Two charts show copper price drop may have been overdone

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Two charts show copper price drop may have been overdone
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Large-scale speculators in the copper market like hedge funds have held net short positions – bets on falling prices – for six weeks running. copper miningnews

But Goldman’s main argument of the dangers of a “scarcity episode” or a “stock-out” remains well supported. When the Chinese government starts buying copper on the open market it’s usually read as a sign of prices bottomingreleased last week exhibits a five year chart of global copper warehouse inventories.

“When adjusted for days of consumption, inventories are almost as low as they were back in 2005, just before copper prices more than doubled. In 2005, copper exchange inventories covered consumption by only two days. China’s unwrought copper imports are up nearly 6% while concentrate shipments are around 7% higher so far this year, encouraged by the fall in price, according to Capital Economics, a London-based research firm. In contrast, cargoes of iron ore, for which China is significantly more reliant on imports than copper, are down 3.5%.

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