Copper:Hedge Fund Longs At All Time Highs

Copper price surged to fresh 18 month highs this week in part driven by news that one of Peru’s biggest Copper mines, the Toromocho mega-mine, owned by China’s Chinalco, has now officially been cleared for expansion. Although officials have not yet confirmed the size of the expansion, with the mine already kicking out around 120,000 tonnes a year the expansion is likely to make the mine of the premier copper producers in the global market.

The latest CFTC data shows that institutional investors have now built bullish positions to all times with long positions now a hefty 55% over the previous 2014 high. Copper prices have been given a significant boost over recent weeks as demand continues to grow in response to anticipation over President Trump’s proposed $500 billion infrastructure spending program. The demand is clearly reflected in the latest positioning data.  The data also highlights a clear division running through the metals complex with funds continuing to reduce bullish silver, platinum and gold bets whilst building Copper bets.

Despite still soaring prices many analysts point to a looming “supply storm” in Copper which is likely to see prices reverse over 2017. Goldman Sachs are among the analysts pointing to lower Copper prices in 2017.

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Copper prices are now resting back below the initial post election high. The next key resistance in Copper will be a test of the bearish trend line from 2012 highs which comes in alongside the 2015 high offering good technical confluence.  Bulls will be looking for a clear breach of this level to pave the way for further upside.

Iron Ore: Prices Climb Despite Moves By China To Curb Speculation

Iron Ore prices continued to forge higher ground this week despite intervention by Chinese officials. Exchanges in China reduced their daily trading limits and increased margin requirements in a bid to curtail speculation which has driven prices sharply higher over recent weeks. Commodity markets in China are fuelled mainly by speculators and short term retail traders as well as hedge funds. This latest move by officials continues the countries efforts to crack down on rampant speculation causing distorted price moves.

Investment Bank Morgan Stanley have warned that the recent rally, fuelled by a rise in coking coals as well as reports of supply restrictions on major miners, is likely to end shortly. However prices this year have continued to defy calls for such a reversal and have instead continued higher.

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Iron Ore prices pushed to fresh two-year highs this week confirming the breakout of the large inverse head and shoulders pattern which points to much higher levels in the metal.

Zinc: Prices Hit Fresh 9 Year Highs

After surging to fresh nine year highs on Monday, Zinc prices have since fallen back on profit taking as gains in the metal moved above 39% year to date. The fresh surge higher was driven by continued strengthening demand in China alongside efforts by Beijing to reduce production. Falling mine supplies as well as growing demand from the housing and automobile market in China have helped push Zinc prices higher this year. Whilst prices have since fallen back on the week, the dip is likely to find fresh buyers given the strength of the rally.

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The retracement lower this week has seen zinc prices retesting the prior high (2010) at 2740 which for now has held as support keeping the technical bullish view intact. Bears will be looking for a close back beneath that level to signal the room for a deeper correction but for now focus is on further upside.