Now is not the time to kick off supercycle trades. The breakdown in base metals is intensifying as commodity demand sentiment plummets, TDS senior commodity strategist Daniel Ghali notes.

Aluminum and Copper turn to the downside

“LME Aluminum is now likely to come under additional pressure as Commodity Trading Advisor (CTA) selling activity mounts with algos now starting to build up a notable net short position. We expect trend followers to sell an additional -15% of their max size as trend signals continue to deteriorate, with some scope for additional selling activity shortly below current prices.”

“While Copper's plunge is consistent with fundamentals, the Red Metal's descend has been aided by the export arbitrage weighing on bullish spec positions, defying expectations for the supercycle to buoy prices to stratospheric heights.”