Single trader holds 90% of LME copper, WSJ says

(MarketWatch) — A single trader holds up to 90% of the copper in London Metal Exchange warehouses, the Wall Street Journal reported late Tuesday.

The news came after copper prices hit a record and other commodities surged. 

The London Metal Exchange reported Tuesday that the trader holds 80% to 90% of the copper in its stockpiles, which is equal to about half of all the exchange-registered supply of the metal in the world, the Journal said. The position is worth about $3 billion, it added.

Last month, the LME reported that a single holder owned more than 50% of the exchange’s copper. People familiar with the matter at the time said J.P. Morgan Chase (NYSE:JPM)  was the holder, the WSJ reported.

Single traders also own large holdings of other metals. One trader holds as much as 90% of the exchange’s aluminum stocks. In the nickel, zinc and aluminum alloy markets, single traders own between 50% to 80% of those metals and one firm has 40% to 50% of the LME’s tin stockpiles, according to the Journal.

Such positions are often owned by big firms on behalf of several clients, the newspaper noted.

The LME has strict rules to prevent market squeezes but does not limit how much metal a single trader may hold. Instead, the exchange demands the dominant holder make metal available for short-term periods at very limited profit margins, the Journal added