While the copper price can continue to rise near-term, the picture is turning negative
The bounce back rally in the copper price has been anticipated as part of the Q4-Q1 party theme hosted by Wayne and Garth. But the rally began with a sentiment tailwind from the copper commitments of traders (CoT) – as we noted last summer in NFTRH for several metals, including the Platinum Group Metals – that no longer exists.
What exists currently is post-Covid reopening hype emanating from China, net long speculators and net short commercials. The structure of the copper CoT is not extreme and so the copper price could continue to party on for a while. But the play is probably closer to its end than its beginning, at least when viewed from a CoT standpoint.
On the plus side for the copper price, warehouse stock levels are once again at an extreme low. That’s a supply/demand tailwind when taken at face value. This supply constraint would probably need a global recession in order to ease.
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