RPT-COLUMN-Doctor Copper ends 2019 with a new-found spring in his step – by Andy Home (Reuters U.S. – December 22, 2019)


LONDON, Dec 20 (Reuters) – Doctor Copper is ending the year on a high note. London Metal Exchange (LME) copper has this morning hit a seven-month high of $6,235.50 per tonne, having broken out of its previous $5,500-6,000 range earlier this month.

Funds have been covering back short positions and building new long positions as bank analysts turn more positive on copper’s prospects for next year. The trigger for Doctor Copper’s resurgence was the announcement of a “Phase One” trade deal between the United States and China.

The deal is still somewhat nebulous and no-one seems sure whether there will be a “Phase Two”, but, to quote Goldman Sachs, there is a sense that “US-China tariffs have peaked”. (“Macro at a Glance”, Dec. 18, 2019). That in turn, it is hoped, will help reinvigorate stuttering demand from China’s manufacturing sector.

All the LME base metals complex should benefit from the weakening of the trade and demand headwinds but, according to JP Morgan, “copper continues to provide the cleanest story for those who are upbeat about global growth in 2020”. (“Metals Weekly, Dec. 12 2019).


Funds have been holding a large collective short position on the CME copper contract for much of this year, using Doctor Copper as a proxy for trade war negativity. That big short has been pared back significantly over the course of December. As of last week the net fund short had shrunk to 13,314 contracts, the smallest it’s been since May.

For the rest of this column: https://www.reuters.com/article/metals-copper/rpt-column-doctor-copper-ends-2019-with-a-new-found-spring-in-his-step-andy-home-idUSL8N28U3R3