COLUMN-The shadowy Chinese fund at the heart of the copper rout – by Andy Home (Reuters U.K. – July 11, 2018)

LONDON, July 11 (Reuters) – Copper prices are in free fall as the United States dials up the trade tension with China. On the London Metal Exchange (LME) copper for three-month delivery touched a one-year low of $6,081 per tonne on Wednesday. The fall from last month’s high of $7,348 has turned brutal.

Slide has become rout as momentum-chasing funds pile in on the short side. LME broker Marex Spectron estimates that as of last Friday the collective speculative short had reached 18 percent of open interest, a level not seen since 2016. And it has almost certainly grown further since.

But it’s a fund of another kind that has grabbed the market’s attention. Few outside China will have heard of Gelin Dahua Futures Co. Ltd. But the Shanghai copper market has been tracking its massive bull position since July of last year.

Last week it sold out of that position big time, coinciding with a collapse in the Shanghai copper price.

There are echoes of January 2015, when another previously unknown Chinese player, Shanghai Chaos, was linked with a copper price implosion. History never quite repeats itself, though.

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