Protests at two big copper mines in Peru knocked out a fifth of the country’s production capacity last week before the government imposed a state of emergency to regain control of the Cuajone mine.
However, the market focus is rapidly turning to the demand side of the copper equation, particularly in China, where lockdowns are already braking growth sharply in the world’s largest metals user.
Copper for delivery in July fell 3.7% from Friday’s settlement price, touching $4.43 per pound ($9,766 per tonne) midday Monday on the Comex market in New York, wiping out most of the metal’s gains for the year.
Click here for an interactive chart of copper prices
Fund managers have been increasing bearish bets on the CME copper contract over the last couple of weeks, Reuters columnist Andy Home reported.
Outright short positions stood at 45,012 contracts as of the close of business last Tuesday (April 19th), according to the latest Commitments of Traders Report.
“They crept past the 2021 peak of 44,978 contracts last week and bear positioning is now as large as it’s been since May 2020. There are still sufficiently significant long positions to keep the collective net speculative exposure marginally net long to the tune of 25,393,” wrote Andy Home.
“But bears have been conspicuous by their absence for many months in the copper market and their cautious re-appearance is telling.”
President Xi Jinping reaffirmed the goal of minimizing deaths from the virus in a speech last week while emphasizing the need to expand cooperation to ensure the economy’s recovery.
China’s zero tolerance approach to covid 19 has seen banks including UBS Group AG and Nomura Holdings slash their growth forecasts for the country as lockdowns weigh on economic activity.
(With files from Reuters and Bloomberg)