Bullish bets by fund managers on copper rose to the highest level since October due to concerns that the US may impose tariffs on copper.
Data from the US Commodity Futures Trading Commission (CFTC) showed that net long positions held by hedge funds and other large speculators rose 26% to 21,673 lots in the week ended 11 February, the highest level in 16 weeks.
U.S. copper prices and other metals, including gold, have soared in recent weeks as traders have increased bets that Trump will impose import tariffs on metals. Trump has announced 25% tariffs on imported steel and aluminium and has mentioned tariffs on copper, but has yet to announce tariff rates or when they will begin.
Commodity market analysts believe it is unlikely that Trump will continue to impose tariffs on copper and other metals. The strong performance of copper prices is inextricably linked to the resilience of demand in the real market. However, future movements remain subject to multiple factors, particularly market volatility due to trade concerns. If the impact of the tariff policy on demand exceeds expectations, it may be difficult for copper prices to sustain the current uptrend.
Benefiting from the resilience of the spot market, copper prices have risen by nearly 8 per cent year-to-date. London Metal Exchange (LME) six major contracts of the LMEX index closed at a three-month high on Tuesday, showing that the market still maintains a certain strength.
However, an analyst report from Citigroup noted that copper prices are likely to remain near $9,400 per tonne in the short term until early April. Subsequently, if the U.S. government implements new tariff policies, copper prices could fall to $8,500 within three months.
Citigroup analysts, including Tom Mulqueen, said in a research report that with the implementation of tariffs, the spread between Comex copper and LME copper could widen further, from the current $800 per tonne to $1,400 per tonne.
Citigroup had said in a report in November that the Chinese government has been waiting to take direct stimulus measures to boost domestic demand, which is negative for the copper market demand. Citi then cut its copper price forecast for the next three months to $8,500 a tonne from $9,500 previously. Now it seems that the copper market seems to be stronger than analysts expected.
LME copper prices closed little changed at $9,465.50 per tonne on Wednesday, while aluminium prices rose 0.4% and zinc prices fell 0.3%.
