Hedge Funds Short LME Copper for First Time in Three Years, Eyes on Copper's Correlation with Economic Growth Which Is Facing Headwinds

Foreign media reported on May 26 that hedge funds are shorting London Metal Exchange (LME) copper for the first time since the outbreak of COVID-19.

Data released by the LME showed that investment funds turned to a net short position in copper for the first time since June 2020. Bearish bets surged after mid-April, with bulls closing positions, as global copper consumption fell short of expectations.

Meanwhile, supply increased, with LME inventories rising for five straight weeks.

TD Securities trend-following tracker is currently showing more selling is likely if copper falls below $7,700/mt. LME copper futures have picked up in recent days.

For now, though, the focus is on copper's correlation to overall economic growth, which is facing headwinds from banking turmoil and tighter monetary policy.

Hedge funds turned net short on COMEX copper three weeks ago, according to data released by the U.S. Commodity Futures Trading Commission (CFTC).

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