Market positions and proximal difficulties

Long speculative positioning is at or near multi-year highs across the board, the collective pivot returns to a previously disadvantaged sector serving as a major price driver.

The main beneficiary of this investment surge is copper which is widely traded as a proxy for global economic health.But the bullish exuberance has also spread to other metals, such as aluminum, a market largely avoided by investors in recent years due to its trend towards excess production and huge inventories. The question is whether this new love of metals is just a cyclical recovery or the beginning of a structural shift in investor behavior.
Prices of industrial metals plummeted and rose over the course of 2020. The London Metal Exchange Index, a weighted basket of major base metals, plummeted 22% in the first quarter of 2020 when China first, then the rest of the world has entered the block. The index rose 21% at the start of the year, a stunning turnaround even by the standards of a notoriously volatile industry.

 The rally in super-charged metals has attracted an increasing number of investors on the long side. The collective weight of money, much of which chases price momentum, has itself helped push prices to multi-year highs.

The first part of the change was the closing of short positions in the second quarter, when the price of copper rebounded from the March low of $ 4,371 per ton. Bear bets fell below 30,000 contracts in June and have remained low since then, the latest at 26,405 contracts. There has been a steady increase in bullish bets since June, led and driven by the prolonged copper rally to the current $ 7,825 per ton….

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