Commodities: Copper extends losses after Chinese investor cuts long position

Industrial metals sagged on Tuesday, helping to drag the entire complex lower, with some traders attributing the decline to the liquidation of a $1bn position in the red metal by a Chinese investor, as reported by the Financial Times.

According to the report attributed to the FT, in just the last week, Chinese broker Gelin Dahua had cut its net long position in copper from 36,050 lots to roughly 10,000 on Tuesday.

Commenting on the news, SP Angel said: "We suspect the sell-order has been poorly placed attracting the attention of other hedge funds who have exacerbated the rout to force prices lower.

"We also suspect it may suit China Inc. to send a signal to the West that it can move important and significant markets when displeased by elements of US foreign policy."

Perhaps, but even so, sentiment towards Chinese growth had been souring for some time.

Against that backdrop, as of 1842 BST, the US dollar spot index was edging higher by just 0.14% to 94.2070, yet the Bloomberg commodity index was trading noticeably lower, slipping by 0.63% to 85.59.

Earlier, three-month LME copper had finished at $6,332.5 per metric tonne, versus $6,424 at the open.

All the other main LME base metals contracts skidded lower too.

"LME prices made gains in the overnight session on the back of firmer regional equity markets before London 8am.

CTA/systems selling hit the market," said traders at Sucden Financial.

Selling was also quite intense in corn and wheat, with September-dated futures on CBoT down by 2.61% and 3.44% each to trade at $3.4475 and $4.9050 a bushel, respectively.

Energy futures on the other hand were mostly higher, with West Texas Intermediate for next monthly delivery up by 0.18% to $73.98 a barrel in NYMEX trading.

Possibly helping to put a bid into oil futures on both sides of the Atlantic was talk of unexpected strike action by rig workers in Norway.

With the US summer driving season in full swing, similarly-dated RBOB gasoline futures were adding 0.56% to $2.1605 a gallon and fast approaching their 52-week highs at $2.2686 a gallon.