COLUMN-Bullish funds’ return to copper a taste of things to come? – by Andy Home (Reuters U.K. – August 9, 2017)

LONDON, Aug 9 (Reuters) – London copper on Wednesday morning touched a high of $6,515 per tonne, a price level last seen in December 2014. This is an extension of the rally that began so dramatically on July 25, when London Metal Exchange (LME) three-month copper punched through $6,200, the top end of a long-standing trading range.

The news trigger for that technical break was a proposal by Chinese authorities to prohibit imports of lower-grade scrap from the end of next year. In the intervening couple of weeks analysts have taken a collective hard look at the implications of such a ban and no-one seems to think it’s a game-changer. Supply chains might change but the scrap itself is not going away. If not in China, it will be processed somewhere else.

None of which particularly matters right now because the money men are in the price driving seat. Money managers have lifted their net long positioning on the LME copper contract by 17,841 contracts since the middle of July to a current 72,563 contracts. That’s equivalent to around 450,000 tonnes of extra buying.

But the real action is happening across the Atlantic on the COMEX copper contract. Both money manager long positions and open interest are regularly hitting all-time record highs. The two things might of course be related.

CME, which operates the COMEX copper contract, seems to have made some sort of quantum leap in terms of market participation. The question is whether this means copper pricing has too. The managed money net long position on the COMEX copper contract ended last week at 104,268 contracts, a fresh record since the data in their current form started being published in 2006.

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