SHANGHAI, Oct. 28 (SMM) – Report that London hedge-fund manager Red Kite Group has snapped up more than half the copper held in London Metal Exchange warehouses raised expectation of possible short squeeze. Meanwhile, rumor swirled that China’s State Reserve Bureau may buy copper for state reserve.
Will copper prices benefit from these reports?
“A single buyer has bought up over half of LME copper stocks, this, sometimes, could be considered a prelude to short squeeze, but things are different this time, as the large holding of copper has not been accompanied by massive short selling,” an analyst from CITICS Futures told SMM. The analyst believes that chances are remote for copper to rebound unless short positions soar in short term.
“Copper prices may take impetus from recent goods news to rise briefly, including Red Kite owning considerable LME copper inventories, potential copper stockpiling by Chinese authority, as well as strikes at Antamina and Grasberg Copper Mine,” analyst from Shanghai CIFCO Futures said.
However, the same analyst added that the any price rally would be short-lived as growing global copper concentrate supply and waning copper demand will exert a drag on prices.
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