Copper's future in the energy transition may be bright but it's the problematic here and now that is weighing on fund managers' minds.
Money manager positioning on the CME's copper contract shifted back to a net long at the start of November for the first time since early May.
Soaring inflation, interest rates hikes, dollar strength and rolling lockdowns in China formed a heady bearish brew, with funds increasing their short commitment as London copper slumped from over $9,800 per tonne in June to a 20-month low of $6,955 in July. Money manager long positions, by contrast, have barely changed since May. They currently total a modest 47,128 contracts, compared with an April peak of 76,837.Investment funds slashed their net long position from a high of 39,028 contracts in February to a two-year low of 4,123 in July, since when bullish bets have gyrated higher to 12,443.
Bears have retracted their claws on both exchanges but there's been no corresponding surge in bullish exuberance among fund managers.Funds' reticence to commit to copper is understandable given the market is trying to price two conflicting trends. The return of Chinese support for industrial metal markets looks set to be a protracted two-steps-forward-one-step-back affair.
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