In May 2024, a significant event occurred in the international financial markets as the New York copper futures market witnessed a historic short squeeze. On May 13th, the New York copper futures market experienced dramatic fluctuations, with copper prices for delivery in July skyrocketing by 5.5% overnight to reach $5.026 per pound, approaching the historical high of $5.0395 per pound seen during the Russia-Ukraine conflict in March 2022. This short squeeze led to a substantial premium of New York copper futures prices over the benchmark contracts on the London Metal Exchange (LME), sparking widespread market attention.

SOURCE：Investing
Data as of May 15，2024

About Copper
Copper, chemical symbol Cu with atomic number 29, is a reddish-brown metal known for its high conductivity and thermal properties. It finds widespread applications across multiple industries including electrical engineering, electronics, construction, mechanical manufacturing, and defense.

Copper futures contracts serve as vital tools for investors to hedge against copper price fluctuations and are also crucial benchmarks for global copper pricing, providing investors with opportunities for diversified asset allocation. Copper prices are influenced by various factors, including the fluctuation of cyclical industries such as construction and industrial machinery manufacturing, as well as political situations in countries with strong control over copper resources.

Copper futures contracts are traded in the form of Contracts for Difference (CFDs), quoted in US dollars per pound, where 1 CFD represents 1 pound of copper, and a standard trading lot typically includes 30,000 pounds of copper. Given copper's central role in modern industry, the performance of the copper futures market is often seen as an indicator of global economic health, providing valuable insights for macroeconomic analysis.

Shorting Pressure Analysis
Shorting pressure arises from a combination of factors. The resurgence of global manufacturing and the push for energy transition significantly increase the demand for copper, while the supply side faces challenges such as declining mine output and rising development costs, exacerbating market concerns about copper supply shortages. As the global economy gradually rebounds, investors' interest in commodities grows, with copper emerging as a hot investment due to its indispensable role in industry and new energy sectors. Additionally, Chilean government's upward revision of copper price expectations, from $3.84 per pound to $4.2 per pound in 2024, further strengthens market expectations of copper price increase, resulting in shorting pressure in the copper futures market.

Market Implications
The historic short squeeze event in the New York copper futures market has had profound implications on the entire financial market. This event directly led to drastic fluctuations in copper futures prices, causing short-term instability in the market and putting pressure on cost structures of related industries, particularly those with high copper demand such as electric vehicles and electric grid construction, which may further pass on cost increases to consumers.

Meanwhile, the short squeeze situation forces traders who were originally shorting copper to face significant losses, leading to forced covering operations, while traders holding long positions face the choice of profit-taking or rolling over positions. With the gradual global economic recovery, the expected supply-demand gap in copper is projected to continue widening, potentially further driving copper price increases. This market change brings new investment opportunities for investors but also accompanies significant risks. To address the abnormal market fluctuations, governments and regulatory authorities may strengthen supervision of the copper futures market to maintain market stability and prevent similar events from recurring.

Against the backdrop of recent copper market short squeeze events, market attention on copper has reached new heights, offering unprecedented investment opportunities for investors. In such a market environment, efforts are dedicated to providing users with a transparent, efficient, and user-friendly trading environment, allowing investors to fully leverage the investment opportunities in the copper futures market and achieve asset appreciation.

How to place a trade on uSMART mobile application：
After logging into the uSMART SG APP, select "Quick" from the bottom menu.Choose "Commodities" from the sliding menu at the top of the page.Scroll down to find the "Metal ETF" section.Click on "Copper" to access the details page and learn about trading details and historical trends.Tap on "Trade" at the bottom right corner of the details page.Select the "Buy/Sell" function.Fill in the trading conditions and submit your order.Here's a visual guide to the steps described above:

This diagram is provided for illustrative purposes exclusively

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