The iPath Series B Bloomberg Copper Subindex Total Return ETN (NYSEArca: JJC) has recently posted some modest upside, rising about 2% over the past week, but the copper exchange traded note (ETN) remains more than 11% below its 52-week, prompting some market observers to deliver split views on the red metal.
Some analysts are growing concerned that global troubles could drag down the industrial metal as well. Along with the trade concerns, copper prices were weakening on softening global economic data. The base metal is a significant component in many industries, including construction, and is widely seen as a barometer for global economic health.
“Funds remain heavily short, betting that copper demand is set to worsen amid what is looking like a synchronized downturn in the global manufacturing sector,” according to Reuters. “The copper price is starting to buckle under the weight of speculative selling pressure but it’s not yet ready to collapse.”
Earlier this month, copper hit a bottom-barrel two-year low as chaos was ensuing in equities. Due to copper’s widespread use, particularly when it comes to home building and commercial construction, it’s a good measuring stick of how well the economy is doing. Good news: sentiment toward the red metal is improving.
Trade Turmoil Rises
Copper has myriad industrial applications and any slowdown in demand from the industries that normally support copper demand could send prices tumbling.
“Market sentiment was helped by the prospect of renewed trade talks between the United States and China but also by copper’s still robust internal supply-demand dynamics, not least China’s continued appetite for imported metal,” reports Reuters.
Unfortunately, a recent spate of slack global economic data has bears piling into copper.
“The latest Commitments of Traders Report showed funds holding outright short positions of 117,898 contracts as of last Tuesday, within touching distance of the all-time record of 118,448 contracts seen in the middle of last month,” notes Reuters.
ETF investors sensing an opportunity in copper can also gain exposure to the metals and mining space through miner-related ETFs, such as the SPDR Metals & Mining ETF (NYSEArca: XME), which is designed to track the broad metals and mining segment, and the Global X Copper Miners ETF (NYSEARCA: COPX), which takes a more focused approach to copper miners.
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