Unnamed buyer swoops on up to 80 per cent of London's copper market
Saturday 04 December 2010
A mystery buyer has cornered the London copper market, sitting on up to 80 per cent of the physical stockpiles traded on the capital's metal exchange.
The London Metal Exchange did not identify the buyer, who, data showed, controls between 50 to 80 per cent of the cash warrants traded on the bourse. The warrants correspond to the 352,425 tonnes of copper sitting in LME-approved warehouses, meaning that the buyer owns up to 281,940 tonnes of the red metal. At $8,711 per tonne, the hoard could be worth anything from around $1.5bn to $2.5bn.
At 80 per cent of LME's warrants, the buyer would own over half of the copper traded on all major world exchanges, according to one analyst, who said such buying was not out of the ordinary – a view reiterated by the LME itself.
The analyst added that it would be hard to work out the identity of the buyer, as the copper market attracts interest from a variety of institutions, including banks and metals merchants, who would be able to trade in such large quantities.
The LME said it had procedures in place to make sure that the market continues to function in an orderly way, with rules dictating that if a buyer holds in excess of half or more of the warrants, they should be prepared to lend at premium of no more than 0.5 per cent of the cash price for a day. With the buyer's identity remaining hidden from view, speculation focused on two possibilities. Either the mystery trader was buying up warrants in a bid to cash in on the prospect of higher copper prices, or, it was said, someone was getting ready to launch an exchange-traded product backed by physical stockpiles, which would provide investors with exposure to rising prices without worrying about buying and storing any metal.
The latter view sprung from recent market speculation regarding the imminent launch of the first such product. Merging the rumour with the LME data, chatter turned to UK-based ETF Securities, which recently said it was preparing to launch a range of physically backed industrial metal exchange traded commodities. Yesterday, ETF said it could not comment on anything to do with industrial metals.
Copper prices have been rising strongly in recent months amid strong demand from India and China, with some eyeing a supply deficit next year.
Top Gear presenter is no stranger to foot-in-mouth controversy
New essay by JK Rowling went live on Pottermore site this morning
Mike Tyson branded 'superhero' after a surprise good turn
Charlie Sheen could be set to revive his role as a hedonistic womaniser
Review: Mike Leigh's biopic is a rambling, rich character study
Want to ward off (or welcome) trick-or-treaters? Here's how
- 1 'Nasa Confirms Six Days of Darkness in December': No, they don't - it's a hoax
- 2 Canadian actor punched in face after 'Islamophobia' experiment goes wrong in wake of Ottawa shooting
- 3 Topshop at centre of row over body image as 'shocking' skinny mannequin photo goes viral
- 4 If you think Russell Brand’s new book is confused, you should read what his critics have to say about it
- 5 Kentucky gang rape: 15-year-old boy left in critical condition after sexual attack by group at party
'Nasa Confirms Six Days of Darkness in December': No, they don't - it's a hoax
Canadian actor punched in face after 'Islamophobia' experiment goes wrong in wake of Ottawa shooting
Halloween 2014: From the Screaming Man of Pluckley to the 'White Lady' of the Tower of London - Britain's 20 most haunted places
Russian politician says Apple CEO Tim Cook should be 'banned' from country after coming out as gay
Kentucky gang rape: 15-year-old boy left in critical condition after sexual attack by group at party
Pope Francis declares evolution and Big Bang theory are real and God is not 'a magician with a magic wand'
Huge surge in Ukip support after EU funding row, according to new poll
Ukip ‘exploiting grooming scandal’ to secure party’s first police chief
Nigel Farage: 'There’s nothing wrong with white people blacking up'
Maureen Lipman says 'she can't vote Labour while Ed Miliband is leader'
Muslims, immigration and teenage pregnancy: British people are ignorant about almost everything
iJobs Money & Business
£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...
£20000 - £23250 Per Annum pro rata: Clearwater People Solutions Ltd: Pro rata ...
£40 - 48k + Benefits: Guru Careers: We are seeking a Marketing Manager to join...
£45,000 - £65,000: Saxton Leigh: Our client is a well-known APAC Corporate and...