LONDON — The biggest copper selloff in three years isn’t over yet because Chinese traders will probably keep shorting the metal, according to Citrine Capital Management.
Copper prices may bottom by March and recover during the second quarter as demand from Chinese manufacturers picks up, Andreas Hommert, a partner at the New York-based hedge fund, said last week. Losses have been driven mostly by hedge funds, commodity trading advisers and Chinese speculators, he said, adding that additional selling may come from China.
While copper has fallen for most of the past month, losses accelerated on Jan. 14 during Asian trading hours, with prices tumbling by the daily limit in Shanghai and London futures losing almost 9 percent at one point. China has curbed long-term commitments to buy copper, adding to the global surplus, according to Hommert.
“Not everybody who might need to sell has been able to sell,” said Hommert. “We might see some lower numbers.”
Money managers have more than doubled the net-short position in New York copper this year to 9,881 contracts, data from the Commodity Futures Trading Commission show.
Global refined production will exceed demand this year by 221,000 metric tons, according to Jefferies Bache.
