Hedge Funds Are Playing ‘Dangerous Game’ With Copper

Jon Economy, Market Commentary

Hedge funds betting that copper will drop further are playing a ‘dangerous game’ with prices, according to the head of copper at Rio Tinto Group, the world’s second-biggest mining company.
The metal is ‘not trading on fundamentals,’ Rio Copper & Coal Chief Executive Officer Jean-Sbastien Jacques said in an interview in London. ‘There is lots of short-selling in copper and we’ve seen the pick up in terms of short-selling in copper on the back of what happened in China a few months ago.’
A glut of copper has exacerbated short-selling by hedge funds and China’s move in August to restrict such sales in equities has prompted funds to redirect bearish bets on the nation’s economy to copper, Jacques said. His view echoes Glencore Plc CEO Ivan Glasenberg’s comments last week that the market was being distorted but that supply and demand would eventually prevail. The metal has slumped about 16 percent this year amid a slowdown in China, the biggest user.

This post was published at bloomberg