Steel and copper traders told Barclays analysts that their inventories were not particularly high.
Traders seemed to ignore that copper was in such surplus in China that it has to be stored outside already full warehouses in dump sites.
All industrial metals have been under pressure over the past four weeks with Chinese traders reporting that demand for copper, zinc, and aluminum has failed to stage a recovery normally seen after the end of Chinese New Year celebrations.
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Gold, platinum and palladium all rose during the week to the May 3 reporting deadline for the most recent Commitments of Traders report, while silver and copper fell.
FORBES: CFTC Data: Funds Trim Gold, Silver Length Slightly; Next Report To Be 'Much More Telling'
As traders and speculators grasp the implications, copper prices should fall, and that will pressure Chinese banks that financed the binge.
If their other company, Freeport McMoRan Copper and Gold, is any measure, the traders would be wise to develop patience in favor of a 5 or 10 bagger over time.
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Traders pointed out that gold, silver and copper have fallen below their respective 200-day moving averages.
FORBES: Focus: Metals Slump On Year-End Liquidation, Scaled-Back Fed Expectations After GDP
Other stocks in this group that traders might want to keep an eye on include Southern Copper Corp (NASDAQ: SCCO), which closed lower for three out of the past four sessions on Thursday.
FORBES: Copper Strength Sets Up Bullish Trades In Freeport McMoRan, Southern Copper
Global copper inventories are down by about a third this year, and traders say that with supplies so tight, the risk is that prices could rise more rapidly if the recovery gathers pace.
They cut net-long positions in gold and silver and net-short positions in copper as seen in both the legacy and disaggregated weekly commitment of traders reports released by the U.S. Commodity Futures Trading Commission for the week ended Dec. 27.
FORBES: FOCUS: Speculators Continue To Cut Exposure To Most Metals- CFTC
Copper has long been one of the metrics used by intermarket-oriented traders and investors.
In other markets, reductions in net-long positions were seen in both the disaggregated and legacy weekly commitment of traders reports in all other metals, with speculators turning net-short in copper.
FORBES: FOCUS: Speculators' Net-Long Position In Gold Rebounds Temporarily - CFTC
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