According to TD Securities' commodity strategy team, copper speculators have resumed adding net long positions after a five-week period of reducing their exposure, with long exposure now slightly outpacing new shorts [1]. This shift is attributed to supportive physical market conditions, including firm premiums in China, low arrivals, and inventory draws on both the London Metal Exchange (LME) and the Shanghai Futures Exchange (SHFE), which have tightened metal availability [1].
The report also notes that ongoing tensions in the Middle East are keeping supply risks in focus, while a softer Consumer Price Index (CPI) print has helped ease some macroeconomic pressures [1]. Despite these supportive factors, the team cautions that expectations for further Federal Reserve tightening remain, and speculators may be quick to trim their positions if copper fails to extend its recent gains [1].
Overall, the combination of tight physical supply and macroeconomic factors is influencing speculative behavior in the copper market, with the potential for further additions to long positions if current trends persist [1].
CONCLUSION
Copper speculators are cautiously rebuilding long positions, driven by tight supply and firm Chinese premiums. However, the possibility of further Fed tightening and the need for copper to sustain recent gains may limit the extent of speculative length in the near term.