur in commodities markets as lossmaking traders are forced to exit positions under pressure from ballooning margin calls or the threat of having to deliver physical material — or pay a big rollover fee — when the contract reaches expiry.
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