There are still risks surrounding the long copper thesis. China has been stockpiling copper for years in light of strong year-over-year economic growth. As of April, the stock levels were at 182,000 tonnes, or 54% above the 5-year historic average. Additionally, some critics view the country’s economic data as unreliable.
Still, copper futures could get a lift from short-covering, which would spark JJC higher. Professional traders have recently been reducing their net short exposure to copper, but it remains one of the more heavily shorted metals, indicating that any unexpected rise in the spot market could touch off a flurry of short-covering.
iPath DJ-UBS Copper TR Sub-Index ETN
ETF Trends editorial team contributed to this post.