The iPath Bloomberg Copper Subindex Total Return ETN (NYSEArca: JJC) is up 7.2% year-to-date, but investors should be careful if they are betting on more significant upside to come for JJC and copper futures.

Copper prices are benefiting as investors anticipate greater demand out of China and increased infrastructure projects under President Donald Trump. Some professional traders are reacting by increasing bullish bets on the red metal.

Industrial metals like copper, nickel, iron and steel have all rebounded in recent months as traders bet on improving global economic conditions would bolster demand for the base metals after prices hit multi-year lows.

“The rally of copper prices towards the end of 2016 was heavily influenced by concerns over a slowdown of mine supply growth at the same time as Chinese demand accelerated …  inventories usually increase at the beginning of the year, when demand can be weak seasonally because winter subdues activity in some sectors in the Northern Hemisphere and factories close during the Lunar New Year holidays in China. … reported stocks remain within recent ranges, reinforcing our view that rising inventories do not reflect a sudden deterioration in underlying fundamentals,” according to a Bank of America/Merrill Lynch note posted by Dimitra DeFotis of Barron’s.

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