Specialist funds cautious on copper rally, says trader IXM

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Funds that specialize in metals have been more cautious than other speculators on the rally that sent copper prices to a 22-month peak this week and is starting to dampen physical demand, an executive at trader IXM said.

Fund-buying helped to drive copper price gains of nearly 20% in the the two months to Monday, when it touched the highest level since June 2022 at $9,640.50 a metric ton.

“More metals-specific funds are bullish but cautious. They got out part of the way up, as copper prices rose from $8,300-$9,500 in a short period of time,” IXM’s co-head of metals Tom Mackay told Reuters.

The rally was largely driven by inflows from index and macro funds into copper instead of traditional commodity investors, he said on the sidelines of the CRU World Copper Conference in Santiago.

The prices are starting to curb physical demand, Mackay added, as indicated by the level of exchange copper stocks in leading consumer China at a four-year high.

Stocks in warehouses monitored by Shanghai Futures Exchange (ShFe) typically retreat after Lunar New Year, but this year, they continued to build despite the resumption of factory activity.

Swiss-based commodity trader IXM, one of the largest traders of physical non-ferrous metals, is owned by China’s CMOC Group.

By volume, copper remained the biggest part of IXM’s book with the fundamentals of copper concentrates particularly strong, Mackay said.

Since the start of the year, IXM has significantly cut its exposure to aluminum in response to weak returns and has focused on metals crucial for the green transition, such as copper and nickel, he said.

“The aluminum market is highly competitive and traders end up arbitraging out opportunities really quickly. The returns we made compared to other products were not ideal.”

In 2005, Mackay joined Louis Dreyfus’ metals trading unit – which was renamed IXM and bought by CMOC – to help build the copper book.

IXM has been more active in nickel since it hired Glencore’s former head of nickel Kenny Ives as chief executive, Mackay said.

“Historically nickel has not been a large business for IXM, but obviously Kenny understands the nickel business and opportunities very well,” he added.

(By Julian Luk; Editing by Barbara Lewis)


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