Copper and aluminum prices 2003-2011

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

Copper Jumps to Seven-Week High in N.Y. After Chile Earthquake

(Bloomberg) -- Copper jumped to a seven-week high in New York after a magnitude-8.8 earthquake disrupted supplies from Chile, the world’s largest producer.

The quake forced Codelco, Anglo American Plc and Antofagasta Plc to halt mine operations after power cuts. Codelco, the biggest copper producer, said it will meet supply contracts with shipments from undamaged plants in northern Chile, where it has bigger mines.

Copper “is obviously being affected by the situation in Chile,” said Donald Selkin, the chief market strategist at National Securities Corp. in New York. “It’s a question of how much damage was done to the mines and when they can get shipments out. We’re seeing these reports that there were some loading terminals damaged.”

Copper for May delivery climbed 6.9 cents, or 2.1 percent, to $3.353 a pound at 10:56 a.m. on the New York Mercantile Exchange’s Comex unit. The most-active contract earlier reached $3.487, the highest price since Jan. 11. The commodity surged as much as 6.2 percent before retreating.

Copper for three-month delivery rose 2.4 percent to $7,365 a metric ton ($3.34 a pound) at 3:45 p.m. on the London Metal Exchange.

Chile is home to copper mines including Escondida, the world’s biggest, and accounts for 36 percent of global exports of copper ores and concentrate.

Chile Stocks Plunge, Peso Drops After Quake Halts Copper Mines

(Bloomberg) -- Chilean stocks tumbled, heading for the biggest drop in eight months, after an 8.8-magnitude earthquake killed at least 700 people, severed the country’s main highway and damaged 1.5 million homes. The peso pared its loss after weakening as much as 1.5 percent.

Empresa Nacional de Electricidad SA, the nation’s biggest power generator, and Lan Airlines SA, the country’s biggest carrier, dropped following electricity outages and airport closures. Ripley Corp. SA, Chile’s third-largest department store operator, slumped lost 2.9 percent. Antarchile SA, the forestry and energy holding company owned by Chile’s Angelini Group, plunged 5.5 percent.

The Ipsa dropped 2.2 percent to 3,741.78 at 8:41 a.m. New York time, the biggest retreat on a closing basis since June 22. Chile’s peso slid 0.4 percent to 526.65 per U.S. dollar, recovering from an earlier plunge.

“Initial reaction for stocks will be negative,” said Eric Conrads, a hedge fund manager at Armada Capital SA, a Mexico City-based Armada partnership with ING Investment Management that oversees $12 billion in emerging markets, said in an interview yesterday. “Medium and long term Chilean equities will resume their rally.”

Copper jumped to the highest price in five weeks in London after the quake cut supplies from the world’s largest producer. Chile’s benchmark 10-year peso bond yield fell to the lowest since the end of October. Roads and airports were shut due to damage and some copper mines closed. The total economic damage may be as much as $30 billion, or about 15 percent of the South American country’s gross domestic product, according to estimates by disaster-scenario modeler Eqecat Inc.