LONDON (Reuters) – In a tentative return to Doctor Copper for the money men, investors are starting to buy back into the metal after aggressively shorting the market at the start of the year.
Some of the gloom weighing on the copper price appears to be lifting, with more positive noises from U.S.-China trade talks and expectations that Beijing’s latest stimulus boost will revitalise a flagging manufacturing sector.
Copper’s own micro dynamics, in particular low visible stocks on the world’s three exchanges, are also fanning bullish enthusiasm. Funds increased their net long holdings on the CME copper contract by 7,488 contracts to 23,126 in the week to March 5, a level not seen since the middle of last year.
However, it’s also clear that views on the price within China are far more mixed with both short and long positioning rising on the Shanghai Futures Exchange (ShFE).
Funds started the year in a super-bearish mood, according to the U.S. Commodity Futures Trading Commission (CFTC), which has now caught up with the data gap caused by the five-week government shutdown. Outright short positions flexed out to a record 88,003 contracts in the middle of January, marginally eclipsing previous bear peaks in July 2018 and September 2016.