Bloomberg has an interesting article on the drop in copper price, claiming that the sell-off in the stock market in China and subsequent freeze on shorting equities is causing a sell-off of copper.

This means that all those stocks that are tied to copper, like Teck, are dropping along with the price of commodities. But, the price of copper is dropping for reasons other than supply and the health of the Chinese economy. Now it is the Chinese stock market that has become more influential.

I guess it is more about perception than reality. In a way it is slightly encouraging that copper is still tied to the health of the Chinese economy because it will start rising again and then it should pull copper with it. As long as we can hang on until that happens.

They’re seeking to hedge exposure to Chinese shares after the government stepped in to stem a stock-market collapse that wiped out $4 trillion in value, according to brokers including Guotai & Junan Futures Co. and Haitong Futures Co. Copper is being sold as a proxy for China’s broader economy, said Ivan Szpakowski, a commodity strategist at Citigroup Inc.

“Shorting commodities has become a widespread strategy to hedge investment in the stock market,” Yang Na, a Shanghai-based analyst with Haitong Futures, said by phone. “Metal prices have been further hit as the fundamentals have been weak this year because of China’s slowdown.”

--http://www.bloomberg.com/news/articles/2015-07-24/china-bears-seen-punishing-copper-as-short-selling-stocks-curbed