For the past several weeks, copper has been a thorn in the side of the bullish narrative. Gains have all but dissipated and the trends are lower.
Fundamentally, the industry is wrought with ballooning stockpiles, with inventories jumping to 10 mo highs.
As a result, asset managers have been placing bearish bets.
“There’s just no stomach for investors to push their longs in copper,” said Bob Minter, a Philadelphia-based investment strategist at Aberdeen Asset Management, which oversees $402 billion. As demand slows, “the second half of the year is traditionally a challenging time for many of the industrial commodities, so seasonality is working against copper at this point too,” he said.
Hedge funds and other large speculators held a net-short position, or bets on price declines, of 4,991 U.S. copper futures and options contracts in the week ended Aug. 23, according to Commodity Futures Trading Commission data released three days later. They switched from a net-long position, or wagers on a rally, of 2,237 a week earlier. Futures traded on the Comex in New York fell 4.3 percent last week to $2.0845 a pound on Friday. Prices are down 2.4 percent this year.
Copper will fall below $2 before the end of the year, Dane Davis, an analyst at Barclays Plc, said in a telephone interview. The market will face a “difficult time” in the second half after China front-loaded its economic stimulus and the efficacy of such measures starts to fade, he said.
SUPPLY STORM LOOMS.
As demand falters, supplies are set to increase. Production from the companies Goldman Sachs tracks, which account for 60 percent of global mine supply, expanded 5 percent in the first half, analysts led by Jeff Currie wrote in a report Aug. 4. Output will rise as much as 15 percent in coming quarters, signaling the copper market is “entering the eye of supply storm,” the analysts said.
My favorite way to play it, naturally, is by shorting over-leveraged piece of offal, FCX.
The stock is down 16% over the past month and heading lower, inexorably.
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An union mob wearing their flashlight adorned hardhats and dusty suede cowboy boots shall be picketing through the neighborhood streets of Princeton in short order…
Le Fly, is Goldman ballsachs positioning into this?http://www.bloomberg.com/news/articles/2016-08-19/a-commodities-rebound-is-accelerating-right-on-china-s-doorstep?
Some Bolivian Miners just beat to death some douche bag from the Big Government. This is real. The peeps are about to go fucking lunatic on the bosses. Play make believe if one wants. The rope is tied the pitchforks are ready. In other words the biz cycle is fucking over worldwide.
Waiting for this bubble to pop since it all started forming in early 2009. My Bubble Thesis will be done when it does. BTW, that bubble popping will take down China Housing Market…then the world.