After pushing down prices on rising inventory levels, copper traders have turned more bullish, supporting back-to-back session gains in the base metal and related exchange traded note on an more optimistic global outlook.
The iPath Dow Jones-UBS Copper Subindex Total Return ETN (JJC) was up 0.6% Thursday. JCC has jumped 8.1% over the past three months, but it is still down 3.7% year-to-date.
COMEX copper futures were up 0.4% Thursday, trading around $3.279 per pound.
Copper prices have steadily incrased since March and is up 7% over the past two-weeks, reports Xan Rice for Financial Times.
Vivienne Lloyd, base metals analyst at Macquarie, argues that copper has rallied from a surge in fund manager interest in commodities, notably in industrial metals, in response to the stronger second-quarter growth.
“Funds have started to look at commodities with a gleam in their eye again and are allocating more money to the sector,” Lloyd said in the article.
The U.S. and China, which account for over 40% of global demand for base metals, have supported the strength in copper after more positive economic data. China is also expected to increase demand by 5.5% this year, allaying concerns of a slowdown. [Strong Global Demand Lifts Copper ETFs to One-Month High]
Meanwhile, on the supply side, the refined copper market was stuck in a deficit of 205,000 metric tons this year, according to Wall St. Daily. London Metal Exchange warehouses show supplies have fallen to around 150,000 metric tons, the lowest in six years, or less than three weeks of global consumption.
Moreover, some market observers are pointing to additional gains in copper prices due to short covering after investors, who had been bearish following the fraud allegations in China, quickly switched over to long copper. So far, fears that financing deals tied to Chinese warehouses have been unfounded. [Copper ETFs Blemished After Chinese Investigation]
iPath Dow Jones-UBS Copper Subindex Total Return ETN
For more information on copper, visit our copper category.
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.