LONDON, July 3 (Reuters) – If you’re one of those people who believe that “Doctor” Copper is a lightning rod for the state of the global economy, then you should be worried. London Metal Exchange (LME) copper for three-month delivery has this week touched $6,519 per tonne, its lowest level since December 2017.
There’s been a partial bounce from Monday’s low point to a current $6,565 but copper has now fallen 10 percent in less than a month and the band of support around December’s low of $6,507.50 is widely expected to come under renewed scrutiny sooner rather than later.
Funds have been slashing their exposure to copper. Net length on the CME’s copper contract has collapsed over the space of the last month from 77,740 contracts to just 22,061. It’s not just copper.
Money managers were net sellers of 19 out of 24 major traded commodities last week, according to Saxo Bank. Tariffs and escalating trade tensions have flipped the investor risk switch to off.
Copper, however, is particularly vulnerable because of its exposure to the Chinese economy, already showing signs of losing momentum and now apparently battening down the hatches for a trade stand-off with the United States. It’s this sensitivity to a deteriorating macro picture that is overwhelming a still finely balanced dynamic in the copper market itself.