China’s commodities funds in the spotlight again after copper rout

As the dust settles following the massive drop in copper prices last week, market participants are once again paying close attention to several Chinese commodities funds that were said to be instrumental in driving prices lower.

As the dust settles following the massive drop in copper prices last week, market participants are once again paying close attention to several Chinese commodities funds that were said to be instrumental in driving prices lower.

Metal Bulletin first profiled the funds in July last year, and here provides a recap of some of the most pertinent details about their origins and their approach to trading.

Key facts

  • Funds trading commodities from China are big in terms of the money they manage: at the time of MB’s report Dunhe managed $1 billion; Shanghai Chaos between $1.6 billion and $4.8 billion, sources close to the funds said. For comparison, around the same time, Galena (Trafigura’s commodity fund) managed $2.1 billion and Red Kite $2.3 billion.
  • Chinese funds are among the biggest speculative participants in metal markets, according to some well-informed sources. “I can count seven or eight players from China that have 100,000-tonne, even 200,000-tonne, copper positions. Long and short directional positions on the LME are now dominated by these funds,” one source said.
  • Big Chinese commodity funds Dunhe and Shanghai Chaos trade diverse domestic and international markets – and not solely commodity futures. Dunhe trades liquid domestic and international futures for major non-ferrous and ferrous metals, as well as domestic and overseas equities, currencies, bonds and derivatives. Shanghai Chaos trades copper, rubber, oil, sugar, soy as well as Hong Kong and US equities and bonds.

Read this and the stories below for more key facts on China’s commodities funds.

VIDEO: Are you paying attention to China’s metal funds?

LORD COPPER: The power of Chinese funds

China’s metal funds: where do they come from? And where are they going? [UPDATE]

SPOTLIGHT: Why you should pay attention to these China-based metal funds

Mark Burton
mburton@metalbulletin.com
Twitter: @mburtonmb

What to read next
Market reactions to the soon-to-be-implemented US copper tariff are driving short-term volatility and supply imbalances while fuelling long-term efforts to expand domestic production, recycling and infrastructure.
US export controls on recycled copper would have unintended consequences that could weaken the country’s domestic recycling and manufacturing ecosystems, the president of the Recycled Materials Association (ReMA) said.
The publication of Fastmarkets’ assessments for nickel 4x4 cathode, nickel briquette and nickel uncut cathode premiums in-whs Rotterdam was delayed on Tuesday July 16 because of a reporter error.
Fastmarkets has corrected its alumina index inferred prices, which were published incorrectly on Tuesday July 15.
The United States' copper recycling industry is ramping up pressure on policymakers to impose some form of export controls on high-purity copper scrap, arguing that current trade dynamics – particularly with China – are distorting prices, weakening domestic capacity and undermining national security goals.
Fastmarkets launched two new price assessments for Indonesia’s domestic trade in nickel ore on Tuesday July 15. The two price assessments are for domestic trades of Indonesian laterite ores with 1.6% and 1.2% nickel content. Indonesia now accounts for 60% of the global nickel supplies and while there is an official government reference price, known […]