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Investors slash copper shorts at record pace as industrial recovery takes hold
by James Phillipps on Aug 23, 2013 at 00:01
The news that the eurozone left recession in Q2 helped buoy investors, leading them to cut their bearish exchange traded product positions (ETP), as industrial activity picked up.
Record outflows from the ETFS Daily Short Copper ETP last week was indicative of investors’ new found optimism. Some $77 million was withdrawn from the inverse ETP, more than double the previous record outflow in May 2012 with $10.2 million flowing into its long copper sister fund.
‘A number of positive indicators for world growth have led investors to revise upwards their expectations for industrial metal demand,’ said Nitesh Shah, ETF Securities’ associate research director.
‘With concerns about liquidity in China’s financial system having been largely allayed, the prospects for copper demand from the largest consumer, accounting for over 40% of world demand, are looking better.’
‘Chinese imports have surged in July, the third consecutive month of rising Chinese demand.’
Investors also piled back into silver, pouring $8.8 million into the ETFS Physical Silver ETP as the metal’s price surged 11.5% last week after a protracted period of weakness.
Natural gas was also in favour, with long ETPs taking in positive inflows for the third consecutive week after the price of the commodity rose 3.7% having fallen by 10% over the previous month.