CTAs begin to de-risk Shanghai base metals as the copper rally pauses

After rotating from energy into industrial metals in late May, CTAs began to trim elevated base-metal exposure on June 5, with selling concentrated in Shanghai-listed contracts.

CTA positioning has reflected a broader cross-commodity rotation since H2 May. As trend-following CTAs reduced long exposure across crude and refined products, they simultaneously increased long exposure across major base metals. The shift mirrored the perception that easing Middle East supply risks and lower energy prices would support industrial metals demand, particularly in Asia. CTA buying helped fuel the rally across the complex, with Comex copper reaching a fresh record high this week, while heavily negative spot treatment charges in China (Argus Media) continued to signal tightness in the copper concentrate market.

Despite this constructive backdrop, our models point to a growing divergence between Western exchanges (LME and Comex) and China's SHFE. While CTA positioning remains broadly bullish across base metals, long exposure on SHFE remains less extended than on Western exchanges across all major contracts except tin:

Trend-following CTA positioning in base metals across main exchanges (June 4)

Source: Kpler Financial Flows

Following the recent build-up in long exposure, CTAs began to de-risk on June 5, with selling concentrated in Shanghai-listed contracts:

• Comex Copper: 100% → 91% long
• LME Copper: 91% → 82% long
• SHFE Copper: 91% → 82% long
• SHFE Nickel: 45% → 27% long
• SHFE Lead: -55% short → -64% short
• SHFE Tin: 91% → 82% long
• LME Tin: 91% → 82% long
• LME Aluminum: 100% → 82% long

CTA selling in both Comex and LME copper helped cap the Comex premium relative to LME prices despite the potential introduction of a 15% US tariff on copper cathode imports. After widening to a 2026 ytd high of more than 5% on June 2, the premium narrowed to around 3% at the time of writing.

Despite today's de-risking, CTA positioning remains materially more bullish across base metals than energy, underscoring the persistence of the recent cross-commodity rotation.

Source: Kpler Financial Flows

This report draws on Kpler Financial Flows. The full dataset delivers daily and intraday CTA positioning, order stacks, and flow estimates - allowing you to track systematic moves as they develop, rather than after the fact. Request access to Kpler Financial Flows here.

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