LONDON (Reuters) – It’s been a hard time for copper bulls. A year of expected supply disruption from expiring labour contracts has failed to live up to expectations as strike deadlines have largely passed without incident.
Neither accelerated Chinese imports, up 15 percent through August, nor mass cancellations of London Metal Exchange (LME) stocks, 125,000 tonnes over the second half of August, have made any impression. The LME three-month copper price is down 20 percent on the start of 2018 at a current $6,020 per tonne.
Copper has become a proxy for geopolitical angst, specifically the trade tensions that are simmering between the United States and China. Wednesday was an “up” day, thanks to the prospect of another round of peace talks between the two protagonists.
But the broader theme remains one of concern about the impact of any new tariffs on global, specifically Chinese, growth. Funds continue to hold a massive short position on the CME copper contract to the tune of a net 25,392 contracts as of last week.
Bulls have struggled to resist the waves of selling from hedge funds and systematic funds chasing the downwards momentum. But they are still holding the line in the LME copper options market.