Categories:
Base Metals
/
General Market Commentary
Topics:
General Base Metals
/
General Market Commentary
Copper vulnerable to supply shock as giant mine faces strike
Copper bears could get caught wrong-footed as a strike looms at the world’s biggest mine.
In the U.S., hedge funds’ bearish bets outnumber bullish wagers by the most since 2016, latest government data show. The top brokers on the Shanghai Futures Exchange boosted their net-short position by more than half. Sentiment has turned increasingly negative even as BHP Billiton Ltd. and workers at its Escondida mine in Chile approach the end of a government-led mediation, after wage talks failed. A strike could start as early as Tuesday.
Copper has slumped almost 17 percent this year on Comex as an escalating trade war between the U.S. and China threatens global growth, fueling demand concerns for the metal that goes into building power grids, homes, cars and electronic gadgets. Societe Generale SA analyst Robin Bhar said the market is “fixated” on concerns about the global economy, ignoring the bullish factors that could send prices higher, including potential strikes in Chile.
“The market maybe isn’t priced correctly,” Andrew Cosgrove, a Bloomberg Intelligence senior analyst, said by telephone, citing the risk of supply disruption. “Last year, the market was net-long going into what was the beginning of a strike.”
Copper, often seen as a barometer of economic growth, posted the eighth weekly loss in the past nine. Futures for September delivery slipped 0.8 percent to settle at $2.7425 a pound Friday on the Comex in New York.
Money managers’ net-short position, or the difference between bets on price declines and wagers on price gains, reached 29,986 futures and options as of Aug. 7, according to Commodity Futures Trading Commission data released Friday. Bearish wagers are near the highest on records going back to 2006, data showed.
Things could turn quickly, should mediation fail and work stops at Escondida, squeezing bearish money managers and brokers in China and the U.S.