Copper Price Analysis: Behemoth long position to approach a pain threshold – TDS

A behemoth billion-dollar copper long position has captured the market's attention. Daniel Ghali, Commodity Strategist at TD Securities, believes a pain point for copper market titans is nearing.

See: Copper set to plummet towards $7000 after its best quarter since Q3-2011 – TDS

Billion-dollar copper traders feel the heat

“Emission cuts-driven supply angst is overblown, and metal reserve sales should dent supply risk. Instead, the behemoth longs are likely tied to reflation bets, surging inflation-hedging and a ballooning supercycle narrative.”

“With copper prices weakening in response to lackluster demand signals, billion-dollar traders are feeling some heat – prompting a liquidation of some 30% of the maximum position size to date. However, a less-frequently watched billion-dollar copper short has been providing support on the other side of the ledger. By taking advantage of weakening prices to cover, this position has helped keep prices range-bound.” 

“Since mid-March, the spec shorts have covered some 52% of its size. With fewer bullets to cover, challenges to consensus long positioning will be increasingly hard to look past. And, with prices set to weaken, we could be nearing a pain threshold for the behemoth long position.”