(Bloomberg) -- A massive dislocation between the prices for copper traded in New York and other commodity exchanges has rocked the global market for the...
-- A massive dislocation between the prices for copper traded in New York and other commodity exchanges has rocked the global market for the metal and prompted a frantic dash for supplies to ship to the US.Xi Tells Putin China-Russia Ties Should Last ‘Generations’
“The broader story is that there are new investment funds that are boosting their exposure to copper for a multitude of reasons, and while that’s a global trend, a huge amount of that investment has been heading to Comex,” said Matthew Heap, a portfolio manager at Orion Resource Partners, the largest metals-focused fund manager.While copper prices have been rising for months, this week’s spike was specific to the Comex and the most-active futures contract for July delivery.
The July Comex copper contract soared to a record $5.128 a pound on Wednesday morning. It also traded at a record premium above the September Comex contract — a situation known in commodities markets as a backwardation, a hallmark of a short squeeze. Short squeezes are nothing new in commodity markets, and they often prompt a mad scramble to find supplies of raw materials that underpin paper contracts.
There have been some signs that the squeeze is easing: the July copper contract edged lower on Thursday morning after coming off its highs from Wednesday, while the premium over cash copper on the LME narrowed to $573 a ton — although still a historically elevated level. While substantial inventories have built up in China in recent months, traders estimate that only about 15,000 to 20,000 tons of that could be delivered against Comex futures.
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