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.

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