LONDON, Feb 24 (Reuters) – Funds have given up on their early-year hopes for higher copper prices. Investors have turned bearish on the CME copper contract , slashing long positions and putting on fresh bets for lower prices.
The net money manager short is now back at levels last seen in the third quarter of 2019, when market sentiment hit a “trade war” trough. The deadly coronavirus has frozen the expected Chinese manufacturing recovery story and is now showing signs of spreading to South Korea, another industrial powerhouse.
While equity markets have been taking a more sanguine view of the medium-term economic impact of the virus, copper is starting to price in the multiple short-term impacts on the physical supply chain.
This is not just a demand story, however, since logistics problems are also affecting China’s copper producers. That adds another layer of uncertainty to an already complex mix.
FUNDS TURN BEARISH AGAIN
Money managers were net short of CME copper to the tune of 55,373 contracts as of Feb. 18, according to the latest Commitments of Traders report. Positioning was little changed week on week but the turnaround since the start of the year has been stark.