Mystery trader captures 80pc of London's copper market
, 11:20, Friday 3 December 2010A single trader has gobbled up to four-fifths of the copper traded in London, stockpiling it in warehouses.
The unknown buyer has been building up the dominant position since at least last week, putting a squeeze on the market.
According to the rules of the London Metals Exchange, the trader must lend out copper if it holds between 50pc and 80pc of the total to maintain day-to-day liquidity in the market. The trader is currently lending at a 0.5pc premium to the cash price.
Position limits prevent one buyer from cornering more than 90pc of the market.
The premium for spot price copper over delivery in three months' time reached $89 in the middle of this week - the highest in two years.
Stockpiles in London have fallen by more than a third since their levels at the beginning of the year.
LME copper was steady at $8,720 per tonne this morning, having reached a high of $8,732 earlier. A record price of $8,966 was hit in mid-Novermber.
The large position is not the only reason the copper price is high.
There are fears of a shortfall in supply next year, as mining production is not expected to keep pace with rebounding demand following the recession.
Two US investment banks and one UK company also want to launch exchange-traded funds linked to copper, which is likely to suck demand out of the market further.
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Some of the 'readers comments' are as good as the article!
The basic mechanism of price discovery has been terminally corrupted because of the large speculative community using leveraged products like derivatives.
Traditionally price of any commodity was derived by the actual demand and supply of users and producers. Today it is derived by the long and short speculative positions on the exchange.
The sad part is that the rest of the population have to pay the price whatever is quoted on the exchange. http://www.marketoracle.co.uk/...
2 people
Since I have money to burn, I think I will run out and buy a bit of copper tube and try this experiment. I am also wondering what would happen if you spin the tube. http://www.youtube.com/watch?v...
By the way, I am not very rich but have managed to buy two silver coins this past year.
Actually silver is up 70% in 12 months.
4 people
But new developments in Cambs, are going through with 40% affordable housing -that means we pay for the umarried women and unemployable through council taxes and central government taxes -their plot of land gets inflated in price I remember the property boom in Thatchers time . My neighbour was getting his house valued regularlyand hence reinisuring. He Had no idea it was the land increasing in value and not the house but the company loved his premiums.I was 29 years old then so I didnt say anything! Simple common sense
we kwow what happenned to Bunker -Hs too
Its taking part that counts I was once told .Play the game and gear up -and down
We live in rip off Britain Food prices ,cars houses etc. I buy beautiful sides of meat -pig ,lamb beef -from a farming friend 60% less than you would see in Tesco and much better eating Carry on spending you sad people out there!Some people are getting rich at your expense whilst you have got used to remortgaging to enable you to live WE ARE ANOTHER PIGS COUNTRY but noone has noticed yet Itis just difficult to make word with pigs and in it init!. NEw cars in the car park all on HP and 30 % credit card debt .We AR E the third world in 20 years
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1. Why buy the house then?
2. Are you considering the value of the land it is built on?
2 people
so how the hell can one trader squeeze the market?
the bunker hunts tried a similar thing.......
pretty soon noboby will have any money to buy any metal so the market will collapse..........of course banks can play monopoly because we have given them billions to play with....i wonder when the cheque will arrive with my slice of the profits?
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Desperate governments print money and flood markets with liquidity, but exercise no control over where it flows.
This is free market ideology gone mad, yet its deluded disciples still rail against any kind of intervention.
Financial markets should be a servant of the people, not their master. How much more evidence of a seriously malfunctioning financial system is needed before sanity prevails?
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9 people
If all those who purchased Gold said I want it now, they would get a nasty surprise!
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After all, they are printing like there no tomorrow and gold and silver are too expensive
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if ww3 happened tomorrow, all those with actual materials would be king, all those with numbers in the bank, would be bankrupt.
so it does make a strange kind of sense.
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Does this mean we are going to reopen the copper mines of Anglesey? Would be nice to see a return to mining in Wales under a Tory government
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I thought the last 3 words were noteworthy. I must have been asleep...are we (The West) back in a boom? Am nervous that we perhaps mistake some rising asset prices and demand elsewhere with real economic recovery?
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"She meant it as a compliment"