Will Copper ETN Be Hit as China Re-Exports Stockpiles?

| About: iPath DJ-UBS (JJC)

China has large stockpiles of copper, and rumors are flying about the prospect that they may re-sell some of this precious metal. Will this negatively impact the strong-performing copper ETN?

China’s buying spree has been seen as a major driver of commodity prices in recent months. But did they get a little too carried away? David Taggart for iStockAnalyst reports that this was more bargain shopping than an actual demand-driven rally. As a result, demand for copper has not yet picked up, leaving China done with buying and considering selling.

Analysts say that any big upward moves in copper prices aren’t expected. Large stockpiles of copper sit in warehouses and as much as 350,000 tons could be re-exported. According to Bloomberg, there are not many buyers for refined copper and the price of copper has more than doubled this year already. Finding a buyer might be tough.

Is copper’s run on hold for now? Some feel it may be. If it cools, have your exit strategy at the ready to put a cap on your losses. Read about trend following in The ETF Trend Following Playbook.

  • iPath Dow Jones AIG Copper TR Sub-Index ETN (NYSEArca: JJC): up 110.1% year-to-date