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Andurand and Rokos make gains from copper surge

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Hedge funds Rokos Capital Management and Andurand Capital Management have emerged as key players in the copper market, making significant bets on rising prices that have already yielded early gains, according to a report by Bloomberg.

Last month, copper prices hit a record high above $11,100 per ton, driven by a surge of speculative investments that many in the industry warned were ahead of market realities. Although futures have since dropped 10% from their peak, Rokos and Andurand remain confident in even sharper future gains.

The report cites unnamed sources familiar with the matter in revealing that Rokos has made a series of options purchases over recent months, betting that copper prices could soar to $20,000 or more in the coming years. At Andurand, copper was the largest position by market exposure at the end of April, with the firm predicting prices could reach $40,000, far exceeding even the most optimistic forecasts from Wall Street banks, according to Bloomberg’s sources.

The funds’ trades are part of a broader influx into the copper market, with long positions held by fund managers in London and New York futures tripling this year to a record $45bn by mid-May, surpassing previous records since 2018.

While the wave of new money into copper has puzzled some industry insiders, who cite weak demand in China and a well-supplied metal market, recent mine setbacks have led to increasingly bullish forecasts from investment banks, suggesting that a long-anticipated global shortage may arrive sooner than expected. The investment case for copper — driven by demand from the energy transition — has been further boosted by excitement around artificial intelligence and data centres.

If the rally falters, the long-term options positions could become worthless, but both Andurand and Rokos have already seen significant gains from this year’s surge.

Andurand’s main commodities funds reported gains of 13% to 30% in April, largely due to its copper positions, as stated in a letter to investors last week. Rokos meanwhile, has also made substantial gains on its copper positions this year, having purchased out-of-the-money options contracts cheaply before prices took off. The fund captured profits on some positions as copper prices rose, and is positioned to benefit to the tune of several hundred million dollars should the bulk of its holdings in later-dated contracts pay out.

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